Findings from Our Category Risk Taxonomy
With one month to go to the end of the second Modern Slavery reporting period for many entities, we’ve been busy analysing nearly $20 billion of spend from over 60 Australian businesses (across thirteen industry sectors) for modern slavery risk.
We use our proprietary Category Risk Taxonomy (CRT) to assess potential risk within an entity’s supply chain based on spend, supplier and supply category. The taxonomy assesses potential risk associated with a specific goods or service based on modern slavery risk criteria including geography (where the good is made or the service delivered), the industry sector associated with the good or service (manufacturing, agriculture, hospitality etc), the commodity, raw material or constituent parts the good is made of (cotton, meat, plastic, electronic components etc) and vulnerability of the workforce used to make or deliver the good or service (migrant labour, women or girls, children etc). Risk profiles generated by the analysis are consolidated into a risk dashboard and other metrics based on markets, brands, internal users etc and inform an entity’s approach to supplier due diligence.
Here’s some insights we have gained from analysing the aggregated supplier spend data across 60 or so reporting entities:
Approximately fifty percent of procurement spend is potentially high risk for modern slavery, though this figure can range from between ten percent to as high as 95% of spend.
Industry sectors with the highest potential risk by spend in their supply chains include mining, energy, government, healthcare and transport services.
Forty-eight percent of the 36,000 suppliers analysed are potentially high risk for modern slavery. Entities in the consumer goods, ICT and government sectors had the largest numbers of high risk suppliers
Of the 1000 types of goods and services analysed, 82% were either high or medium risk for modern slavery. The most common high risk categories by spend include building and construction services, engineering products and other raw materials, ICT equipment, medical consumables, packaging, transport and logistics.
When compared to the low levels of risk reported in many published modern slavery statements, our results suggest that some industry sectors may be under-estimating the amount of potential risk in their supply chains. We expect that reported risk levels will increase over time as knowledge of the issue improves and businesses further develop their capability to accurately assess risk.
Contact us if you would like to know more about our data analysis process and findings.
