Connect with us

Reports

Child labour and human trafficking remain important concerns in global supply chains

Published

on

A new report indicates that a significant share of child labour and human trafficking in global supply chains occurs at their lower tiers, in activities such as raw material extraction and agriculture, making due diligence, visibility and traceability challenging.

The report, Ending child labour, forced labour and human trafficking in global supply chains , provides the first ever estimates of child labour and human trafficking in global supply chains.

Amongst those in child labour, the percentage in global supply chains varies across regions:

  • 26 per cent in Eastern and South-Eastern Asia.
  • 22 per cent in Latin America and the Caribbean.
  • 12 per cent in Central and Southern Asia.
  • 12 per cent in sub-Saharan Africa.
  • 9 per cent in northern Africa and Western Asia.

“The goods and services we buy are composed of inputs from many countries around the world and are processed, assembled, packaged, transported and consumed across borders and markets,” said ILO Director-General Guy Ryder. “This report shows the urgent need for effective action to tackle the violations of core labour rights that are occurring in supply chains.”

The report outlines several key areas in which governments and businesses can do more.

It underscores the critical role of states in addressing gaps in statutory legislation, enforcement, and access to justice (which create space for non-compliance) and in establishing a framework for responsible business conduct. It also examines how governments can lead by example by integrating due diligence considerations into their own activities as procurers of goods and services, owners of enterprises and providers of credit and loans.

Speaking at the Paris Peace Forum, OECD Secretary-General Angel Gurria said, “These findings, based on an OECD methodology that’s been applied in various economic and environmental contexts, underscore the need for governments to scale up and strengthen efforts to ensure that businesses respect human rights in their operations and across supply chains. Creating an enabling environment for responsible business conduct due diligence must be a key action for governments.”

The report also outlines a broader preventive approach focused on root causes, including child and family deprivation, particularly in the upstream and outsourced segments of global supply chains operating in the informal economy, where risks are greatest.

“These results make clear that efforts against human trafficking in global supply chains will be inadequate if they do not extend beyond immediate suppliers to include actors upstream engaged in activities such as raw material extraction and agriculture, and serving as inputs to other industries,” said IOM Director General Antonio Vitorino.

For business, the report underscores the need for a comprehensive, whole-of-supply-chain approach to due diligence.

Due diligence is unique in that it both builds on and adjusts existing business practices while also introducing processes that are still relatively new in the supply chain context, such as processes to provide for remedy along the supply chain. Importantly, effective due diligence for child labour, forced labour and human trafficking is preventative, commensurate with and prioritized in accordance with the severity and likelihood of harm, and forms an integral part of an enterprise’s risk management and decision-making.

The estimates were generated by combining data on the estimated total number of children in child labour with data on trade flows and value chains within countries and across borders. The same exercise was carried out for human trafficking.

Child labour can have lifelong negative consequences on children’s physical, mental and social development, robbing them of a chance to play and learn,” said UNICEF Executive Director Henrietta Fore. “We need to address the root causes that push children to work, like poverty and violence. We also need concrete solutions to ensure that families have alternative income sources and children have access to quality education and protective services.”

The report was compiled in response to a call by the Group of Twenty (G20) Labour and Employment Ministers to assess violations of core labour rights in global supply chains. It offers a unique interagency perspective on the causes of these human rights violations and on the priorities for governments, businesses and social partners in addressing them. The report was produced by the International Labour Organization (ILO) , Organization for Economic Cooperation and Development (OECD) , International Organization for Migration (IOM) , and the United Nations Children’s Fund (UNICEF) .

Continue Reading
Comments

Reports

Capabilities fit is a winning formula for M&A: PwC’s “Doing the right deals” study

Published

on

city business

Ensuring there is a capabilities fit between buyer and target is key to delivering a high-performing deal, according to a new PwC study of 800 corporate acquisitions. . The study finds that capabilities-driven deals generated a significant annual total shareholder return (TSR) premium (equal to 14.2% points) over deals lacking a capabilities fit.

The “Doing the right deals” study looks at the 50 largest deals with publicly-listed buyers in each of 16 industries and evaluates the characteristics that delivered superior financial outcomes for the buyers, as measured by annual TSR.

A capability is defined as the specific combination of processes, tools, technologies, skills, and behaviours that allows the company to deliver unique value to its customers.

Two types of deals were found to outperform the market: capabilities enhancement deals – in which the buyer acquires a target for a capability it needs — and capabilities leverage deals – in which the buyer uses its capabilities to generate value from the target. These represent a true engine of value creation, delivering average annual TSR that was 3.3% points above local market indices. Deals without these characteristics – limited-fit deals – had an average annual TSR of -10.9% points compared to the local market indices.

While 73% of the largest 800 deals analysed sought to combine businesses that did fit from a capabilities perspective, 27% were limited-fit deals. The analysis shows that for every dollar spent on M&A, roughly 25 cents were spent on such limited-fit deals that in many cases destroyed shareholder value.

