Modern slavery in supply chains

Australia is considering adopting a Modern Slavery Act which will require businesses to report on steps taken to eradicate slavery in their supply chains.

  • It's almost impossible for consumers to know what happens in the overseas factories that make our clothes, gadgets and food.
  • Near-endless global supply chains increase the risk of forced labour going into everyday imported products.
  • Australia is considering adopting a Modern Slavery Act, which will require big businesses to report on steps taken to eradicate slavery in their supply chains.
  • Some are resisting calls for stronger laws that will make them ultimately responsible for their overseas networks.

Modern slavery

Make no mistake: you have personally benefited from modern slavery. It might be in the clothes you wear, the prawns you grill or in the smartphone you may well be reading this article on.

Modern slavery is an umbrella term that covers crimes like forced labour, human trafficking, bonded labour (where the worker is ostensibly paying off a debt), and forced or child marriage. Migrants and refugees are common victims, lured abroad with a promise of good work. They often have their identification documents taken and are housed in squalid conditions with other victims.

About two thirds of the global slave trade occurs in the Asia-Pacific. Some of Australia's biggest trading partners, including China, Malaysia, Indonesia and Thailand, are host to some of the most egregious crimes.

Human chains in the supply chain: click here for an accessible text-only version of this infographic.

Introducing a Modern Slavery Act

The Australian Parliament is currently holding an inquiry into adopting a Modern Slavery Act, similar to one introduced in the UK in 2015. It would bring the crimes of slavery, forced labour and human trafficking under a single law, overseen by a new office – the Independent Anti-Slavery Commissioner.

A key pillar of the UK legislation is the requirement for big businesses to publish annual transparency reports on the steps taken, if any, to ensure slavery and human trafficking is not taking place in their supply chains. For a sector seemingly allergic to red tape, the response from the corporate world has been surprisingly positive: in fact, the push for mandatory reporting came from big business.

Big business to the rescue?

Andrew Forrest, chairman of Fortescue Metals, is an evangelist for corporate action on modern slavery. He encourages companies to root out slavery in their supply chains and be upfront about it when they find it. In 2012 he and his family founded the abolitionist Walk Free Foundation, and he's been public about his own efforts to clean up forced labour in Fortescue's supply chains .

Forrest is certain slavery is endemic throughout the supply chains of Australian businesses. He wants to see a modern slavery act which will "encourage and celebrate" businesses that find and eradicate slavery in their networks.

In June, Forrest told the parliamentary inquiry about "a leading businessman, who is a household name here in Australia, who said to me, face to face, 'I will not look for slavery in my supply chains, in case I find it.'" Forrest believes these moguls are scared of being demonised for going public about slavery in their supply chains.

A fan of the UK legislation, Forrest doesn't want to see penalties for businesses that have slavery exposed in their supply chains. He wants industry to self-regulate as much as possible, with guidance – not regulation – from governments.

"It is absolutely necessary that we make this easy for business so that we make it hard for modern slavers," he says. "If we make it complicated for business … all we will end up doing is encouraging modern slavery. So, we must 'keep it simple, stupid'."

"It is our view that even with the best endeavours, no company can confidently say that they do not have modern slavery or other serious human rights abuses in their domestic or global supply chains."

Nestlé Australia, submission to parliamentary inquiry.

But will letting businesses police themselves really change anything? By Forrest's own admission, self-regulation has its limitations. The UK system only works if consumers shop with their feet when a company fails to report, or doesn't report in sufficient detail. And there's little evidence that conscientious consumers read, or are even aware of, such reports.

The proposed Australian Modern Slavery Act also doesn't address the structural problems that exist in the British model. In the UK, there's no definitive list of companies required to make statements, and once published on the businesses' websites the statements aren't officially compiled and made available. There are no penalties for failing to report.

An estimated 12,000 to 17,000 businesses trading in the UK are thought to meet the criteria for mandatory reporting. The Business & Human Rights Resource Centre, which has created a database of transparency statements, has found just over 2500 – at best, this means four in five companies are failing to comply with the law.

An Australian Modern Slavery Act seems likely to address some of these issues. A central repository of statements has broad support, and a list of companies required to report – compiled by ASIC – has been mooted. However, these solutions skirt the edges of the real problem: for a business, it's still very easy to do the bare minimum.

Determined laggards

Slavery and human rights reports are like a dreaded homework assignment for businesses, with ethically-minded consumers doing the marking. For some businesses – especially those that aren't pursuing the ethical consumer market – it might just be enough to go through the motions and call it a day.

The UK law gives companies guidance on the sort of things to report on. How is your staff trained to identify abuses? Where are the risks in your supply chains? How effective are your due diligence measures? But in the end the only requirement is that the business publishes a report every year, and many seem to not even manage that.

"It is evident that there is a great discrepancy in the quality of annual statements," Paul Redmond of Anti-Slavery Australia said during the parliamentary inquiry currently under way. Studies of statements published in the UK have found many don't go into detail beyond broad commitments to human rights.

In his evidence to the inquiry Redmond held up two global companies for comparison. Rio Tinto's slavery and human trafficking statement [PDF] is a nine-page document that goes point-by-point through each of the areas recommended in the law. Qantas's slavery and human trafficking statement [PDF] is a 348-word letter that gives a high-level overview of its ethical procurement process, and next to nothing about how it conducts due diligence on its 10,000 suppliers. Despite the differences, both companies met their legal obligations with these documents.

Redmond says at the moment there's a commercial advantage to being a "determined laggard" – a business that ignores abuses in supply chains. Proper human rights due diligence isn't cheap, and if you're a revenue-minded executive, it isn't always clear that it's going to pay off.

Anti-Slavery Australia recommends that, "at a minimum", the UK's reporting guidelines be made mandatory, with penalties for companies that fail to comply. They also suggest making it a crime to "fail to prevent" slavery in supply chains, by making it a legal requirement that a business take steps to investigate their overseas supply chains for abuses.

Australia taking action

An Australian Modern Slavery Act seems likely to take shape: the government has recently asked for feedback on a proposed corporate reporting regime, which makes the voluntary criteria in the UK system mandatory.

However, the $100m revenue threshold suggested by government has been criticised for holding only the biggest businesses to account – being much higher than the UK's £36m ($60m). And the opposition says that without penalties for failing to report, the laws will be "toothless".

The inquiry is still hearing evidence and will report back later in the year.

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