Supply chains, labor and human rights topping the trends in APAC
Across the Asia-Pacific region, “supply chains, labor and human rights” continues to be a priority topic as regulatory developments and growing investor interests have elevated the dialogue into boardrooms and required companies to develop more mature strategies and targets.
In ELEVATE’s 12th edition of the company’s annual expert stakeholder survey, Tracking the Trends volume 1, the topic of supply chains, labor and human rights emerged as the key sustainability topic, with 68% of respondents across 11 countries mentioning this is a key sustainability issue over the next 2 – 5 years.
Supply chains in the Asia-Pacific region are undergoing rapid change, driven by trade wars, increasing labor costs, automation, and greater scrutiny of labor standards and other deep supply chain issues.
The China-US trade war comes at a time where supply chains in the region are disrupted by the rise of automation and increasing labor costs in traditional sourcing markets such as China. There are signs of supply chains being re-positioned outside of China in favor of a more diversified, agile mix of locations including new locations in Asia such as Cambodia and Vietnam but also nearshoring in the vicinity of the United States and Europe.
We’ve seen that Modern Slavery laws in the US, EU and Australia are directing greater attention to labor standards and human rights risks within supply chains in the Asia‑Pacific region.
Policy efforts are also under way in Asia: Thailand has released the final draft of its National Action Plan on Business and Human Rights and India, Indonesia, and Malaysia has formally announced intentions to follow suit. In Hong Kong, a group of lawyers and a legislator are pushing for an anti-slavery law modeled on Britain’s Modern Slavery Act.
International migration is one of the key factors shaping this trend in Asia-Pacific. The region had an estimated 62.1 million international migrants in 2017, with the majority being labor migrants. Most of the top destination countries in the region (e.g. Malaysia, the Republic of Korea, Singapore, Japan, Taiwan and Thailand) typically employ low-skilled temporary migrants from neighboring countries for work in factories, construction sites, and in agricultural supply chains.
Recruitment and labor hire have become a multi-billion-dollar industry in the region and an area where significant abuses and fraudulent practices, such as high recruitment fees borne by workers, are widespread.
The effective governance of labor migration poses big challenges including the protection of migrant workers’ human and labor rights throughout their journey from recruitment, to employment and return.
In November 2018, the twelve Colombo Process member states committed to an Asian regional agreement to foster ethical recruitment, and in particular, to ensure no recruitment costs to migrant workers.
We’re seeing that the growing awareness of sustainability topics, including supply chain, labor and human rights, has increased pressure for key stakeholders to act. Business plays a significant role in driving change and tackling these challenges.
The feedback from our expert respondents in the Asia-Pacific region highlights the following:
- Supply chains in Asia are undergoing a dramatic transformation influenced by trade tensions, automation, the rise of e-commerce, and increased worker mobility and expectations.
- As consumers are demanding more information about where and how their products are made, traceability is becoming an important part of the story of a product (or service).
- The effects of modern slavery legislation in Western economies ripple across the globe and drive concern over “deep” supply chain issues (those beyond tier 1 down to raw materials) and supply chain due diligence.
- Supply chain risk assessment and segmentation is growing in importance and becoming increasingly sophisticated. Companies are leveraging new technology to build transparency beyond tier 1.
- Increasing concern about human rights violations against migrant workers and refugees is shaping the human rights agenda in the region.
Other risks highlighted by our expert respondents pertained to human rights abuses in non-manufacturing supply chains and gender-based violence and harassment. Respondents were cautiously optimistic about a growing acknowledgement of the need for responsible recruitment practices and an increasing emphasis on living wages and correct wage payment (beyond compliance with minimum wages). There is also a growing interest in women empowerment along supply chains – a topic further explored in a recent blog by our Vice President of Capacity Building, Heather Canon.
Tracking the Trends draws a picture of increasingly complex supply chains with critical risks and opportunities arising well beyond tier 1. Our respondents’ views on how business should respond emphasize that robust supply chain risk assessment and segmentation are critical and need to inform a forward-looking sustainability strategy that considers broader development challenges beyond direct business risks.
The core business strategy needs to embrace supply chain sustainability with full commitment from the C-suite to make it an integrated part of commercial and business decisions.
To learn more about Tracking the Trends and access an exclusive copy of the report click here.
To gain in-depth knowledge and on-the-ground insights into modern slavery risks in the region’s supply chains, do not miss our upcoming “360 Field Trips” with STOP THE TRAFFIK. Meet workers, local communities, businesses, NGOs as well as government and UN representatives to explore the cultural, contextual, community and business drivers of bonded and forced labor, and opportunities to craft solutions.
These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.
 ELEVATE (2019): Tracking the Trends 2019 – Volume 1
 Danish Institute for Human Rights (DIHR) National Action Plans on Business and Human Rights
 UNESCAP (2018) Towards Safe, Orderly and Regular Migration in the Asia‑Pacific Region
 Afghanistan, Bangladesh, Cambodia, China, India, Indonesia, Nepal, Pakistan, Philippines, Sri Lanka, Thailand, Vietnam
 Colombo Process Ministerial Declaration (adopted 16 November 2018)
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