Alastair Rimmer, Global Deals Strategy Leader, PwC UK said: “Our analysis confirms that deals where the buyer is focused on enhancing its own capabilities or leveraging its capabilities to improve the target can result in a substantial TSR premium. Whether a deal creates value depends less on whether it is aimed at consolidation, diversification or entering new markets. What matters is whether there is a solid capabilities rationale between the buyer and the target.”

Capabilities fit delivers shareholder value across industries

The capabilities premium was found to be positive across all of the 16 industries studied. The share of capabilities-driven deals was highest in pharma & life sciences (92%), an industry where deals often combine one company’s innovation capabilities with another’s strength in distribution.  Other leading industries in capabilities fit deals were health services and telecommunications (both with 90% capabilities-driven deals) and automotive (86%).  Limited fit deals were found to be most prevalent in the oil & gas industry (62%), where asset acquisition can play an important role in addition to capabilities fit.

The analysis shows that the stated strategic intent of a deal, as defined in corporate announcements and regulatory filings, has little to no impact on value creation. Whether a deal fits or not depends less on stated goals of consolidation, diversification or entering new markets. What matters is whether there is a capabilities fit between the buyer and the target.  Deals aiming for geographic expansion notably stood out as performing less well than others, largely because many of them (34%) were limited-fit deals.

The M&A playing field has shifted due to COVID-19

More than ever, companies must be clear in defining which capabilities they can leverage to succeed, and which capabilities gaps they need to fill.

Hein Marais, Global Value Creation Leader, PwC UK added: “Deal rationales have shifted in a COVID context, reflecting the heightened need for new and different capabilities if an enterprise is to generate value and create sustained outcomes.  The need to move quickly increases the pressure to do deals at pace – and thereby the risk of failing to evaluate capabilities fit with enough care. Ensuring such capabilities fit, however, dramatically increases the chances of your deal creating value.”

Continue Reading

Reports

Companies may be overlooking the riskiest cyber threats of all

Published

on

A majority of companies don’t have a handle on their third-party cyber risks  – risks obscured by the complexity of their business relationships and vendor/supplier networks.  This is the finding of the PwC 2022 Global Digital Trust Insights Survey.  The survey of 3,600 CEOs and other C-suite executives globally found that 60% have less than a thorough understanding of the risk of data breaches through third parties, while 20% have little or no understanding at all of these risks.

The findings are a red flag in an environment where 60% of the C-suite respondents anticipate an increase in cyber crime in 2022. They also reflect the challenges organizations face in building trust in their data — making sure it is accurate, verified and secure, so customers and other stakeholders can trust that their information will be protected.

Notably, 56% of respondents say their organizations expect a rise in breaches via their software supply chain, yet only 34% have formally assessed their enterprise’s exposure to this risk. Similarly, 58% expect a jump in attacks on their cloud services, but only 37% profess to have an understanding of cloud risks based on formal assessments.

Sean Joyce, Global & US Cybersecurity & Privacy Leader, PwC United States said: “Organizations can be vulnerable to an attack even when their own cyber defenses are good; a sophisticated attacker searches for the weakest link – sometimes through the organization’s suppliers.  Gaining visibility and managing your organization’s web of third-party relationships and dependencies is a must.  Yet, in our research, fewer than half of respondents say they have responded to the escalating threats that complex business ecosystems pose.”

Asked how their companies are minimizing third-party risks, the most common answers were auditing or verifying their suppliers’ compliance (46%), sharing information with third parties or helping them in some other way to improve their cyber stance (42%), and addressing cost- or time-related challenges to cyber resilience (40%). But a majority have not refined their third-party criteria (58%), not rewritten contracts (60%), nor increased the rigor of their due diligence (62%) to identify third-party threats.

Simplifying the way to cybersecurity

Nearly three quarters of respondents said the complexity of their organization poses “concerning” cyber and privacy risks. Data governance and data infrastructure (77% each) ranked highest among areas of unnecessary and avoidable complexity.

Simplification is a challenge, but there is ample evidence that it is worthwhile.  While three in 10 respondents overall said their organizations had streamlined operations over the past two years, the “most improved” in our survey (the top 10% in cyber outcomes) were five times more likely to have streamlined operations enterprise-wide.  These top 10% organizations are also 10 times more likely to have implemented formal data trust practices and 11 times more likely to have a high level of understanding of third party cyber and privacy risks.

CEO engagement can make a difference

Executive and CEO respondents differ on how much the support the CEO provides on cyber, with CEOs seeing themselves as more involved in, and supportive of, setting and achieving cyber goals than their teams do. But there is no disagreement that proactive CEO engagement in setting and achieving cyber goals makes a difference.  Executives in the “most improved” group, reporting the most progress in cybersecurity outcomes, were 12x more likely to have broad and deep support on cyber from their CEOs.  Most executives also believe that educating CEOs and boards so they can better fulfill their cyber responsibilities is the most important act for realizing a more secure digital society by 2030.

