LRQA 2025 Supply Chain ESG Risk Outlook Reveals Hidden Vulnerabilities in Global Sourcing

Key Takeaways

• Global Supply Chain Risks: More than half of the countries in LRQA’s 2025 Supply Chain ESG Risk Outlook are marked as high or extreme risk, challenging the myth that Western production markets are always safer.
• Labour Vulnerabilities in Developed Countries: Australia, a developed nation, is facing labour issues, including increased exploitation risks for foreign migrant workers.
• Near-shoring Isn't Always the Solution: Near-shoring, especially for US companies, doesn’t guarantee a reduction in supply chain risk.
• Geopolitical Shifts: Growing political tensions are disrupting sourcing decisions and supply chain stability.
• Data's Crucial Role: High-quality, transparent data is key to understanding and mitigating supply chain risks effectively.

Deep Dive

As the global risk landscape continues to shift, businesses must face the reality of whether the traditional approaches to supply chain risk is no longer enough. In its 2025 Supply Chain ESG Risk Outlook, LRQA doesn’t just confirm what we already know about risks—it reveals deeper, sometimes uncomfortable truths that businesses can no longer afford to ignore. This isn’t just another report filled with jargon, it’s a wake-up call that calls for reflection, action, and a recalibration of how we view supply chain resilience in a rapidly changing world.

Let’s start with a myth that’s long been accepted in business circles: Western production markets are inherently less risky. But the data from LRQA’s EiQ platform paints a very different picture. In fact, more than half of the countries assessed in the report are categorized as high or extreme risk. This means that, rather than pointing fingers solely at emerging markets, businesses need to reconsider their assumptions about risk in all corners of the globe. Risk doesn’t care about borders—it thrives everywhere.

And yet, we’ve been content to think that risk is somehow “out there,” far away from the carefully controlled environments of Western markets. But what if that’s not the case? What if the vulnerabilities closer to home are just as—if not more—critical?

Labour Challenges in Australia: A Reality Check for the Developed World

Take Australia, for example. When we think of supply chain risks, we might not immediately picture a country like Australia. It’s a developed nation with strong labor laws and high standards, right? But the report highlights a shocking truth: even in Australia, there are growing vulnerabilities in labor practices. Migrant workers, particularly foreign nationals, face serious risks of exploitation. This isn’t an issue confined to distant factories in developing nations; this is happening in places we’ve long considered safe from such violations.

It’s a reminder that no matter how developed or regulated a country may seem, supply chain vulnerabilities can lurk where we least expect them. The reality is that the world’s supply chains are interconnected—and issues in one region can quickly ripple across others, creating a web of risks that are harder to untangle than we often realize.

Near-shoring: A “Quick Fix” That May Not Fix Anything

There’s been a lot of buzz around near-shoring—moving operations closer to home to reduce the risks of long-distance supply chains. But the report shows that near-shoring isn’t the golden ticket many companies think it is. For US-based companies, in particular, relocating operations domestically doesn’t always equate to a safer or more resilient supply chain.

Think of it like rearranging furniture in a room that’s still prone to flooding. Sure, it’s closer, but the risk is still there, lurking in the background. Companies need to consider more than just proximity when deciding where to place their operations. Near-shoring can help, but it’s not the cure-all for the systemic risks that threaten supply chains today.

Geopolitics: The Wild Card Shaping Supply Chain Futures

Geopolitical tensions are making things even trickier. From trade wars to shifting alliances, political instability has become a massive wildcard for global supply chains. The report reveals that political dynamics now play an outsized role in shaping where businesses source their goods, how they manage production, and when they can expect disruptions.

It’s an uncertain world out there, and that uncertainty is shaping how businesses approach sourcing decisions. Companies that fail to account for these geopolitical shifts could find themselves scrambling when instability strikes. It’s no longer just about local disruptions—it’s about global patterns, and how they interact with the larger geopolitical landscape.

The Power of Data: Seeing the Forest and the Trees

So, what can businesses do in the face of all this risk? The answer, according to LRQA, is data. But not just any data—high-quality, transparent, and comprehensive data that provides a full view of the supply chain landscape. In the modern era of risk management, it’s not enough to rely on gut feelings or outdated assumptions. Businesses need to arm themselves with real-time, accurate information that allows them to track risks as they emerge, assess vulnerabilities, and make informed decisions.

Think of it as putting on a pair of glasses after squinting through a foggy window. The world looks clearer, more defined, and—most importantly—manageable. By leveraging data, businesses can gain a clear understanding of where risks are hiding—whether they’re related to labor conditions, environmental impacts, or geopolitical turmoil—and take action before things spiral out of control.

This is where the real value of LRQA’s biannual updates comes in. Risk is always evolving, and businesses need to stay ahead of the curve. The report’s regular updates ensure that companies have access to the most current, relevant data to guide their decision-making. It’s a dynamic, fast-moving world, and the only way to keep up is to continuously monitor, adjust, and refine strategies.

The 2025 Supply Chain ESG Risk Outlook isn’t just another report, but a roadmap for businesses looking to thrive in an increasingly complex world. It’s an invitation to look beyond the surface, to dig deeper into the hidden risks that often get overlooked, and to take proactive steps toward creating more resilient, responsible, and transparent supply chains.

The future of supply chains is not about avoiding risks—it’s about understanding them, managing them, and adapting to a world that’s constantly changing. The insights in LRQA’s report provide a vital tool for any business committed to navigating these challenges with integrity, foresight, and responsibility.

The question is whether you are ready to face the risk head-on? Because, whether we like it or not, it’s already here.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.