LRQA Report Highlights Child Labor as Key Concern in Global Supply Chains

A recent report from global assurance specialist LRQA sheds light on the persistent issue of child labor within supply chains, identifying it as the primary ESG (Environmental, Social, and Governance) differentiator between top-performing and low-performing countries. The report draws attention to the alarming presence of child labor in supply chains, emphasizing its impact on the overall risk assessment in the ESG domain.

The study, based on data from 25,000 supply chain audits across 100 regions and 20 sectors, assessed countries in five key categories: labor, health and safety, environment, business ethics, and management systems. The findings indicate that even countries considered low-risk are experiencing a decline in scores related to child labor, transparency, working hours, and policy in 2023.

Pakistan emerges as the country with the highest risk of ESG supply chain violations in 2023, particularly in the context of child labor concerns. Other southeast Asian economies, specializing in textiles and electronics, such as Bangladesh, India, Cambodia, and Vietnam, also fall into the lower-performing category.

On the positive side, Germany leads the list for the lowest supply chain risk, alongside Japan, Taiwan, and European agricultural and manufacturing nations Portugal and Spain.

The report highlights the increasing challenges posed by major conflicts, such as the war in Ukraine, which have led to population displacements and raised concerns about forced labor and human rights violations for migrant workers globally.

LRQA's ESG Advisory MD, Kevin Franklin, emphasized the need for proactive risk management and transparent reporting in the face of complex global challenges. He stated, "The rising complexity of due diligence regulations and the lack of alignment in risk assessment and disclosure standards continue to muddy the waters of transparent and credible reporting."

In an earlier interview, LRQA Board Advisor Paul Butcher underscored the growing concern about forced labor in supply chains, emphasizing the necessity for organizations to address this issue comprehensively throughout their supply chain networks, including suppliers' suppliers.

As the report underscores, the evolving landscape of global crises and conflicts directly impacts ESG trends in supply chains. Franklin emphasized the importance of businesses taking a proactive approach to risk management, expanding their knowledge of the ESG risk landscape, and maintaining transparent and robust data monitoring practices to address present and emerging challenges.

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