Modern slavery is an emerging issue and here’s why your company should act now

Modern slavery is an emerging issue and here’s why your company should act now

By Priya SaratChandran, Marianna Brungs and Hugo Hodge 

New laws requiring companies to demonstrate their operations and supply chains are free from slavery are expected to be passed in Australia by the end of the year.

Following a year-long inquiry, in December 2017 the Federal Parliament’s Foreign Affairs and Aid sub-committee recommended that Australia enact a Modern Slavery Act based on similar UK regulation.

You could be forgiven for feeling puzzled about the introduction of such a law given many of us assume slavery is an issue relegated to the history books of a distant, shameful past.

The reality is that slavery-like practices – including servitude, forced labour, debt bondage, human trafficking, deceptive recruiting for labour or services, child labour, child exploitation and other practices where a person’s labour or services is exploited – are still occurring in the developed and developing world today.

Modern slavery is occurring in the supply chains of everyday brands whose products we use on a daily basis. For example, it has been reported that cars and computers manufactured by household brands contain a mineral called cobalt sourced in the Democratic Republic of Congo where workers are subject to human rights abuses, extortion and intimidation.

Estimates at the number of people in slave-like conditions in the world today range from 27 – 46 million. The SumAll Foundation has estimated there are 27 million slaves worldwide today, more than in 1860 when there were 25 million. Despite slavery being illegal across the globe today, it is clearly a widespread problem.

The proposed new laws will introduce mandatory reporting requirements for companies with a total revenue greater than $50 million and will require submitting a Modern Slavery Statement that covers modern slavery risks in the company’s operations and supply chains, including the company’s:

  • structure, business and supply chains;
  • policies in relation to modern slavery;
  • due diligence and remediation processes for modern slavery in the company’s business and supply chains;
  • business and supply chain areas where there is a risk of modern slavery taking place, and the steps that the company has taken to assess and manage that risk;
  • effectiveness in ensuring that modern slavery is not taking place in the company’s business or supply chains, measured against such performance indicators as the company considers appropriate;
  • training available to the company’s management and staff on modern slavery; and
  • any other actions taken.

Under the proposed Act, the Modern Slavery Statement reporting requirements would cover both domestic and global operations and supply chains, and would apply to all tiers of a company’s supply chain, not just the first tier of suppliers.

Why should companies act now?

  • Address the new risk environment. Business and human rights regulation in Australia is becoming more stringent. Australian companies are moving into an age where they will be held accountable to new standards
  • Become a leader in the field. Proactively addressing the requirements of the Modern Slavery Act means you’ll have the benefits of shifting organisational operations and culture ahead of competitors.
  • Attract investors. Investors are increasingly viewing human rights compliance (along with other ESG issues) as a sign of overall operational excellence and stronger risk management.
  • Bring human rights activists on side and avoid shareholder activism. In the UK, Modern Slavery Statements have been closely examined by activists, with lists of the good (Marks & Spencers, Unilever, Sainsbury’s) and poor performers being widely published. The proposed Australian regime is stronger – it recommends that the Government publish lists of entities that are required to report and those that have failed to report alongside the central repository of statements.
  • Avoid potential financial penalties. The Parliamentary Committee recommended the Act contain financial penalties and other compliance measures for failure to report (NB: the Attorney-General’s Department had previously indicated that it did not anticipate including penalties for non-compliance).
  • Comply with international obligations. The UK and California have enacted Modern Slavery Acts, France and the Netherlands have introduced legislation similar to the UK Act, and Hong Kong is considering a similar bill.

How can Futureye help you?

Identification and assessment

Risk prioritisation: We can perform a risk prioritisation process to test feasibility against impact and determine where to direct resources.

Innovative solutions implemented across the business

  • Shared value creation: Futureye are experts in developing unique solutions that add value to both the company and supply chain participants, as well as meet reporting requirements.
  • Engagement plan: We engage external suppliers and other stakeholders at every stage of developing practical solutions, ensuring that they are on board with implementation. We help companies to listen and respond to suppliers and other stakeholders in a way that reduces concerns and generates mutual understanding of risks and benefits.
  • Governance and integration strategy: Leadership from the top and integration across the business is critical when developing and implementing innovative solutions around emerging issues. Futureye can provide a governance strategy that puts into place cross-functional coordination for businesses, particularly those with siloed or global operations.

Tracking and monitoring

  • Human rights benchmarking: Futureye can develop a framework for businesses to benchmark their human rights policies, strategies and performance against best practice and competitors’ performance on key emerging issues and risks.

Communicating

  • Effective reporting and polices: Human rights activists will be closely examining Modern Slavery statements. Futureye can help to draft reports and modern slavery policies that exceed government and community expectations and bring human rights activists on side.
  • Risk communication training: Dealing with contentious issues requires a response that takes into consideration stakeholder perceptions and key risks. Futureye can conduct training to upskill staff and suppliers at every level to understand, embed and execute risk communication on issues associated with modern slavery and other human rights issues that impact business.

 

To find out how Futureye can help your business adapt to the requirements of the Modern Slavery Act contact Priya SaratChandran on priyas@futureye.com or +61 3 8636 1111.