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Preparing Your Second Modern Slavery Statement

Slavery is often thought of as firmly in the past, yet despite its almost-universal illegality, there are believed to be over 40 million slaves across the globe today – more than in any other time In history. Here in Australia, the Modern Slavery Act make it compulsory for large companies (over $100m revenue) to take reasonable steps to prevent modern slavery in their supply chain, and file annual Modern Slavery Statements reporting on their progress. The keyword here is indeed progress, because modern slavery is by nature hidden from view, and combating the phenomenon effectively involves a nuanced, multi-year process. For companies who are (rightly) proactive about taking the “reasonable steps” in question, the first Modern Slavery Statement will reflect not only what has been done, but what needs to be done; while the second Modern Slavery Statement should demonstrate the headway your company has made towards bridging these gaps.

It’s important to note that even modern slavery statements with the most laudable policies do not necessarily translate into effective practice – for example, Nestle is currently in litigation for child labour identified in its supply chain, despite committing to abolishing this practice labour two decades ago. Intentions are not enough either to be confident that your company is fulfilling either its legal obligations, or its responsibilities as a good corporate citizen.

This article is intended to help you prepare your second modern slavery statement; if you’re still tackling putting the right strategies in place for your first modern slavery statement, head to our previous article 5 Steps Your Company Needs To Take To Help Form Its Modern Slavery Statement. Regardless of your stage in the reporting journey, we also recommend reading Why You Need A Tiered Approach To Combat Modern Slavery, which will help you to grasp the complexity of identifying key modern slavery risk factors in multitiered supply chains. These articles will assist you in setting the right foundations to initiate a robust, strategic approach to combating modern slavery.

Getting ready for Year 2 reporting

Your first annual Modern Slavery Statement sets the foundations for your efforts, but where to from there? Managing human rights in supply chains that may span many countries and be highly opaque can seem an almost-impossible proposition at first. This is why companies should take a multi-year, staged approach. In your first year, you set your framework; your second year and beyond will involve monitoring, reviewing effectiveness and pivoting accordingly.

By Year 2, you should have mapped at least your Tier 1 suppliers, and made significant efforts to address the first wave of high/medium risk suppliers, ensuring that the higher the identified risk, the higher priority. You should also have made progress towards setting up Codes of Conduct for your suppliers, and the suppliers they work with, as well as adding relevant clauses to contracts with existing and new suppliers.

 Additionally, you should be working together with key stakeholders (experts, suppliers, peers, NGOs, communities and consumers) to build capabilities over time. Not everything can be achieved over the course of a year, or even multiple years, but with proactivity your efforts will bear more and more fruit.

Your Second Modern Slavery Statement will include much that fits within the same domains as your first Statement, and you must still include the mandatory seven key components that form a Modern Slavery statement, as outlined here.

However, during this past year you have had time to take a deeper dive. You’ll be able to update the Government and the public on what you have achieved in the interim, demonstrating that you have taken reasonable steps to identify, prevent, sanction and remediate; and how effective your responses to modern slavery risks have been. Typically, this will include how far along you are in mapping the tiers of your supply chains; issues that have arisen, how they have been resolved and what has been learned and implemented.

People-centric mechanisms

You should also be covering what mechanisms you have put in place to resolve issues, and to protect the human rights of people working with your suppliers, and their suppliers in turn. While these should be suited to your industry, there may be much you can learn from what is being done in other industries: for example, in Bangladesh, workers in over a thousand supplier garment factories can report and quickly resolve workplace problems using the Amader Kotha Workplace Hotline was set up by three project partners (a civil sector organisation working with two private sector partners), which provides this service to 1.5 million workers including the Tier 1 suppliers of many leading international garment brands.

Not sure what sort of mechanisms would work best for your company and industry? Talk to external experts who are familiar with best-practice; talk to your suppliers, and talk to workers in your supply chain about what they’d like to see in place (making sure that they feel secure to speak freely about any concerns).

Mapping supply chains beyond Tier 1

Your second Modern Slavery Statement should include the efforts you have taken to understand what stage your Tier 1 suppliers are at identifying and preventing modern slavery in their own supply chain, and the steps you have taken to equip Tier 1 suppliers with these capabilities.

Combating modern slavery effectively cannot be done without a tiered approach (more on that here). Most modern slavery is found beyond Tier 1, so you and your suppliers must work together to be effective; if your Tier 1 suppliers are not taking their own reasonable steps, they shouldn’t be your supplier. Australian firms are increasingly taking action on modern slavery, with Wesfarmers recently ending relationships with 20 suppliers over these concerns.

