Skip to content
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
Insurance Journal - Property Casualty Industry News

Featured Stories

  • Farmers Data Breach Could Impact 1M+ Customers
  • ‘Big Four’ Reinsurers Maintain Property-Cat Appetite
  • Articles
  • Jobs
  • Markets

Current Magazine

current magazine
  • Read Online
  • Subscribe
  • Login
  • Front Page
    • National
    • International
    • Most Popular
    • Magazine
    • Forums
    • Blogs
    • Videos/Podcasts
    • Newsletters
  • News
    • Most Popular
    • National
    • International
    • East
    • Midwest
    • South Central
    • Southeast
    • West
  • Magazines
  • Research
  • Directories
  • Jobs
  • Features
    • Events
    • Forums
    • Market Directories
    • Quotes
    • Polls
    • Rankings & Awards
    • Insurance Giving Back
  • Subscribe

US Slips in Supply-Chain Ranks After Child-Labor Violations

By Frances Schwartzkopff | June 20, 2023
Email This Subscribe to Newsletter
  • Article
  • 1 Comment

The US has joined a list of mostly emerging-market countries where ESG supply-chain risks are “high,” after the world’s richest economy failed to provide adequate protections for vulnerable populations including migrant children, according to a fresh study.

The US saw its ranking decline on almost all metrics, according to an analysis published Wednesday by Elevate, an ESG (Environmental Social Governance) advisory and analytics company that’s owned by LRQA, which sits in the investment arm of Goldman Sachs Group Inc.

The authors of the Elevate report said they found it “especially concerning” that the deterioration registered in US scores was tied to the “most severe forms of ESG risk,” such as those relating to the treatment of children. In last year’s ranking, the US posed a “medium” supply-chain risk in the Elevate scale, which has four levels spanning “low” to “extreme.”

The downgrade follows months of revelations first reported by the New York Times that companies have been employing children as young as 12 to work in dangerous conditions. The US Department of Labor says there’s been a 69% jump in illegal child labor since 2018. That’s ignited a political firestorm, with Democrats wanting more resources to police employers. Yet in some states, Republican lawmakers are seeking to relax laws amid labor shortages.

The composition of supply chains is set to play an increasingly important role for businesses and investors as new regulations raise the specter of legal liability for those who fail to screen for violations.

A study by RBC Capital Markets found that this year’s proxy season saw an increase in the number of shareholder proposals on ESG risks supply chains. Clarity AI, a technology platform that provides sustainability information to the finance industry, says it’s experimenting with satellite data amid demand from clients to confirm information provided by corporations.

“There are new data points and new metrics that are becoming more relevant, and some are big, for example, transition plans,” Patricia Pina, product research and innovation head, said. “We need to focus on the gap between what companies say and what they do to make real progress.”

Stricter environmental, social and governance rules are coinciding with less transparency and increasing risks in regions normally deemed safe, the Elevate study found.

“Of the many conclusions that can be drawn from our 2023 supply chain ESG risk ratings update, perhaps the most important one is that the West – long assumed to be a safe haven for its better production standards – is high risk,” the report said.

With the US performing worse in the latest assessment, roughly half the global markets Elevate ranks are now considered “high” risk, the report said. And while countries like the UK, Germany and Portugal continued to be ranked “medium” for overall ESG supply-chain risks, they were also deemed “high” risk in categories such as child labor and wage-related violations, the study found.

Elevate’s definition of “high” risk:

“A high-risk designation indicates that a country is highly likely to experience risk events that contravene ESG governance frameworks, including those supported by local and international law. These violations could range from environmental degradation to the use of child labor within local supply chains. Our analysis spans 38 categories of supply chain ESG risk indexes which we compile through the 20,000+ audits we undertake annually.”

At the same time, it’s getting harder to collect data on such violations as assurance companies face increasing obstacles to viewing first-hand working conditions and environmental issues, the Elevate report found.

Auditors hired by companies to check on their supply chains are being turned away and even lied to, according to Erin Lyon, head of ESG consulting at LRQA. Employees are coached on how to answer questions by firms hired for that purpose, she said.

That’s eroding what’s known as audit transparency, which is the ability to assess the credibility of information. It’s an issue that’s particularly acute in China, where about two-thirds of audits conducted in the second half of 2022 are unreliable due to inadequate access, the report found. In India, just over half the audits conducted were transparent, it said.

For audits, “transparency is a critical concern, particularly as it relates to ensuring compliance with the EU Due Diligence Directive,” Lyon said.

In the EU, the Corporate Sustainability Due Diligence Directive has just made it through the bloc’s parliament. The framework, which would hold companies liable for social and environmental violations in their value chains, is now being debated across EU member states.

Treasury Secretary Janet Yellen told US lawmakers on Tuesday that while the Biden administration supports efforts to clean up supply chains, it’s concerned about the “extra-territorial scope” of EU regulations. She also warned of potential “negative, unintended consequences” of such rules.

