Australia is adopting a Modern Slavery Act – so what are the implications for Australian businesses?
The Australian Government is calling on organisations with earnings over $100 million AUD dollars to report annually on what they are doing to address modern slavery – not only within their own business operations but also in their supply chain. The turnover threshold for businesses is $100 million and will affect companies, government and other legal entities.
The legislation, due to be in place mid to late 2018, is intended to foster transparency and encourage businesses to identify issues and improve practices. It’s about visibility and accountability.
Currently there are 15 Australian companies that are already reporting under the UK Modern Slavery 2015 Act. Some of these include Lendlease, Multiplex, Qantas, Westpac, NAB, Macquarie Bank, ANZ, Rio Tinto, Westfarmers, Brambles and BHP Billiton.
Having attended a Modern Slavery Act Readiness Seminar hosted by the Green Building Council of Australia (GBCA) in April, it is clear that the building and construction industry, along with GBCA, are eager to support this new legislation. There is a push to bring awareness to this very important issue and for industry to play their part in eradicating modern slavery.
So what is modern slavery and who does it affect?
Modern slavery takes many forms including forced labour, wage exploitation, child labour, sexual exploitation and human trafficking.
Global slavery isn’t merely a historical relic. In 2016, around 40.3 million men, women and children, from every part of the globe, were victims of modern slavery. In 2016, the Walk Free Foundation produced a Global Slavery Index report which found that two thirds of modern slavery occurred in the Asia-Pacific region – involving around 30,435,300 men, woman and children.
In an article posted by Michael Chen Head of Sustainability at Westpac, almost every industry is affected but higher risk exists in:
Manufacturing (including electronics, steel, automobiles, garments and textiles)
Agriculture, seafood and aquaculture
Mining and minerals
Shipping and transportation
Construction and commercial property
What is the legislation likely to require?
Under the proposed Australian Modern Slavery Act, entities that have any part of their operations in Australia, and have earnings over $100 million, will require board-level sign-off on a public statement outlining their risk assessment, management approach (including policies and procedures), and due diligence processes in relation to modern slavery. This statement will be required to be reported annually on the entity’s website and to a central public repository of reports.
At this stage, no penalties are proposed for entities that do not fulfill these requirements, although, I suspect, most organisations understand the reputational risk to their brand, and shareholders and consumers will expect them to comply.
Opportunities for product manufacturers who are early adaptors
This legislation is likely to directly affect hundreds of Australian and international corporations and, indirectly, thousands of small to medium sized businesses who supply these entities with goods and services. There will also be opportunities for smaller entities to opt in on the reporting requirements of the Modern Slavery Act.
So, if you’re supplying products to these corporations, working on Green Star projects or supplying materials to top tier building and construction companies, there is an opportunity for you to help these organisations by addressing your own internal business practices and that of your supply chain.
Although the government is legislating on modern slavery, this talks to the broader issue of workers’ human and labour rights. Human and labour rights issues include not only slavery but also fair working conditions, the health and safety of workers, anti-discrimination, freedom of association and child labour.
No company or business owner wants to support organisations that have unethical business practices so we have some suggestions on the best way to begin this critical and complex journey.
Here are my top 5 tips for product manufacturers who want to address these issues:
1. Hiring casual staff – ensure the labour hire company that you are working with has recruitment and employment practices and standards that comply with local and national labour laws.
2. Review your own internal labour polices – as stated above, this talks to the broader issue of human and labour rights. Ensure you have policies and procedures in place and that staff are made aware of these policies (e.g. work health and safety, fair pay, equal opportunity and anti-discrimination).
3. Make a commitment to conduct supply chain due diligence – map your suppliers, conduct risk assessments, look at areas where there is the high likelihood of human and labour rights issues occurring, and start engaging with your suppliers.
4. New suppliers – set up new procedures and processes so when you are procuring new products or materials from regions or countries of high risk, you only procure from organisations that have a high level of compliance. Check their business operations by issuing questionnaires that cover off environmental and social compliance.
5. Education is the key – help your suppliers understand the importance of addressing this issue. Australia is not the only country legislating against modern slavery. The UK has had legislation in place since 2015. Other countries such as the US, Switzerland, Germany and the Netherlands are also looking at legislating against modern slavery. If your product or material manufacturer is supplying goods to these regions, then they should be complying with international human and labour rights standards.
We understand that conducting sustainable supply chain due diligence can be tricky, frustrating and difficult but it’s also rewarding, especially when you see that you are having influence and creating better working conditions for vulnerable workers.
If we can help you help your clients combat modern slavery, and help you understand how to conduct supply chain due diligence, please get in touch.
Further blogs will be posted on sustainable procurement, sustainable supply chain, and frameworks and standards to help you manage this process.
Useful links
PROPERTY COUNCIL OF AUSTRALIA – Looking Through the Human Rights Lens, 13 Dec 2017
GREEN BUILDING COUNCIL OF AUSTRALIA – Future Focus for Product Manufactures