ARTICLE | January 23, 2025
The Role of Business in Addressing Modern Slavery
I. Introduction
Modern slavery remains an urgent issue in today’s globalized marketplace, as forced and child labor often lurk in the deeper tiers of supply chains. Businesses face increasing scrutiny from regulators and consumers to ensure they are not, knowingly or unknowingly, profiting from exploitative labor. Recent developments, such as the updated Uyghur Forced Labor Prevention Act (UFLPA) Entity List and Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act, underscore a clear reality: companies that fail to address these risks expose themselves to significant legal, operational, and reputational harm.
II. Navigating the Evolving Regulatory Landscape
With the constant emergence of new regulations targeting forced labor, companies are grappling with a shifting legal environment. For instance, when the UFLPA Entity List expands—as it did recently with the addition of over two dozen new entities—goods traced to these blacklisted suppliers can be immediately detained. In Canada, legislation has taken similar steps toward ensuring vigilance, resulting in obligations to produce detailed supply chain reports and evidence that child or forced labor is not present. Non-compliance goes beyond mere fines; companies risk having their imported goods destroyed if forced labor suspicions are not quickly rebutted.
The implications are profound. Middlemen, agents, and warehouses—sometimes operating outside regions traditionally flagged for forced labor—can obscure product origins. This highlights the importance of tracking how raw materials and partially manufactured goods flow from one supplier to the next. Businesses must look well beyond their direct, or Tier 1, suppliers and probe multiple tiers deeper, especially if they rely on raw materials known to be high risk for forced labor violations.
Externally, the focus shifts to your broader community and global networks. Forced labor or child labor can hide several tiers beneath seemingly legitimate suppliers, with some companies acting only as shell organizations. Human rights violations take on many forms and can be overlooked if due diligence is shallow. It behooves today’s leaders to examine these issues comprehensively, aligning themselves with initiatives that truly stand for the protection of individual well-being everywhere they conduct business.
Internally, a company’s culture should prioritize respect, psychological safety, and policies that reinforce equity, diversity, and inclusion. Leaders also must ensure that working conditions meet or exceed legal standards, embracing flexibility and continuous improvement in occupational health and safety. Even data privacy factors into social responsibility; an organization that fails to secure personal information undermines its credibility and the trust stakeholders place in it.
III. The Risks of Ignoring Modern Slavery
Overlooking potential forced labor in the supply chain can have costly consequences. In severe cases, regulators can seize goods suspected of being produced under forced labor conditions, causing disruptions that might create significant inventory losses and lead to forced restructuring of supplier relationships. Aside from direct material setbacks, lawsuits in this area are becoming more common, and plaintiffs can point to negligence in screening for exploitative labor.
Beyond the legal ramifications, your reputation is also on the line. Consumers are paying attention to companies’ labor and sourcing practices, and a single misstep can generate lasting damage. Investor confidence may also waver if there are concerns that an organization’s social policies do not align with modern compliance standards or general human rights expectations.
IV. Key Strategies to Combat Modern Slavery in Supply Chains
Businesses committed to eliminating forced labor from their operations and supply chains need a multifaceted approach. First, it is critical to implement zero-tolerance policies with well-defined consequences. These policies should clearly articulate that forced or child labor is grounds to terminate supplier relationships, and they must be communicated to each relevant partner without ambiguity.
Second, rigorous due diligence and supply chain transparency are absolutely necessary. Tracking your materials or components beyond the layers you initially see helps reveal whether any suppliers among Tiers 2, 3, or even 4 rely on exploitative labor. Documenting this chain of custody and compiling regular reports fosters both accountability and continual improvement.
Third, businesses need practical solutions in response to identified concerns. In some cases, that means collaborating with suppliers to help raise labor standards. In other instances, it may involve transitioning to new, more ethical suppliers. Ensuring accountability throughout this process may include regular audits and robust reporting mechanisms for employees, who should be trained to spot red flags.
Training programs on forced labor indicators remain another vital piece. Employees cannot address what they do not understand. By fostering a culture that encourages vigilance, you are also empowering your workforce to step up when they become aware of suspicious practices. Finally, businesses should remember the importance of cross-industry collaboration. Sharing best practices and problematic supplier lists can help accelerate industry-wide improvements.
V. How Freelandt Caldwell Reilly LLP Can Help
Freelandt Caldwell Reilly LLP offers a range of services designed to empower businesses in tackling the challenges posed by modern slavery. Our Accounting & Assurance practice can support you with the compliance side of regulations, including conducting specialized audits.
Because forced labor risk necessitates more than checklists and due diligence, our Advisory Services can help you develop broader strategies and best practices. We work with clients to create robust governance frameworks and adopt sound risk management techniques. We also provide business start-up and succession planning for organizations aspiring to embed social responsibility into the heart of their brand.
Our team also recognizes that transaction advisory may require a close look at forced labor risk when pursued in driving mergers and acquisitions. Freelandt Caldwell Reilly LLP brings daily, hands-on experience in capital structuring, financing, and compliance due diligence—helping ensure your deals are ethically and strategically sound.
VI. Conclusion
As regulatory authorities build stronger safeguards against forced labor and as public awareness of workers’ rights continues to grow, companies need to be aware of potential obstacles. Integrating ethical sourcing into your corporate culture protects your business from legal repercussions while helping to secure the trust of consumers, partners, and investors.
Modern slavery threatens communities worldwide and can undermine any organization’s core values. Taking proactive steps—through comprehensive due diligence, decisive policies, robust training, and industry collaboration can help mitigate business risk. By treating social responsibility as an ongoing commitment rather than merely a compliance checkbox, businesses can foster tangible, positive change on a global scale.
Expert Contributors
- Edwin P. Reilly, Managing Partner
Email: ereilly@fcrca.com
Highly experienced in accounting, assurance, and transaction advisory. Specializes in mergers, acquisitions, and supply chain risk management.

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