Background
I attended the Modern Slavery Forum back in April 2017, hosted by the UN Global Compact in Sydney. Andrew Forrest, non-executive chairman of Fortescue Metals, was part of the line-up of speakers. He spoke with such passion and commitment about eradicating modern slavery. He was incredibly inspiring! Andrew has been a passionate advocate for a number of years and set up the Walk Free Foundation with his family in 2012.
The reason why I mention Andrew Forrest is because he made a comment that was incredibly powerful and stays with me to this day.
Andrew is certain slavery is endemic throughout the supply chains of Australian businesses and he suggests we should “celebrate when we find modern slavery in supply chains” as there is an opportunity to remediate and work with the supplier to improve the conditions of the workers who are making the products and materials we procure. He’s been very public about his own efforts to clean up forced labour in Fortescue Metals’ supply chains.
Of course, Fortescue Metals are likely to have more influence over their suppliers than a small-to-medium enterprise, so I don’t want to underestimate the incredible complexity of conducting human and labour rights due diligence when determining modern slavery within supply chains.
The Modern Slavery Act
Over 3,000 Australian businesses are likely to be reporting to the Australian Government under the Modern Slavery Act (Cth) once it has passed through parliament and takes effect in the second half of 2018. Even more entities must report under the recently passed Modern Slavery Act (NSW). It has been suggested that over 10,000 entities will be subject to reporting. These two new pieces of legislation are likely to directly affect a number of building and interior product manufacturers, and most product manufacturers will be indirectly affected.
If, as a product manufacturer, you are supplying products to government departments, universities, or large corporations like banks, telcos, insurance, building and construction companies who must meet this legislation, then these organisations will be likely conducting due diligence on your organisation to determine the risks associated with modern slavery in your operations and that of your supply chains.
There will be opportunities for early adaptors in this space. Entities who will be reporting under the Modern Slavery Act will want to partner with organisations that are working to combat modern slavery in their supply chains. Product manufacturers should consider this in their sustainability strategy. And, I suspect, in the coming years, it will be part of many large organisations’ tender requirements.
How to determine if modern slavery exists in your supply chains
To understand if you have modern slavery in your supply chain it would be advisable to conduct a risk assessment of your suppliers. The steps below will assist this process.
STEP ONE – Conduct a high level, broad analysis of your supply chains. Consider tier 1, 2 and 3 suppliers for the possibility of modern slavery.
STEP TWO – Map your supply chain. Record where your suppliers are located (region); which country, size of the entity, your dollar spend, whether you have influence over the supplier, and what sort of processes pose the most risk. For example, powder coating and chrome plating in the South Pacific region could be a potential risk for furniture manufacturers to consider.
STEP THREE – Engage with your suppliers and where possible have a conversation with them so you can explain why you are asking specific questions relating to modern slavery (human and labour rights). It’s important to get your suppliers on board. Addressing human and labour rights will not happen overnight and needs commitment from all parties.
STEP FOUR – Document a Sustainable Supply Chain Questionnaire that lists all business human and labour rights issues. Ask your suppliers if they have policies, procedures, and processes in place to address forced labour, child labour, indentured labour, and anti-discrimination. Ask for evidence to support this.
STEP FIVE – When you have received and reviewed the responses from your suppliers, rate them according to the level of risk they pose. Analyse the responses and set an action plan to start addressing the high-risk suppliers. Set minimum compliance requirements and an Ethical Code of Conduct.
Additional Guidance
When you’re conducting sustainable supply chain due diligence, don’t just focus on modern slavery issues such as forced labour, child labour and indentured labour, go for the broader human and labour rights issues. These include anti-discrimination, freedom of association and collective bargaining, fair pay and remuneration, and, of course, the health and safety of workers.
Also include environmental checks. Check to see how your suppliers are managing their environmental impacts (i.e. waste, energy, emissions, material efficiencies and chemical management) and environmental legal compliance.
The supply chain risk analysis is just the first step in sustainable supply chain due diligence and eradicating modern slavery. If you would like further help with sustainable supply chain due diligence or modern slavery compliance, please give us a call.
Tools and resources that can assist in assessing high risk areas of modern slavery
There are various tools and subscription models that can help conduct risk assessments. The Global Slavery Index is one, another is Verisk Maplecroft.
Links to interesting articles
CHOICE, 14 AUGUST 2017 – Modern Slavery in Supply Chains, Daniel Graham
SYDNEY MORNING HERALD OPINION, 2 JULY 2018 – Found slaves in our supply chain, Andrew Forrest