Supply chain traceability: Most egregious risks are hidden below the “waterline”

Companies, like sea captains, focus on navigating risks associated with their downstream supply chain tiers. These are the visible parts of their supply chain involved in the production of the goods they sell to consumers like cell phones and clothing. This means most responsible sourcing programs focus on preventing and responding to labor exploitation risks, such as child and forced labor, “above the waterline” in their known often “tier 1” supply chain.

Upstream supply chains typically fall “below the waterline,” which means many companies lack visibility to the hidden labor exploitation risks associated with the raw materials used to make their products (i.e. the lower tiers 2, 3, 4, and beyond to raw materials). Child and forced labor risks increase substantially at the direct farming and mining level, which often remain invisible and out of the scope of company efforts to influence labor conditions directly.

Strong efforts have been made, specifically in the extractives industry, to create end-to-end traceability using a chain of custody standards and other innovative solutions. This was motivated partly by the “conflict minerals” provision in the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the U.S. publicly listed companies to check their supply chains for conflict minerals (i.e. tin, tungsten, tantalum, and gold), identify where the minerals originated, and conduct appropriate due diligence to make sure they are not funding armed groups or human rights abuses. However, these efforts need to be leveraged, scaled and adopted across industries and commodities. This will help empower the business sector to be accountable and use their purchasing power to address and prevent child and forced labor from occurring at the root of their complex supply chains.

The reasons above are why ELEVATE is pleased to be working on a multi-year supply chain tracing project funded by the U.S. Department of Labor. The award is made available through the department’s Bureau of International Labor Affairs, whose mission is to promote a fair global playing field for workers in the U.S. and around the world by enforcing trade commitments, strengthening labor standards, and combating international child labor, forced labor, and human trafficking.

As part of this project, ELEVATE and our Consortium partners—the Global Fund to End Modern Slavery, Diginex Solutions, the Responsible Minerals Initiative, and RCS Global—will develop and publish two actionable tools to empower brands and retailers to trace their full supply chain to improve visibility to upstream suppliers. The key tools we’ll develop over this four-year project include:

• The Commodity Tracing Protocol: Establishes a standardized protocol, including definitions, tools, and best practices that can be adapted for different industries.
• The Commodity Tracing Platform: An open-source supply chain tracing system that captures traceability and verification data to present a complete picture of the child / forced labor risk in a supply chain.

As a first step in developing these tools, we will develop and pilot our supply chain tracing system in two supply chains: cotton (Pakistan) and cobalt (Democratic Republic of Congo). The diversity of these supply chains will contribute to developing tools that can be implemented across a diverse set of geographies and commodity supply chains to increase supply chain traceability.

Funding is provided by the United States Department of Labor under cooperative agreement number IL-35808-20-75-K. One hundred percent of the total costs of the project or program is financed with USG federal funds, for a total of $4 million dollars.

This material does not necessarily reflect the views or policies of the United States Department of Labor, nor does mention of trade names, commercial products, or organizations imply endorsement by the United States Government.

These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.