Date posted: 29/07/2019 3 min read

Implementing Australia's Modern Slavery Act knowing your supply chain

Key takeaways and new insights from Australia’s first modern slavery conference

In brief

  • Adopt a risk-based approach to Modern Slavery focused on the harm to people not the organisation
  • Move beyond compliance, this is an opportunity to change mindsets
  • Collaborate and partner to reduce the burden– organisations are in this together

I recently watched the movie 12 years a Slave and was then reminded that there are more people in slavery now than at any time in human history, including when slavery was legal in some parts of the world.

It is estimated that there are over 40 million slaves globally, including 15,000 in Australia. These stark statistics are an important reminder why Australia's Commonwealth Modern Slavery Act 2018 is such an important step to eradicate these serious human rights abuses.

In late June, Australia's Department of Home Affairs hosted Australia's first modern slavery conference attended by over 450 delegates from 14 countries and 200+ large businesses.

Chartered Accountants Australia and New Zealand attended the conference and over two days heard from 30 expert speakers on seven panels.

What did the Commonwealth Government say?

This conference was a timely opportunity to raise awareness of obligations under the Act and to help businesses assess and address modern slavery risks in their supply chains and operations.

The Government indicated they wanted to build capacity in Australian businesses to comply with the Modern Slavery Act. They highlighted the importance of taking a risk-based approach and that they expect to see business improve over time.

A dedicated business engagement unit has been created to support and advise businesses on how to comply, give examples of best practice and answer questions. The Department is working on updating their draft guidance document following the consultation period and expect it to be further developed to include appendices for different sectors.

The Commonwealth government will also be issuing their own statement.

1. A risk-based approach

Organisations reporting under the Act need to take a risk-based approach to tackling modern slavery. Most speakers agreed that they should start by mapping their operations and supply chains and identify risk areas.

The risk should focus on chance of harm to people, not the risk to business or chance of being found out. The UN Guiding Principles on Business and Human Rights can assist organisations with this perspective.

A good way to break down the risks is to consider them by geography, sector and product. The biggest risk areas may not represent the biggest volume, activity or procurement spend for your organisation.

UK giant Marks and Spencer (M&S) is a leading reporter under the UK's Modern Slavery Act 2015. They shared that some surprising higher risk aspects of their supply chain were local tailors altering suits and the car washers in car parks.

2. Don't let complexity be a deterrent

Yes, operations and supply chains are complex, even for a simple business. For example, 750 suppliers go into one mobile phone.

So it can be difficult to know where to start and how far to go through the supply chain. Saying this, it is important that complexity isn't used as reason for doing nothing.

Start small and address one step (product, tier, supplier) at a time. It was called a journey many times during the conference.

The Department of Home Affairs noted that businesses are not expected to guarantee their supply chain is slavery free but to take ownership of reducing the risks in their operations and supply chains. However, just because it is a journey, doesn't mean action can be slow. There conference conveyed a sense of urgency for organisations to get started.

3. Awareness and education

Modern slavery is a more profitable crime than drugs and is endemic in supply chains, however suppliers and employees don't understand modern slavery and how it can be present.

Therefore, it is necessary to change mindsets and encourage suppliers to help identify it. For example, the M&S CEO wrote to all suppliers and asked for their help to bring the perpetrators to justice and save the victims.

Education is critical, both internally and externally with suppliers. You need to know what you are looking for. Many organisations who spoke at the conference including Supply Chain Sustainability School and Nestle have shared their employee human rights training and resources for free online.

Which brings me to my next point.

4. You're not alone

Don't assume you're doing this alone. Take opportunities to learn from and collaborate with business partners, industry associations and civil society.

This can help reduce the burden and it's in the interest of all businesses to work together and create a level playing field.

Collaboration can also help reduce the impact on smaller entities. Also leverage freely available toolkits (eg M&S) and other guides that businesses and organisations have developed, eg Konica Minolta Australia.

5. Compliance tools and oversight

Codes, contracts and policies are a great first step. But you also need to consider how are they embedded into processes and do people really understand them (see education above). Many presenters recommended taking a cross functional approach.

You will also need to consider your remediation approach. If you start looking for modern slavery, you may find it and need to have processes in place to deal with it.

Audits are also very useful – internal audit have a critical role, also independent third-party audits, but most important are those unplanned audits. Put in place platforms for workers voices to be heard and their concerns to be safely raised such as anonymous hotlines and feedback apps.

6. Must go beyond compliance

However, a tick-box approach will not be sufficient – we need to move beyond compliance. Strong organisational leadership is necessary.

People need to be empowered to report when something doesn't feel right. Responsibility should be shared, but not passed on. Directors are becoming more aware of the risks associated with human rights issues.

Focus on the good outcomes and compelling business case. Human rights was one of the top two searches on the Responsible Investment Association Australasia's online responsible returns tool last year.

Investors are looking to modern slavery statements to guide investment decisions and shape their engagement with investees. "No first report is going to be perfect. Be honest, transparent and set clear goals" was the clear message from the panel of experts that unpacked what good reporting looks like.

 So where to from here? Our Modern Slavery page has details of all available resources and a summary of the legislation to help you identify whether your organisation needs to report or not.

However, as the reporting organisations seek to better understand their supply chain, and ask questions of their suppliers, we will see action on Modern Slavery filter down to many other Australia and New Zealand businesses.

Don't wait for this to happen, prepare now. It is time to end slavery in all its forms.

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