Modern slavery business risk is a real threat to most organizations. While many businesses try to ensure these elements do not exist, sometimes these elements get in the business. The best way to avoid this risk is to be aware of these elements and take the necessary steps for prevention. Unfortunately, this has become particularly complex as it impacts law enforcement and businesses, which are often unaware that they are affected by modern slavery.
Modern slavery business risk is defined as the potential that an organization faces due to modern slavery practices or activities taking place within their supply chains (e.g., child labor, forced labor, debt bondage). These practices can happen at any level in a company’s supply chain (upstream, downstream) and impact organizations across industry sectors. The possible effects include financial loss, damage to reputation, or other harm to an organization’s stakeholders or partners; however, there is no universally agreed definition of modern slavery.
Modern Slavery Business Risk
Reputational Loss:
Modern slavery has the potential to tarnish an organization’s reputation. This is because it can harm society, subject people to conditions contrary to international human rights norms, and create barriers for businesses desiring to enter into ethical relationships with their suppliers or business partners.
Financial Loss:
An organization may suffer financial loss through legal costs associated with modern slavery issues, damages awarded by a court about a claim against them for breach of statutory duty, costs associated with the remediation of modern slavery risks in their supply chain, or through claims made under programs such as insurance policies where premiums have been affected by the poor performance data resulting from measures relating to modern slavery. The reputational loss will also impact sales revenue which can be seen by customers choosing to purchase goods and services from other suppliers.
Legal Actions:
There is an increased risk of legal action being brought against organizations failing to have adequate measures to prevent modern slavery. Legislation may be imposed through the Modern Slavery Bill, which would hold companies accountable for failing to stop modern slavery practices or activities within their supply chains. If companies cannot demonstrate that they have taken steps beyond just due diligence, then there is a higher likelihood that they will face prosecution. This can lead to financial penalties being charged under criminal proceedings or enforcement action being taken under civil proceedings.
In conclusion, organizations need to take action to understand and mitigate modern slavery business risk as it can affect society, people’s well-being, and your organization’s future. Organizations must ensure that the supplier has effective systems to address modern slavery issues by asking them about these issues at a minimum. You should also support suppliers with information on how they can help reduce modern slavery within their supply chains.