Introduction
During the 11 years I’ve been working with product manufacturers, industry awareness of environmental issues has expanded to now include social impacts, which means addressing human and labour rights and modern slavery risks.
Environmental and social responsibility is becoming an important part of doing business. My clients are being asked to complete Sustainability Supply Chain Self-Assessment Questionnaires and to sign Suppliers (Vendors) Codes of Conduct. We are also seeing social and environmental compliance requirements included in tenders, government procurement contracts, and in companies’ terms and conditions.
While some multinationals have been addressing human rights for decades and using the UN Guiding Principles on Business and Human Rights standards to inform their human rights strategies, awareness of the need for human rights compliance is extending more broadly across the industry now due to Australia’s recently adopted modern slavery legislation.
In this blog, we:
examine local and global modern slavery legislation
take a look at what the building and construction industry, the Green Building Council of Australia (GBCA) and government are doing to tackle modern slavery
identify the role business has to play in addressing modern slavery risks, and provide guidance on how to get started!
Global modern slavery legislation impacting Australian companies
In 2015, the UK Government enacted the UK Modern Slavery Act (2015), which requires organisations with an annual turnover of £36 million (approximately AUD $ 65 million) to publish an annual modern slavery statement. This statement outlines the measures they have taken to assess, address and prevent modern slavery occurring in their supply chains.
The Act not only includes domestic entities but foreign corporations as well. Consequently, there are at least 15 Australian companies that are already reporting under the UK Modern Slavery 2015 Act. Companies include Lendlease, Multiplex, Qantas, Westpac, NAB, Macquarie Bank, ANZ, Rio Tinto, Wesfarmers, Brambles and BHP Billiton.
Because of this, in recent years we’ve seen Australian companies more proactive in the human rights and modern slavery space.
Local legislation - Commonwealth Modern Slavery Act 2018
The Commonwealth Modern Slavery Act (2018) came into effect in Australia on 1 January 2019. It requires national and foreign entities with an annual turnover of over AUD $100 million to report on the steps they are taking to address the risk of modern slavery in their business operations and their supply chains.
Entities affected by this legislation are required to produce an annual modern slavery statement. The statement must outline:
the reporting entity’s structure, operations and supply chains
a description of the risks of modern slavery practices in their operations and supply chains
actions taken by the reporting entity (and any entity that it owns or controls) to assess and address those risks, including due diligence and remediation processes
assessment of the effectiveness of such actions
To ensure high-level commitment, the statement must be approved by the board of directors (or equivalent) and signed by a director.
Smaller entities that do not reach the reporting threshold of AUD $100 million can opt-in and voluntarily report.
The Commonwealth Modern Slavery Act 2018 was based on the UK Modern Slavery Act (2015), and although there are some similarities, there is a significant difference – the Australian Act has seven mandatory reporting requirements, which are not included in the UK Act.
This will mean that reporting entities will produce more detailed modern slavery statements in response to the Australian legislation than those submitted under the UK Modern Slavery Act (2015).
WHO does the Act apply to?
The Act applies to all types of Australian and foreign entities carrying on business in Australia, including:
individuals
partnerships
associations
legal entities such as companies, trusts, universities, superannuation funds and investment organisations
commercial entities and not-for-profits such as charities
Commonwealth Government entities
Corporate Commonwealth entities
If you supply products or services to these entities or form any part of their supply chain, then there is an expectation that your organisation will comply with the intent of the legislation. This means you are required to assess and address the risk of modern slavery in your business operations and your supply chains.
What is the building and construction sector doing to meet legislation requirements?
The Property Council of Australia
Two articles posted by the Property Council in 2018 indicate that the property industry supports the Modern Slavery Act and is committed to working with government and suppliers on addressing modern slavery risks.[1]
According to Davina Rooney, chair of the Property Council’s National Sustainability Roundtable and the recently appointed CEO of the Green Building Council of Australia, the Property Council see this as a non-competitive space, and they have been collaborating with industry for some time.[2]
The Property Council’s National Sustainability Roundtable, which includes thirteen of the industry’s leading companies, has collaborated to develop a standardised questionnaire, delivered via an online platform. Its designed to streamline the process for both suppliers and construction companies; suppliers will only have to fill out one questionnaire, which can be accessed by all construction companies. This initiative is being piloted by thirteen companies, with the intention of being rolled out across the property industry.
It’s been my experience working with product manufacturers and retailers that many construction companies have already started assessing for risks and putting in place strategies to mitigate their risk.
Ms Rooney’s parting words are, “Don’t wait for the legislation, start talking to your suppliers because this is the way of the future. Investors want it. Customers want it. Join the long race to the top.”[3]
Green Building Council of Australia (GBCA)
I attended a Modern Slavery Act Readiness Seminar, hosted by the GBCA, in April 2018. It is clear that the building and construction industry, along with GBCA, are eager to support the new Commonwealth Modern Slavery legislation.
