Today, leading companies understand that they must look beyond their own operations when assessing and addressing their environmental, social, and governance (ESG) impacts. To deliver maximum business and social returns, they should consider and incorporate their supply chains when developing corporate citizenship programs.

Those that do are presented with the opportunity to address inefficiencies and risks—many of which could have severe ramifications to a firm’s reputation, as research finds that consumers are likely to hold a firm responsible for unsustainable activity regardless of where it occurs within the supply chain. A 2014 study finds that, while the severity of the incident increases backlash, the relationship the supplier has to the firm (direct vs. indirect) and the importance of the supplied product in no way mediates consumer anger.[i] That means that the behaviors of even a supplier that makes a negligible part of a product could pose a serious threat to company reputation and profit.

The risks and opportunities present in a company’s supply chain can range widely—from inefficient packaging that makes recycling targets more difficult to meet—to human rights violations—with no issue more severe than slavery.

While the vast majority of firms would never consciously employ slave labor, many operate at least in part in countries where serious labor violations are prevalent, though in fact—no country is immune to the issue. The most recent Trafficking in Persons Report, released in June 2017 by the U.S. Department of State, finds that modern slavery is still a widespread abuse of human rights that affects every country in the world.

One of the more common forms of modern slavery today is forced labor, in which coercive measures—such as physical threats, deception, or abuse of the legal process—are used to compel individuals to work. The International Labor Organization estimates more than 20 million men, women, and children around the world are currently victims of forced labor.

To address this issue at its source, companies must undertake a careful review of their supply chain practices to ensure all parties are meeting expectations regarding workers' human rights. 

A small number of firms have chosen to take one step further, moving from internal reviews of labor practices to advocating externally for the eradication of slavery. These companies are championing best practices and playing an active role in the development of international standards. 

[i] Hartmann, J., & Moeller, S. (2014). Chain liability in multitier supply chains? Responsibility attributions for unsustainable supplier behavior. Journal of Operations Management, 32 (5), 281-294.