This document details Informed 365's strategic shift from Edge Impact's original methodology to Bureau Veritas’s comprehensive risk assessment approach. We recognise that risk ratings must adapt to dynamic influences such as global indices, evolving knowledge and data, environmental conditions, and socio-political changes. This shift enables us to capture a broader spectrum of risk factors through a more qualitative, in-depth analysis, ensuring our practices remain robust and aligned with the latest global standards.
Our commitment to evolving risk management aligns with the 20% increase in the Global Slavery Index between 2016 to 2021 (referenced in the Global Slavery Index 2023 reporting), driven by factors such as conflict, climate extremes, environmental devastation, democratic decline, rollback of women's rights, and the impacts of COVID-19. Similar trends were observed in other data sets, like Exiobase and UNICEF, reflecting new insights.
At the same time, the assessment of the risk of harm to people from modern slavery has substantially matured around particular countries, industries and supply chains. The supply of solar panels and renewable energy solutions, for example, has led to a substantial reassessment of risks in key locations. The understanding around factors of vulnerability, and the assessment of prevalence and risk in countries and regions with poor reporting regimes or weak rule of law, has also changed. We recognise that there is no single definitive way to assess risk and that transitioning from quantitative to more qualitative methodologies can yield different outcomes. Incidents such as Ansell's involvement in forced labour at a Malaysian supplier illustrate how rapidly risk levels can escalate, reinforcing the need for a proactive approach. We are committed to our risk management practices remaining robust, proactive, and aligning with the latest global standards, enabling Informed 365 to continue leading in responsible and informed business practices.
Overview of Methodologies
Edge Impact Methodology:
 | Edge Impact has been instrumental in providing structured, data-driven insights into modern slavery risks within various industries. Their methodology utilises a quantitative only approach, analysing data from specific sources such as the Social Hotspot Database and Exiobase. |
Bureau Veritas Methodology:
| Contrasting with this, Bureau Veritas utilises a qualitative only analysis. This methodology integrates additional indices such as the Corruption Perceptions Index (CPI), Social Progress Index (CPI), Global Peace Index (GPI), and Global Slavery Index (GSI). This approach assesses not only direct risks associated with modern slavery but also broader societal risks that can impact industry standards and business practices. |
Why We Transitioned to Bureau Veritas
🌐 Broader Risk Assessment: Bureau Veritas’s methodology extends the scope of assessment to include broader societal, political, and environmental aspects, offering a more holistic view of risks. This is particularly beneficial for adapting to the diverse challenges faced by globally operating companies.
🔄 Greater Flexibility: The qualitative aspects of the new methodology allow for nuanced assessments that can adapt to new information and changing global standards, thereby providing a more resilient and adaptive risk management tool.
🔍 Deeper Insights: The integration of broader indices helps companies understand not only the risks inherent in their operations but also how external factors like governmental stability and environmental issues can influence these risks.
Dynamic Nature of Risk Ratings
As Informed 365 has transitioned from Edge Impact’s methodology to Bureau Veritas’s approach, it's important for our clients to understand that you may notice changes in the risk profiles from last year to this year. The nature of modern slavery risk assessments is inherently dynamic, influenced by a multitude of factors:
🌏 Geopolitical Shifts: Changes in government policies or political stability can significantly impact industry operations and regulatory environments.
💹 Economic Fluctuations: Variations in the economic landscape, such as recessions or economic booms, can affect labour markets and financial stability, altering risk assessments.
🌊 Environmental Changes: Issues like climate extremes, flooding, and other environmental challenges can impact operations and worker safety, necessitating updates in risk evaluations.
📊 Updates to Global Indices: Revisions in indices like the GSI that track country-specific risks based on new data.
⚠️ Location-Specific Issues and Sector Vulnerabilities: Each location and sector may face unique risks due to environmental conditions, civil unrest, or economic instability.
Additional Information on the Ratings Changes
To further explain the justifications for risk rating changes, it is important to consider the methodological adjustments and the contextual factors influencing these ratings. The changes reflect a more conservative and cautious approach to ensure the accuracy and reliability of risk assessments, taking into account evolving global conditions and specific sectoral insights.
🌍 Conservative Approach: Bureau Veritas adopted a more conservative approach with the ratings to avoid giving platform users a false sense of security regarding their risk, fostering a more proactive approach. This conservative stance is a reason for the increased ratings compared to previous years.
