Both enforcement agencies and consumers increasingly are focused on manufacturers’ supply chains. Human rights enforcement frameworks increasingly have real teeth. Both the United States and the European Union either have, or are in the process of adopting, real enforcement mechanisms to protect against the importation of goods made using forced labor. As a sign of things to come, Germany’s Supply Chain Diligence Act and Norway’s recent Transparency Act impose affirmative human rights due-diligence obligations on companies and create an enforcement structure with severe penalties for non-compliance. When placed on top of other legal regimes that focus on supply chains, including the Australian Modern Slavery Act, the Uyghur Forced Labor Prevention Act, and the California Transparency in Supply Chains Act, companies that operate or source abroad need to implement comprehensive due diligence and other measures designed to ensure the ethical sourcing of their goods.
Just as importantly, manufacturers will face tangible reputational risks if forced-labor issues are exposed in their supply chains. (When Joe Rogan is talking about forced labor in supply chains, you can bet the subject has become of mainstream significance.) As transparency in supply chains increases and issues are exposed (whether by government seizures, consumer-focused compliance-assessment tools, or media exposure), both media and consumers have more data at their fingertips. And, according to one recent survey, that information matters: 60 percent of consumers have said they would switch products if they knew human trafficking or forced labor was used to create them. Thus, the consumer base — and, hence, the bottom line — are acutely at risk for manufacturers who fail to properly assess their supply chains.