Companies that fail to clean up their supply chains face not just the risk of legal liability, “but to reputation and business relationships,” Lyon said. Such violations are “being increasingly understood as a material risk.”

Photo: Photographer: AFP/Getty Images

Copyright 2025 Bloomberg.

Topics USA

Was this article valuable?

Thank you! Please tell us what we can do to improve this article.

Thank you! % of people found this article valuable. Please tell us what you liked about it.

Here are more articles you may enjoy.

Sompo to Acquire Aspen for $3.5 Billion to Expand Global Access
How to Keep Small Business Insurance Customers From Jumping Ship
Containment Increases on California Wine Country Wildfire
Reinsurers Have Made Major Structural Changes to Improve Profits. Will Discipline Last?

Written By Frances Schwartzkopff

More From Author

The most important insurance news,
in your inbox every business day.

Get the insurance industry's trusted newsletter

Email This Subscribe to Newsletter
  • Categories: National NewsTopics: child labor law violations, environmental social governance (ESG, global supply chain, U.S. Department of Labor, wage and hour
  • Have a hot lead? Email us at newsdesk@insurancejournal.com

Latest Comments

  • June 20, 2023 at 2:32 pm
    Transparency says:
    Perhaps transparency in audits could be encouraged by more transparency in definition. Definitions are meant to be clear and concise, not vague, and certainly not using their ... read more

Add a CommentSee All Comments (1)Add a Comment Cancel reply

Your email address will not be published. Required fields are marked *

*

*

More News
Anthropic Thwarts Hacker Attempts to Misuse Claude AI for Cybercrime
Viewpoint: Why Reinsurance Industry Often Struggles to Manage Market Cycles
Cyber Outlook Report Finds Gaps, Outlines Holistic Approach to Protections
Katrina 2005-2025: Lessons Learned
More News Features

Read This Next

  • US Slips in Supply-Chain Ranks After Child-Labor Violations
  • Philadelphia Police Officer Wins Delayed Workers' Compensation Claim for PTSD
  • Insurtech Looks to 'Redefine' Insurance With Autonomous AI Agents by 2026
  • 20 Years Later, Hurricane Katrina's Impact Echoes in Models, Mitigation and Reforms
  • Insurtech Investment Hits $60B Milestone But Pales AI Figures

Insurance Jobs

  • Insurance Account Executive/Manager Wanted Flexible Hours, Potential Equity - Dix Hills/Deer Park, NY
  • Sales Agent - Encino, California
  • Underwriting Professional Development Program, MMBC Commercial Accounts – November 2025 - Saint Paul, MN
  • Assistant Client Services Specialist - Cruz Bay, Virgin Islands
  • Associate Counsel, Claim - Morristown, NJ
MyNewMarkets
  • When Insurance Isn't the Optimal Risk Management Approach
  • Reputation Risk Can Overshadow Ransom in Cyberattacks, Aon Says
  • Tackling Cyber Risks: The Vital Role of Brokers in Third-Party Data Protection
  • DIY Home Inspections Are Taking Over, Firms Say
  • Six Things to Know About Umbrella Insurance
Claims Journal
  • FTC Sues LA Fitness for Making it Exceedingly Hard to Cancel Gym Memberships
  • EU Carmakers Warn Combustion Engine Ban Is No Longer Feasible
  • Peloton Must Face Shareholder Lawsuit Over Post-Pandemic Outlook
  • Most Losses in Destructive Eaton Fire Tied to Conflagration Hazard, Report Shows
  • 20 Years Later, Hurricane Katrina's Impact Echoes in Models, Mitigation and Reforms
Academy of Insurance education
  • August 7 EPLI Basics
  • August 14 Managing and Insuring Reputational Risk
  • August 19 How To Write: Flood
  • August 21 Workers' Comp Crash Course

Insurance News

  • News by Region
  • News by Topic
  • Yesterday

Site Search

Features

  • Insurance Markets Directory
  • Forums
  • A.M. Best Company Ratings
  • Industry Events
  • Agencies For Sale
  • Newswire
  • Insurance Jobs
  • Rankings & Awards

Connect with us

  • Email Newsletters
  • Magazine Subscriptions
  • For Your Website
  • RSS Feeds
  • Twitter
  • Facebook
  • LinkedIn
  • Do Not Sell My Info

Insurance Journal

  • Submit News
  • Advertise
  • Subscribe
  • Reprints
  • Link to Us
  • Contact Us

Wells Media Group Network

  • Insurance Journal
  • MyNewMarkets.com
  • Claims Journal
  • Insurance Journal TV
  • Academy of Insurance
  • Carrier Management
© 2025 by Wells Media Group, Inc. Privacy Policy | Terms & Conditions | Site Map