Sean Joyce concluded: “Our survey shows that the most advanced organizations see cybersecurity as more than defense and controls, but as a means to drive sustained business outcomes and build trust with their customers.  As leaders of organizations, CEOs set the tone for focusing their cyber teams on bigger-picture, growth-related objectives rather than narrower, short-term expectations.”

Continue Reading

Reports

Are we on track to meet the SDG9 industry-related targets by 2030?

Published

on

A new report published by the United Nations Industrial Development Organization (UNIDO), Statistical Indicators of Inclusive and Sustainable Industrialization, looks at the progress made towards achieving the industry-related targets of Sustainable Development Goal (SDG) 9 of the UN 2030 Agenda for Sustainable Development. The report is primarily based on the SDG9 indicators related to inclusive and sustainable industrialization, for which UNIDO is designated as a custodian agency, showing the patterns of the recent changes in different country groups.

Six years after the adoption of the 2030 Agenda for Sustainable Development and its 17 SDGs, there has been increasing demand for information on whether the SDG targets could be reached, and what actions should governments take to accelerate progress. The UNIDO report introduces two new tools developed by UNIDO to help countries measuring performance and progress towards SDG9 industry-related targets: the SDG9 Industry Index and SDG9 progress and outlook indicators. The SDG9 Industry Index benchmarks countries’ performance on SDG-9 targets over 2000-2018 for 131 economies. In addition, the report develops two measures to answer the main questions:

  • Progress: how much progress has been made since 2000?
  • Outlook: how likely is it that the target will be achieved by 2030?

The global COVID-19 pandemic has inevitably had a negative toll on the progress towards reaching the SDG9 indicators, but the extent of the long-term impact remains to be seen. Industrialized countries continue to dominate global manufacturing industry, but their relative share has gradually declined over the past decade. In 2010, industrialized economies made up 60.3% of global production, which has decreased to 50.5% in 2020. China has been the largest manufacturer, now accounting for 31.7% of global production. This is a trend that has been reinforced by the pandemic.

Progress for the least developed countries (LDCs), at the heart of the 2030 Agenda, is a different story. While economic theory and countries’ experiences across the world have established that industrialization is an engine of sustainable growth, progress among LDCs remains very diverse. Asian LDCs are poised to double their share of manufacturing in GDP and thus meet SDG target 9.2, but African LDCs have stagnated.

SDG9 Industry Index

The SDG-9 Industry Index, consisting of five dimensions, covers three targets and five indicators and assigns a final score to countries. In 2018, the top ten consisted of exclusively industrialized economies, with Taiwan, Province of China, Ireland, Switzerland, the Republic of Korea and Germany making up the top five. In general, industrialized economies perform best in all dimensions of the Index.

The countries at the bottom of the ranking are LDCs, in particular those located in sub-Saharan Africa. Although some African countries have been displaying impressive growth rates, growth has been driven by an extended commodity boom and foreign capital inflows, while industrialization and structural transformation have stagnated. Additionally, substantial data is lacking for a significant amount of the countries. In the SDG9 Industry Index, only 24 out of 54 African countries are included, from which only eight are LDCs. It is clear that national statistics offices need strengthening, as data availability helps countries formulate, review and evaluate their development plans and programmes.

Continue Reading

Publications

Latest

forest forest
Africa Today24 mins ago

African Union urged to address the threat of Congo forest logging driving extreme weather

Industrial logging in the Democratic Republic of Congo (DRC) may severely disturb rainfall patterns across sub-Saharan Africa and bring about...

Finance52 mins ago

Serbia: Job Creation and Green Transition Needed for Sustainable Growth

Serbia’s economic recovery is gaining pace, with a rebound in private consumption and an increase in total investments, says the...

Middle East2 hours ago

North Africa: Is Algeria Weaponizing Airspace and Natural Gas?

In a series of shocking and unintelligible decisions, the Algerian Government closed its airspace to Moroccan military and civilian aircraft...

Americas3 hours ago

Biden’s Department of Justice: parents as domestic terrorists

In recent developments in the United States, US Attorney General, Merrick Garland, and the FBI have put under the FBI radar parents...

Americas5 hours ago

Iran poll contains different messages for Biden and Raisi

“It’s the economy, stupid.” That is the message of a just-published survey of Iranian public opinion. However, the substance of...

Economy7 hours ago

The Blazing Revival of Bitcoin: BITO ETF Debuts as the Second-Highest Traded Fund

It seems like bitcoin is as resilient as a relentless pandemic: persistent and refusing to stay down. Not long ago,...

Finance9 hours ago

Credit Suisse to pay $475 million to U.S. and U.K. authorities

Credit Suisse Group AG has agreed to pay nearly $475 million to U.S. and U.K authorities, including nearly $100 million...

Trending