HUMAN RIGHTS

Supply chain labor violations

HUMAN RIGHTS

Many brands now center human rights within their ESG commitments and brand identity. That shift reflects rising consumer expectations: 60%–80% of Gen Z and high-income shoppers say they would switch brands or pay more for products aligned with their values.

Human rights are no longer a peripheral concern; they sit at the heart of regulatory, reputational, and commercial agendas. This index draws on multiple interlinked indicators: voice and accountability, workplace fatality rates, the prevalence of modern slavery, and forced or child labor.

Yet despite growing scrutiny, violations remain widespread. According to Walk Free, over 50 million people lived in modern slavery in 2021, an increase of 10 million in just three years. Of these, 40 million were children or in forced labor.

Within our index, the top five highest-risk countries account for 9.2% of global GDP and the top ten for 21.4%. Countries like Saudi Arabia and China sit in the top 5th percentile globally for human rights violations, demonstrating that the risk is embedded in major trade networks and not limited to marginal economies.

G20 nations alone import $468 billion annually in goods at risk of forced labor. High-risk categories include electronics, garments, palm oil, solar panels, and textiles, implicating sectors such as tech, retail, and consumer goods.

Child labor in India remains widespread; an estimated 5 million children (2% of all 5-17 year olds) were working just before the pandemic.
Turkey's official child labor rates are lower, but informal work among migrant and refugee children is a growing concern. As the only European country in the top 10 (the next being Poland at 17), Turkey highlights EU tension around labor standards and wage policy.
China, Malaysia, Indonesia, and Thailand also present unique risks tied to restricted civil liberties, high poverty, or systemic informality.
Mexico, by contrast, ranks 8th for human rights violations but shows improving labor standards under the USMCA, moderating its position relative to its compliance and governance risk.

HIGH-RISK COUNTRY HIGHLIGHTS

Saudi Arabia, Turkey, and Russia top the index, combining low accountability with a high prevalence of modern slavery - 21.3, 15.6, and 13 per 1,000 people, respectively.
India, ranked fourth, has the largest absolute number of people in modern slavery (11 million). Though its prevalence rate is lower (~8 per 1,000), India reports over 10 workplace deaths per 100,000 workers, reflecting deep informality in sectors like construction, agriculture, and subcontracted manufacturing.

G20 nations
IMPORT $468BN ANNUALLY in goods at risk of forced labour

IMPLICATIONS FOR PROCUREMENT

For procurement professionals, human rights are a complex challenge. In some cases, reasons behind working conditions, such as child labor, can also be complex and rooted in poverty. Zero tolerance or cut-and-run strategies can push families deeper into poverty. However, businesses and procurement teams, with the right tactics, can not only mitigate risks but also improve the lives of millions who underpin the global economy.

Country-sector pairings can help identify high-risk combinations—for example, construction in Saudi Arabia (forced migrant labor) or food and beverage in Mexico (child labor exposure). Risk often lies below the surface. Tier 3 or 4 suppliers like mills, smallholder farms, and subcontractors could be the most vulnerable points in the chain. Further, high-profile disasters (the Rana Plaza collapse, Pakistan’s Ali Enterprises factory fire, and Lesotho’s denim labor abuse) show that even audited suppliers can fail catastrophically.

Human rights due diligence demands transparency, traceability, and a proactive approach. The question for buyers is no longer "Are we compliant?" but "Are we complicit?"

SOURCING AND SUPPLY TACTICS

All suppliers should sign a Code of Conduct aligned with international standards such as the ILO and UN Guiding Principles, explicitly prohibiting forced or child labor, unsafe conditions, and restrictions on association. But signatures alone don't uphold rights. Contracts must include audit rights, grievance mechanisms, and consequences for breaches. Enforcement must be paired with support: work with suppliers, NGOs, and governments to raise standards.

After gender-based violence surfaced in Lesotho's denim sector, brands like Levi's created a worker-led code with independent monitoring, a model for ethical enforcement that is both proactive and collaborative.

Human rights compliance must be prioritized as a key value lever in sourcing decisions and supply relationships. To achieve greater transparency, procurement teams can map material, component, and labor origins, focusing on high-risk regions and informal or outsourced tiers. This allows the right questions to be asked of the right partners.

Tools like Unilever's Responsible Partner Policy show how human rights can be embedded in evaluation. Its audits have triggered thousands of corrective actions, with 88% of procurement spend with compliant suppliers in 2024.

Many human rights challenges are systemic - no single buyer can fix them alone. However, businesses can engage in multi-stakeholder platforms like the Responsible Business Alliance (electronics), the Fair Labor Association (apparel and agriculture), or the RSPO (palm oil). These initiatives support shared standards, pooled audits, and on-the-ground improvements working with suppliers.

Tony's Open Chain, for example, helps brands like Aldi and Ben & Jerry's source cocoa through five principles, including living income and supply chain transparency. As of 2023/24, over 17,000 cocoa farmers are engaged. Collaborating at scale drives systemic change where bilateral action falls short.

3 | COLLABORATE AND DEVELOP
SUPPLIERS

2 | EMBED INTO SUPPLIER SCREENING
AND PROPOSAL

1 | DEFINE POLICIES AND CODES
OF CONDUCT FOR SUPPLIERS

SOURCING AND SUPPLY TACTICS

Human rights risk is a key challenge often encountered in low-cost country sourcing. Buyers must align sourcing with corporate ethics and manage brand exposure while keeping costs in check.