As mentioned in the last article, with the introduction of Australia’s Modern Slavery Act 2018 many organisations are starting to measure social impacts, evaluate human rights commitments, and assess the risks of modern slavery across operations and supply chains. However, it’s important to understand what those risks look like, and how to prioritise them effectively.
The term ‘modern slavery’ describes situations where offenders use coercion, threats or deception to exploit victims and undermine their freedom; situations of serious exploitation that may include debt bondage, forced labour, forced marriage, human trafficking, servitude, slavery, and the worst forms of child labour. The term doesn’t include practices like underpayment of workers or substandard working conditions, although these practices are also harmful and may be present in situations of modern slavery. It is estimated that today there are over 40 million people in conditions of modern slavery worldwide, with up to 15,000 people in Australia similarly impacted.
Larger organisations required to comply with the Modern Slavery Act 2018 must prepare annual Modern Slavery Statements; others may report voluntarily to demonstrate best practice or meet client obligations, while smaller and medium-sized organisations are already being asked to provide information to help larger businesses demonstrate the ‘continuous improvement’ that underpins the Act.
As the Australian Government’s ‘Guidelines for Reporting Entities’ state, “The third mandatory criterion requires you to describe the risks of modern slavery practices in the operations and supply chains of the reporting organisation. You also need to describe the risks of modern slavery practices in the operations and supply chains of any entities the reporting organisation owns or controls.” So, what do those risks actually look like?
To be clear, organisations are only required to identify how risks of modern slavery practices may be present in the reporting organisation’s operations and supply chains, and the Act “does not require you to certify that the reporting organisation is slavery free” since “every organisation has modern slavery risks in its operations and supply chains.”
So, in this context, the ‘risks of modern slavery practices’ means the potential for your organisation to cause, contribute to, or be directly linked to modern slavery through its operations and supply chains – in other words the risks that your organisation may be involved in modern slavery. Effective human rights due diligence remains the best way to identify risks and avoid them materialising in the first place; it’s also critical that policies and procedures to support human rights are not developed in isolation so that they can be implemented in a meaningful way.
What’s important is that the concept of risk mentioned here means risk to people rather than risk to your organisation (such as financial or reputational harm). However, often risks to people are likely to overlap with risks to your organisation. For example, potential forced labour in an LED lighting factory poses risks to the human rights of the workers (risk to people) but may also lead to reputational harm and legal liability for the LED lighting company (risk to the organisation), and possibly its clients.
This people-focused or outward-facing approach to risk may be different from how your organisation normally deals with other types of risk, and how risk may have been regularly assessed in an organisational ‘Risk Matrix’ and addressed by your senior leadership team or board in the past.
Some organisations have been assessing such information for years; because they are leaders in this field, demonstrating their ethical procurement and supply chain transparency; or because they already report in other jurisdictions. But many others feel that they are ‘late’ to the conversation, and so need to catch up with broader risk assessment, staff and supplier training, and prioritisation of the risks identified.
A recent Australian Financial Review article outlined that “other risks for companies created by the pandemic included workers, particularly those in factories, potentially catching COVID-19 if they are not adequately protected or spaced apart, while some people who had lost their jobs during the virus outbreak were now desperate, putting them at risk of being exploited”, highlighting the fact that many of the people-focused risks may be constantly evolving.
It’s certainly helpful to prioritise actions and initiatives in terms of ‘risk of harm to people’, rather than the usual ‘likelihood of something occurring’ or ‘risk of reputational damage’. And it’s also useful to think about ‘Responsible Recruitment’ as underpinning everything you do – whether in Australia or oversea – to ensure that every element is covered. In this way you can make sure that policies and procedures are inclusive, wages are paid regularly, directly and on time, and the right to worker representation is respected.
As Nicole Thompson, Head of Sustainable & Ethical Procurement, Edge Environment, says: “Often receiving the results of a modern slavery risk assessment is overwhelming, as so many of our supply chains have some level of risk within them, however understanding where the risk lies is only the first step. The next step towards preventing modern slavery is to prioritise which supply chains or which suppliers to concentrate due diligence efforts on first, as you can’t address it all at once.”
She explains that “We are seeing organisations take different approaches to prioritising risk but generally there a few key factors that should be considered being, risk profile (high risk countries & sectors), at what proximity is the risk to the organisation, where can the organisation have the most influence or leverage over suppliers, and which suppliers need the most support.”
As Nicole continues, “many organisations use spend, which isn’t wrong as this usually equates to leverage, but it’s important not to overlook low spend categories that carry a high risk. It’s a good idea to involve stakeholders from across the organisation to contribute their knowledge, this may include project managers and representatives from procurement, risk, legal and governance teams.”
You and your suppliers can also start with one of the wide-ranging toolkits available that look at multiple aspects of business and investment including how to understand current problems, how to look at supply chain due diligence, codes of conduct, corrective action and remedy, the basic legal obligations and frameworks, your reporting processes, tools for the financial sector to use, and how you might mitigate the impacts of COVID-19 on vulnerable workers.
As Emeritus Professor Rosalind Croucher, President of the Australian Human Rights Commission, describes it, “effective management of modern slavery risks involves placing ‘risks to people’ at the heart of your response. Taking a rights-based approach to addressing modern slavery will assist your business to meet the increasing expectations of investors, governments, clients, consumers, business peers and civil society around business respect for human rights.”
If you’d like to find out more about this topic, on Thursday 22nd October 2020, you are invited to join an expert panel at a FREE webinar aiming to answer: ‘How can you prioritise your modern slavery risks?’
The panel will share their experiences working with Australian businesses in different sectors, examine how human rights and modern slavery issues sit within the strategic, sustainability and social sustainability agendas, and explore how we can address and prioritise the risks of modern slavery in our operations and supply chains.
The webinar is free and features the following speakers:
- Nicole Thompson, Head of Sustainable & Ethical Procurement, Edge Environment
- Robin Mellon, CEO of Better Sydney, and Project Manager for the Property Council of Australia’s Modern Slavery Supplier Platform
- Susan Mizrahi, Chief Sustainability Officer at Australia Post and Chair of the London Benchmarking Group Steering Committee
- Justin Dillon, CEO and Founder of FRDM and Made In A Free World
- Nicole D’Souza, Ethical Sourcing Manager at Konica Minolta Australia
You can get your free ticket to this industry webinar at: https://events.humanitix.com/how-can-you-prioritise-your-modern-slavery-risks
by Robin Mellon, CEO at Better Sydney
Robin Mellon has combined his love of the environment, passion for sustainability, qualifications in real estate, and experience with procurement to become one of Australia’s experts on property, construction, supply chains and sustainability in the built environment, and the CEO of Better Sydney. He is Project Manager for the Property Council of Australia’s Modern Slavery Working Group and Supplier Platform, and works with the Better Building Finance team engaging with councils across NSW.