Monthly Briefing

The business benefits of radical supply chain transparency

Monthly Briefing

Guest contributor Felicitas Weber, Project Lead for KnowTheChain at the Business & Human Rights Resource Centre shares why supply transparency makes business sense.

According to the ILO an estimated 24.9 million people are victims of forced labour today, 16 million of whom are employed by the private sector. The sheer scale of this exploitation has prompted governments around the world to introduce legislation that requires companies to publicly report on their efforts to address forced labour.

Why public reporting? Increasing corporate transparency is key step towards corporate accountability. Leading companies across sectors and regions demonstrate what meaningful transparency can look like: The Japanese apparel and footwear company Asics and the US technology hardware company HP disclose a list with the names and addresses of their suppliers. The Singaporean agribusiness Wilmar and the German sportswear company Adidas disclose a publicly available grievance mechanisms, and a list of grievances raised and outcomes thereof. 

Such supply chain transparency has clear business benefits. It:

  • Builds trust with workers, communities, and their representatives.
  • Demonstrates to stakeholders such as investors that a company has a strong understanding of its supply chains and related risks (in particular, where a company also discloses information on its supply chain workforce such as the number workers or the level of unionisation at its suppliers).
  • Demonstrates to stakeholders such as customers (B2B or consumers) that a company is able to identify negative human rights impacts and address them promptly. Simply stating that a company did not identify any negative human rights impacts is no longer credible in a world with shrinking civic space and with global supply chains that span across countries with weak labour laws and a lack of law enforcement.
  • Provides an early-warning system. While audits provide a snapshot in time, transparent and effective grievance mechanisms are able to pick up concerns in real time, before they aggravate and escalate, and before a media outlet identifies the story. 
  • Enables a company to evaluate trends and patterns of grievances which in turn allow the company to identify systemic issues, understand the effectiveness of its due diligence systems, and ultimately futureproof its supply chains.

Image source: Food Working Woman Tea Person Harvesting by Max Pixel. Creative Commons Zero – CC0.