Sustainability – what does it mean and how does it affect your company?

It is a broad term that refers to environmental and socially responsible initiatives in business. The pressure to take on sustainability efforts is on the rise, but there is still push back arguing that sustainability is too expensive. With questions like “who will absorb the cost of responsibly sourced goods in the supply chain: consumers, corporations or suppliers?” there may be opposition to choosing suppliers with higher costs as a result of better wages for workers and strong labor protections. It could be more attractive to maximize profits by picking a supplier that has lower costs but vague labor practices, especially when operating on a strict purchasing budget and timeline. However, evidence refuting the notion that sustainability is too expensive is mounting.

Investors are prioritizing the long-term investment benefits of environmental and social governance programs. As a result, sustainability initiatives, including a commitment to fight forced labor, are showing to have increased profits and return on investment for companies.

Not only are financial incentives a consideration for companies to implement sustainability policies, the legal obligations are also on the rise. The United Kingdom, Australia, and France have enacted laws asking companies to disclose their due diligence efforts to address the risk of forced labor in the supply chain. The United States and Canada are also considering similar legislation.

In the U.S., forced labor is also addressed in contracting regulations and customs laws. For example, the Federal Acquisition Regulation “requires all Government contracts to prohibit Contractors, Subcontractors, and their employees from engaging in severe forms of trafficking in persons, procuring commercial sex acts, and using forced labor during the period of performance of the contract.” The Countering America's Adversaries Through Sanctions Act makes the presumption that any goods produced by North Korean nationals are forced-labor goods, and are prohibited under the Tariff Act of 1930. Violating any of these laws could lead to a seizure of imports at the border, large fines, or even criminal liability, causing massive economic loss and scandal for a company.

The International Supply Chain Initiative is closely monitoring regulations for combating forced labor. ISCI can conduct a liability assessment for your company, to determine the risk of forced labor in the supply chain and develop a remediation plan to address any threats. Not only does this protect your company from noncompliance of laws and regulations, taking a proactive approach to combating forced labor can further your company’s bottom line. Please contact us for more information of how we can advance your company’s sustainability agenda.