This year the GBCA launched their Future Focus Consultation Paper, which includes new categories that will “drive relevant and material outcomes for the built environment over the next decade”.
GBCA intend to include human rights and modern slavery impacts in the Sustainable Procurement credit of their new Green Star for New Buildings rating tool. The desired outcome of this credit to ensure “a robust procurement process in line with ISO 20400 to assess suppliers and products. The procurement process must address issues related to human rights, such as modern slavery, and environmental issues”.[4]
The GBCA has sought industry feedback on the Future Focus Consultation Paper. While we are yet to see the outcome of the categories and credits, the intent is there to address human rights and modern slavery risks. Watch this space!
How will the Modern Slavery Act affect the way the Government procures?
The Commonwealth Government is also required to report under the Commonwealth Modern Slavery Act 2018. So be prepared, if your organisation is providing goods and services to government departments, you may need to start the process of assessing and addressing modern slavery risks in your business operations and supply chains.
On the state level, I have assisted a number of clients with NSW Government Request for Tender contracts, and the tenders have very specific requirements around “full transparency and traceability of supply chains for environmental, labour and human rights – leading to zero incidents”.[5]
The NSW Modern Slavery Act 2018 was due to be in force mid-2019, however it is now with a parliamentary committee, pending recommendations that are due in February 2020 so the full extent of this legislation will become clear in the coming months.
What is expected of suppliers - what do you need to know
Most companies that are reporting under the Commonwealth Modern Slavery Act 2018 are in the process of raising awareness within their supply chains about human rights and modern slavery due diligence. Companies are asking their suppliers, via questionnaires or online platforms, whether they have policies and procedures in place that support ethical and responsible procurement and whether they are assessing for modern slavery risks in their supply chains.
Other companies are taking the extra step and including modern slavery clauses in their terms and conditions, or they have a modern slavery charter for their suppliers and service providers. This includes the expectation that their suppliers will comply with the Commonwealth Modern Slavery Act 2018.
The companies that you supply need your help because your products form part of their supply chain. They need you to conduct modern slavery due diligence on your business operations and your supply chains. Reporting companies will want to partner with companies that are assessing and addressing modern slavery risks.
It has been noted within the building and construction sector that at some point we will start to see discrimination against product manufacturers and retailers who are not assessing and addressing modern slavery risks in their business operations and supply chains.
So how can you help your clients assess and address modern slavery?
The First step involves your company making a commitment to address modern slavery. This needs to come from the TOP. You need the support of the senior management team to ensure this process is addressed properly.
The second step is to map your supply chain, both in terms of your business operations and your suppliers. This includes all goods and services.
Then you need to conduct a high-level risk assessment of your procured products and services to understand where the greatest risks of modern slavery lie in your supply chains, including beyond tier 1 suppliers.
Once you understand where risks may lie, you can conduct a more detailed risk assessment of individual suppliers by asking specific questions about labour practices, including forced labour and child labour.
You will then need to establish processes to mitigate risk, this could involve looking at how your company may contribute to instances of modern slavery through aggressive price negotiation or unrealistic timelines.
The final step involves developing a remediation plan to remedy harm when instances of modern slavery are identified.
I’m working with some clients who really understand that there is a moral imperative to tackle modern slavery and are they doing great work in this area. I’m also working with businesses who choose to report voluntarily and we’re expecting to see commercial benefits – their customers will want to partner with companies that are conducting modern slavery due diligence.
So how can we help?
Addressing modern slavery impacts and broader human rights issues can be challenging and complex, but we’re here to help.
We can help you:
Educate your team on what modern slavery is
Assist with supply chain mapping
Conduct a risk assessment to identify high-risk suppliers
Mentor and support staff with the modern slavery due diligence process
Document policies, procedures and action plans that address human rights and modern slavery
Develop and implement remediation measures when modern slavery is found
Help you write your modern slavery statement
We also provide tools, guides and templates that you can use with your suppliers in the due diligence process – you don’t have to start from scratch!
Contact us now for a FREE CONSULTATION to see how we can work together to combat modern slavery.
You can also download the Preparing for Modern Slavery Legislation Guide from the Sustainable Business Matters Website, which gives further guidance and resources to help you get started.
Endnotes
[1] “Property Industry Supports Combatting Modern Slavery”, Property Council of Australia, 28 June 2018,
[2] “Modern Slavery and the Long Race to the Top”, Property Council of Australia, 1 August 2018,
[3] “Modern Slavery and the Long Race to the Top”, Property Council of Australia, 1 August 2018,
[4] “Green Star for New Buildings: A Future Focus consultation paper”, p38, Green Building Council of Australia,
[5] Modern Slavery Act: What businesses in Australia need to know, Norton Rose Fulbright,