How New Human Rights Legislation Impacts Global Procurement Leaders

Human rights compliance regulations across the globe are challenging enterprises to take a hard look at their supply chains and highlighting the importance of procurement.

Image placeholder

From calculating supplier risk and analyzing company spend to informing financial forecasting and measuring business impact, procurement has always been a key driver of enterprise resilience. Today, however, procurement teams have an even greater remit: bringing visibility to socially responsible sourcing practices.

Of particular importance are human rights-based compliance practices. Many regions, including California, the United Kingdom, and Australia, already require reporting on ethical supply chain practices to guard against what’s known as “modern slavery": the exploitation of people for commercial gain through trafficking, child labor, debt bondage, or other means. 

Because enterprises often partner with multiple suppliers that may then contract with  various suppliers of their own, human rights abuses can easily slip through the cracks of the supply chain and expose enterprises to unknown risk. With the capability to drill down into their supplier networks and rigorously assess their suppliers, global enterprises can comply with modern slavery laws and mitigate risk for the business. 

Human Rights Compliance in Action

For organizations that do not have robust reporting and supplier management capabilities in place, compliance with these regional regulations may pose a threat to business operations as more countries enact human rights compliance regulations. For example, March 2021 marks the first time that Australian businesses must submit statements in order to comply with the country’s Modern Slavery Act of 2018. Enterprises without the required reporting capabilities must prioritize implementing the necessary tools for compliance over other corporate objectives.

Meeting compliance regulations such as Australia’s Modern Slavery Act requires enterprises to agreggate, organize, and manage supplier data, collaborate cross-functionally, and quickly report information. With the right technology, procurement teams can quickly collect relevant supplier information in real time, giving the C-suite the necessary reporting to ensure compliance with local and global regulations.

Tech-empowered procurement teams in Australia and throughout the globe are pivotal in helping their enterprises effectively mitigate supply chain risk and bring transparency to responsible sourcing. Those with a strong strategic sourcing function can proactively assess their bidding suppliers and ensure they comply with modern slavery regulations before signing the contract. Procurement teams with this extensive visibility can help the C-Suite keep close tabs on their supplier networks, providing insights that enable agile responses to risks.

Enterprises that actively protect human rights will be better positioned to interact with their international business partners, suppliers, and customers.

 

Building More Equitable Supply Chains

For enterprises that are not yet required to report on their supply base, procurement leaders must seize the opportunity to work proactively and ensure fair labor conditions. These instances of mandatory reporting may signal what’s to come for businesses globally. Enterprises that actively protect human rights will be better positioned to interact with their international business partners, suppliers, and customers. Backed with the right technology, procurement can give their enterprises the information they need for risk mitigation, spend management, and compliance with regulatory requirements. 

Although these regulations may be enforced regionally, upholding human rights is a global issue. Executives striving to lead purpose-driven organizations must demand complete visibility into their suppliers and their suppliers’ suppliers not only to comply with laws like these, but also to fulfill their company values. 

To learn more about how Workday can help support supply chain transparency, visit www.workday.com/strategic-sourcing.

More Reading