Modern slavery exists in many areas of business and awareness is the first step in its eradication.
Australian anti-slavery laws to be introduced in 2018
Australia looks set to introduce anti-slavery laws in 2018. Based on the UK’s 2016 Modern Slavery Act, similar laws here will raise board and public awareness of issues such as forced, child and migrant labour, wage exploitation, debt bondage, human trafficking and forced marriage.
The growing push for change was underscored by a recent Parliamentary inquiry into modern slavery by the Joint Standing Committee on Foreign Affairs, Defence and Trade has held seven public hearings and considered more than 200 submissions. The committee’s interim report has made substantial recommendations for change. In August, Federal Minister for Justice Michael Keenan released a consultation paper on supply-chain reporting that would compel businesses with a turnover of $100 million-plus to report annually on actions they are taking to address modern slavery. Draft legislation is expected in the first half of 2018.
Supply chains under scrutiny
“There is a high risk Australian businesses and consumers are benefiting from modern slavery in supply chains,” the Justice Minister said. Industries of concern are agriculture, construction, electronics, fashion, hospitality and extractives, especially in complex multinational supply chains. Other danger areas are industries with many migrant workers and companies operating in countries with weak regulations, plus domestic supply chains using contracted labour.
In Perth, a world-first regional meeting of government ministers with business leaders from 45 countries spent two days discussing ways to combat modern slavery. Andrew Forrest AO, chair of Fortescue Metals Group and Australian business co-chair of the Perth forum, described how he had discovered “hideous examples” of slavery in Fortescue’s supply chain, including forced labour “on a grand scale”.
“We’re all going to have slavery in our supply chains, no matter how good we think our corporate social responsibility is,” he said, noting that affidavits forcing suppliers to look at their own supply chains were a powerful weapon.
The inquiry’s interim report says although many businesses have signed up for voluntary initiatives such as the UN Global Compact, awareness of modern slavery in Australia is generally low. “Some Australian businesses aspire to address human rights issues in their supply chain, but most lack clear strategies and processes to trace, monitor and address risks,” the report says, adding there is a particularly high risk of forced labour in the Asia-Pacific where many Australian businesses source materials and products.
Consolidate the supply chain
Global sporting goods manufacturer Adidas told the inquiry it has spent the past decade consolidating its supply chain. Now, more than 80 per cent of all Adidas products are made in about 110 factories, plus the company has “broad visibility” into key materials-sourcing relationships. “It is a good starting point for the purposes of building a modern slavery outreach program,” Adidas said.
Prioritise geographic hotspots
In early 2016, Adidas finished a risk-based assessment of its extended supply chain. It looked at the tier 2 and 3 suppliers that provided raw materials to its tier 1 or direct suppliers. To manage the risk of modern slavery in its wider supply chain, Adidas is prioritising its efforts in danger areas and rolling out a modern slavery training and awareness module for tier 2 suppliers.
“Most enterprises are hampered by a simple fact: they are unclear as to their supply-chain relationships. Full traceability remains an ideal, but one that has yet to be realised for the vast majority of companies.”
Prioritise high-risk categories
Nestlé Australia told the inquiry that human rights, including forced and child labour has been identified as one of the multinational’s material risks, with exposure highest in upstream agriculture. “Supply chains beyond tier 1 can be multi-layered, complex and opaque — and change frequently — posing significant challenges,” Nestlé said. To manage the risk of slavery, it has prioritised 12 categories, including palm oil, soya, sugar, coffee, pulp and paper, cocoa and dairy, which have stricter sourcing guidelines than its general supplier code. It’s also training its staff in human rights issues.
Konica Minolta Australia set up an ethical sourcing project two years ago, as part of the parent company’s global response to the UK Modern Slavery Act. It told the inquiry that electronic supply chains, mostly in Asia, are vulnerable to modern slavery, including excessive recruitment fees to place workers, debt bondage and forced overtime. Upstream sourcing of minerals is also a major challenge. “Ethical sourcing and modern slavery are new concepts for the majority of our suppliers,” Konica Minolta said. “This means many seek information on the issue and the risk to their business, then for step-by-step guidance on conducting human rights due diligence,” This requires sustained supplier engagement and may mean working with a small group of suppliers over a longer time.
Konica Minolta Australia also noted that its supply chain includes Australian contractors for tasks such as transport, warehousing, property management and cleaning services. It has a full-time ethical sourcing executive, which is working with suppliers to identify and change practices.
Check the tearoom
NAB’s submission to the inquiry also highlighted the issue of local contractors in areas like information technology, logistics, consulting, marketing, printed goods and cleaning. Even tearoom supplies are subject to its supplier sustainability policy across its more than 1700 contracted suppliers.
Hire external auditors
Fortescue Metals made a public commitment in 2012 to eradicate modern slavery in its supply chain. For one major supplier, Fortescue hired specialist social auditor Verite to investigate the labour and living conditions of its factory workers, mostly from India, Nepal and Bangladesh. Verite uncovered high-interest loans to workers to fund excessive recruitment fees, ambiguous rules around overtime and leave, and a practice of forced surrender of passports. Rather than sacking the supplier, Fortescue made sweeping changes including repayment of recruitment fees, a safety deposit box for passports, unannounced site visits, a whistleblower hotline and the appointment of a business integrity manager reporting to Fortescue’s company secretary.
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