🏥 Health and Safety Link: Bureau Veritas believes that health and safety are intrinsically linked to the risk of modern slavery. Therefore, a health and safety perspective was applied to the ratings, resulting in either a reduction or increase in the ratings.
♻️ Renewable Energy Consideration: Renewable energy was considered under the ‘Energy Equipment & Services’ section, which saw a rating change from “Medium” to “Very High”. Due to the lack of detailed information, Bureau Veritas conservatively considered all energy equipment types, noting the increasing spotlight on modern slavery in the renewable energy industry, supported by their auditing experience in the sector.
Sample Data
Below are examples of how risk ratings have shifted for various countries and industries following the transition from Edge Impact's quantitative methodology to Bureau Veritas's more qualitative approach. These changes reflect increased awareness of modern slavery, supply chain complexities, and health and safety risks.
Country samples:
China: The risk rating for China decreased from "High" by Edge Impact to "Medium" by Bureau Veritas. This change is based on China’s rank of 58 out of 160 in the GSI, indicating that 102 countries have a higher risk. The CPI ranks China 65th out of 180, placing it in the medium-risk category. Additionally, the SPI places China in Tier 4 out of 6 tiers, indicating a medium-high risk. Bureau Veritas averaged these ratings to arrive at a “Medium” risk rating, and have plans to increase to “High Risk” in the next risk update scheduled for later in 2024, based on the Guidance on Reasonable Steps document from the OASC.
Cuba: The risk rating for Cuba decreased from "High" by Edge Impact to "Low" by Bureau Veritas. According to the GSI, Cuba is ranked 82nd globally and has a vulnerability rating of 43, indicating below-average vulnerability for the region. This data supports the reduction in the risk rating to Low, reflecting Cuba’s relatively lower risk compared to other countries.
France: The risk rating for France decreased from "Low" by Edge Impact to "Very Low" by Bureau Veritas. The GSI ranks France 139th, suggesting a low risk of modern slavery. Additionally, high rankings on the SPI and CPI further support the assessment of Very Low risk, justifying the reduced risk rating for France.
India: The risk rating for India increased from "High" by Edge Impact to "Very High" by Bureau Veritas. The GSI estimates that India has the highest number of people in modern slavery situations globally. This significant prevalence of modern slavery justifies the increased risk rating to Very High, reflecting the severe risk factors present in the country.
Industry samples:
⚡ Electrical Components & Equipment: This risk rating for Electrical Components & Equipment increased from "High" by Edge Impact to "Very High" by Bureau Veritas. This change is due to heightened visibility and evidence of modern slavery in this sector, as noted by IAST APAC, and the U.S. Forced Labor Prevention Act. Bureau Veritas highlighted the extensive and complex global supply chains, which increase health and safety risks, justifying the higher rating.
🛢️ Oil & Gas Equipment & Services: This risk rating shifted from "Low" by Edge Impact to "Very High" by Bureau Veritas. This significant increase is due to the industry's manufacturing practices in developing countries, where low supply chain visibility hampers labour standards enforcement. High health and safety risks further support the higher rating, as detailed by KPMG on modern slavery in the energy sector.
🔋 Energy Equipment & Services: This risk rating rose from "Medium" by Edge Impact to "Very High" by Bureau Veritas. The renewable energy sector, included in this category, is linked to modern slavery by sources like the Helena Kennedy Centre and the U.S. Forced Labor Prevention Act. Bureau Veritas's auditing experience verifies the opaque and complex nature of these supply chains, thereby justifying the increased rating.
🚗 Auto Components: The risk rating rose from "High" by Edge Impact to "Very High" by Bureau Veritas. This change is due to the industry's reliance on manufacturing in countries with prevalent modern slavery, as reported by Human Rights Watch. Significant health and safety risks and the challenges in monitoring ethical labour practices in these international supply chains support the higher rating.
Conclusion
The integration of Bureau Veritas’s methodology marks a strategic enhancement in our risk assessment process, keeping us informed of the evolving global risk landscape. Transitioning from Edge Impact's quantitative approach to Bureau Veritas's qualitative analysis ensures our assessments are dynamic, incorporating current data and insights. This broader perspective allows us to better understand and manage complex factors such as the Global Slavery Index, environmental challenges, and socio-political dynamics. Consequently, we can more effectively pinpoint and address potential issues in our supply chain, leading to stronger collaborations with suppliers and a more resilient operation. For our clients, this means more reliable and insightful risk assessments, fostering better decision-making and robust supply chains.
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