The Rising Tide of Corporate Accountability: Modern Slavery in Global Supply Chains
For too long, the term “modern slavery” conjured images of historical perbudakan – outright ownership of people. Today, the reality is far more insidious: a lack of genuine choice for workers, driven by threats, coercion, deception, or crippling debt. This evolving understanding is reshaping the landscape of corporate responsibility, particularly for businesses operating in and sourcing from countries like Indonesia.
The Dyson Case: A Turning Point
Recent legal battles, such as the case involving Dyson and allegations of forced labor at a Malaysian supplier, demonstrate a significant shift. UK courts allowed Nepali and Bangladeshi migrant workers to pursue civil damages claims directly against Dyson Group in the UK, setting a precedent for holding multinational corporations accountable for abuses occurring deep within their supply chains. This illustrates that alleged abuses at overseas suppliers may lead to civil damages claims.
New Regulations: EU and US Pressure
The UK’s Modern Slavery Act of 2015 was an early indicator of this trend, requiring large companies doing business in the UK to report on their efforts to combat modern slavery risks. Now, the European Union’s Corporate Sustainability Due Diligence Directive (2024) takes this further, mandating that incredibly large companies actively identify and address human rights risks throughout their entire value chain. Failure to comply can result in substantial financial penalties and civil claims.
The United States is employing a different tactic: trade enforcement. Goods suspected of being produced with forced labor can be seized at the border, placing the burden of proof on importers to demonstrate a clean supply chain. This poses a significant risk for Indonesian exporters, as even a single problematic component can lead to delayed shipments and lost contracts.
Indonesia’s Response and Emerging Risks
Indonesia is taking steps to strengthen its human rights and labor safeguards. The government is drafting a new presidential regulation on business and human rights, expected to be finalized in 2026, and discussions are underway to revise the Human Rights Law. These initiatives signal a growing domestic commitment to aligning with international standards.
However, a critical, often overlooked risk lies in extreme price competition. When labor costs are driven so low that they cannot support legal wages and protections, workers develop into vulnerable. This can manifest as perpetual temporary contracts, suppression of worker rights, and economic dependence on intermediaries – all red flags for international auditors.
Beyond Compliance: Proactive Risk Management
Simply having policies in place is no longer sufficient. Companies are expected to establish clear labor standards, apply them consistently across their supply chains, and actively verify compliance. “Not knowing” what happens within the supply chain is no longer an acceptable defense.
Pro Tip: Implement robust supplier audits, focusing not just on formal compliance but also on indicators of coercion, debt bondage, and unfair labor practices. Prioritize transparency and worker voice in the auditing process.
What Does This Mean for Indonesian Businesses?
Indonesian companies face a dual challenge. Those operating in the UK or supplying UK customers must prepare for increased scrutiny under the Modern Slavery Act. All Indonesian businesses with global ambitions must proactively manage modern slavery risks to avoid reputational damage, legal liabilities, and market exclusion.
FAQ: Modern Slavery and Your Business
- What is modern slavery? It encompasses situations where individuals lack the freedom to stop working due to threats, coercion, deception, or debt.
- Does this apply to my company if I’m not based in the UK or EU? Yes, if you do business with companies in those regions or export goods to the US.
- What can I do to mitigate risks? Implement robust supply chain due diligence, conduct regular audits, and prioritize worker welfare.
- What are the potential consequences of non-compliance? Reputational damage, legal liabilities, lost contracts, and market exclusion.
Did you know? International auditors are increasingly viewing extreme price competition as a key indicator of potential modern slavery risks.
As the regulatory landscape evolves and awareness grows, proactive risk management and a genuine commitment to ethical labor practices are no longer optional – they are essential for long-term business success.
Explore further resources on responsible sourcing and supply chain transparency at The International Labour Organization and The 2025 Trafficking in Persons Report.
Share your thoughts and experiences in the comments below. How is your organization addressing the challenges of modern slavery in global supply chains?
