Exposing modern slavery

Australia’s new Modern Slavery Act is an opportunity for businesses and consumers to ensure they are making ethical choices when it comes to working conditions in global supply chains, according to experts from the MLS community.

Australia’s new Modern Slavery Act is an opportunity for businesses and consumers to ensure they are making ethical choices when it comes to working conditions in global supply chains, according to experts from the MLS community.

By Johanna Leggatt

At the end of 2018, a momentous law was quietly passed in the House of Representatives that sought to address the use of modern slavery to construct the everyday goods we consume.

The Commonwealth Modern Slavery Act 2018 came into force in January this year and obliges Australian companies and organisations with consolidated revenue of $100 million or more to provide annual statements on the risks of modern slavery in their supply chains.

The reports, which will be publicly available, also require companies to outline the steps they are taking to combat the modern slavery they unearth within their supply chains.

For human rights advocates such as Melbourne Law School alumna Kyla Raby (MPub&Intl Law 2016), who is the National Program Coordinator for the Support for Trafficked People Program at the Australian Red Cross, it was a defining moment.

“Modern slavery is such a hidden issue,” Raby says.

A recent Australian Institute of Criminology study found that for every person who is identified as a victim of modern slavery, there are four victims who are not identified.

Indeed, the International Labour Organisation estimates there are more than 40 million people in modern slavery conditions worldwide.

As Raby notes, globalisation, while positive in many respects, has also meant that forced labour is sometimes used in the creation of the goods Australians consume.

“We are a connected world, but it has also meant we are disconnected from how the products we buy are made, who has made them, and in what circumstances,” Raby says.

“This new Act makes companies assess the protections they have for people in their supply chains.

“How do you make sure you have accountability mechanisms in place if something does go wrong so people can defend their own rights?”

Dr Phoebe Wynn-Pope (BA 1986, PhD 2010 Law), who is the Head of Business and Human Rights for independent law firm Corrs Chambers Westgarth, says the Act will help highlight instances of modern slavery hidden by opaque, twenty-first-century supply chains.

“Modern slavery happens out of sight and is partly driven by this desire to reduce costs, especially labour costs,” Wynn-Pope says.

“This is fine in principle, but it raises the potential for exploitation.

It’s not an illegitimate thing to go offshore, and good businesses are lifting people out of poverty at a rate of knots, but I think when you have a very low-margin product, and suddenly you need another 100,000 of them by Monday, those sorts of things can push suppliers to the very limits.

Wynn-Pope notes that some sectors are more likely to contain examples of modern slavery in their supply chains than others. These include some – although not all – apparel and clothing accessories manufacturers, as well as manufacturers of laptop computers and mobile phones, especially those assembled in China and Malaysia.

According to the Global Slavery Index, apparel and accessories are particularly vulnerable to modern slavery in supply chains if they have been made in Argentina, Brazil, India, China, Malaysia, Thailand or Vietnam.

In terms of food products, fish, rice and cocoa are highly vulnerable too.

Ingrid Landau, Melbourne Law School PhD candidate and Lecturer in the Department of Business Law and Taxation at Monash Business School, describes the Act as a positive and important move, but not without limitations and complexities.

As Landau explains, the Australian Act is modelled on the UK Act, but has tried to address some of the exposed flaws within the UK legislation.

With the UK Act, there is no publicly-funded and provided registry for company statements,” she says. “Companies are only required to publish their [slavery statements] on their own website.

“Whereas our Act, in contrast, allows for a government-funded and provided registry, where all the statements will be accessible.

“This still requires civil society to do the legwork in comparing and benchmarking the responses.”

Landau says a lack of financial penalties has also hamstrung the UK Act.

“Under the UK Act, there is no enforcement of penalties if companies fail to produce a statement.

What we have seen in the UK, as a result, is that many companies are either not producing a statement or they are producing a statement that does not comply with the bare minimum of information they are required to produce.

When it came time to draft Australian laws, many advocates felt keenly that there should be some form of ‘stick’ to compel companies to report.

“The Labor Party tried unsuccessfully to bring in amendments to the bill for civil penalties for non-compliance,” Landau says.

“In the end, an amendment was passed in the Senate, which means that the Minister for Home Affairs can send companies and organisations essentially a ‘please explain’ if they fail to report, and potentially ‘name and shame’ those companies that fail to respond appropriately.”

A separate NSW Modern Slavery Act was passed in the State Parliament in June last year and comes into play on 1 July.

It provides for a dedicated NSW anti-slavery commissioner, as well as financial penalties for companies who renege on their duties to report.

While this is heartening to human rights advocates, it is not clear how the NSW and federal acts will co-exist.

“The NSW Act applies to companies and organisations with a revenue threshold between $50 and $100 million,” Wynn-Pope says.

“So you have this situation where companies working in NSW earning between $50 and $100 million may have penalties applied, but companies earning more than $100 million will fall under the Commonwealth Act and may not have penalties.

“My understanding is that there is work to be done to marry these two acts and ensure they are complementary.”

How effective is the new federal Act likely to be in combating instances of modern slavery in supply chains? Will it make any real difference?

Wynn-Pope is optimistic.

“There are a lot of Australian businesses that are already quite ahead on this front: those multinationals who already report in the UK – the likes of Qantas, BHP and so on,” she says.

Also, the environmental, social and governance reporting that is required increasingly by investors and scrutinised by corporate stakeholders offers a great opportunity for businesses to get ahead of the game and to demonstrate that it certainly isn’t ‘business at any cost’ and it certainly isn’t business on the back of the world’s most vulnerable people.

While many were hoping the federal Act would include the provision of an anti-slavery commissioner and financial penalties, Landau points out there is scope for the legislation to be changed down the track.

“In response to concerns over the UK legislation, there will be a three-year review of the Act, including the issue of penalties, so if organisations aren’t reporting properly there may be an option to introduce a civil penalty,” she says.

In the meantime, consumers have a role to play too.

“We have seen a shift in the last decade towards consumers wanting to make more ethical choices,” Raby says.

“That is quite challenging to do without transparency from organisations, so what the Act does is to increase that transparency.

“A consumer is going to be able to look at the public register and see an organisation’s modern slavery statement, or whether they have even made a statement.

“I am positive about the Act, but I do think it will be an incremental process of change,” Raby says.

Banner image: Apparel and clothing accessories manufacturing is one example of an industry that can be vulnerable to modern slavery. Image credit: Vladimir Vladimirov, iStock.

This article originally appeared in MLS News, Issue 21, June 2019