Reporting your progress

To prepare your second Modern Slavery Statement, you should review what gaps you identified in your own capabilities in your first statement, and what steps you have taken to bridge these gaps. Some questions to consider:

• Who have you consulted over the last year?
• What tools have you used, and why?
• What due diligence and risk assessment actions have you carried out, and what do you have planned for the year(s) ahead?
• What training have you provided to relevant internal and external stakeholders (directors, employees, suppliers and so on)?
• To what extent has an understanding of modern slavery risk factors permeated your organisation – and how do you know that the training has been effective?
• What has changed since your first statement? What have you found as a result of these efforts?
• What actions did you to commit to in your first statement, and how far along have you progressed?

A Modern Slavery Strategy that gets results

Your Modern Slavery Statement must be more than just words on a page. It’s not just about avoiding business risk exposure, keeping your company out of a scandal, or keeping shareholders happy. It is a commitment towards ethical behaviour and a key part of your business strategy, informing the decisions you make as a company. It is about the people in your supply chain, and your responsibilities towards them.

For a modern slavery strategy to be effective, companies must understand that combating modern slavery is always a work in progress and are not set-and-forget. As you continue to approach this complex and multifaceted issue over the years, your expertise will grow; you will be better positioned to map and understand your supply chain and diffuse a people-centric culture where human rights are respected at all tiers. You will also gain a valuable body of knowledge that you can use to help other companies to do the right thing; after all, industries are much more able to effectively combat modern slavery when companies work together.

It’s important to accept that this takes time; your second Modern Slavery Statement will almost certainly still include areas that you wish to improve upon, and limitations to admit and address.

Forming a second Modern Slavery statement backed by robust strategy and practice can be a time-consuming process, as well as a costly one. Research from the AFR finds that only 8% of Australian companies are going beyond a basic analysis of modern slavery in their supply chain, which suggests that for many companies, putting policy into practice still remains on the too-hard shelf. Fortunately, agile tech solutions such as Informed 365 are able to provide reliable, meaningful data.

Our integrated solutions are helping companies to become more efficient by automating traditionally manual data gathering, visualisation and reporting, so your company can track, calculate, monitor, visualise and report against any data –requiring minimal input from busy or resource poor companies. We offer an end-to-end solution with our support team and onboarding assistants. With Informed 365, it’s easier and faster than ever for your company to

Want to know more about Informed 365, and how we can empower your company to put its CSR & ESG commitments into practice, delivering more robust results in less time? Explore our resources on modern slavery, ethical sourcing and supply chain management, and CSR reporting and certification, and contact us to assist with any enquiries, demo requests and suggestions.

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5 Key Modern Slavery Questions To Ask Your Top Suppliers

Modern slavery is increasingly in the spotlight, with Australian businesses and consumers alike becoming increasingly aware that this is not merely an international phenomenon. In fact, because of our extensive trade links with the APAC Region, where most victims of modern slavery are based, modern slavery is highly relevant to Australia. This makes it all too easy to inadvertently benefit from human rights abuses: from purchasing canned tuna and chocolate at the supermarket, to buying fast fashion, and even in the metals used to make our phones and the precious stones in our jewellery.

In an effort to combat this phenomenon, the Federal Government passed the Modern Slavery Act at the beginning of 2019, making it compulsory for large companies (over $100m revenue) to take reasonable steps to prevent modern slavery in their supply chain, as well as filing annual Modern Slavery Statements reporting on their progress. This is entirely new and often confusing territory for business leaders, who often want to do the right thing but are confused about where to start – combating modern slavery involves a body of knowledge and a skillset firmly out of their fields of experience. They also worry about spiralling costs chasing down opaque, multinational and multitiered supply chains.

This has led to a concerning phenomenon in which the preparation of Modern Slavery Statements seems to have become a box-ticking exercise for many companies, putting in-depth supply chain analysis in the too-hard basket as they settle for policies that sound laudable on paper, but do not translate into practice. In fact, the AFR estimates that only 8% of Australian companies that have lodged Modern Slavery Statements lodged to date have conducted more than a rudimentary Tier 1 analysis of their supply chains. With slavery by its very nature being not only reprehensible but also illegal in most global jurisdictions, such an analysis is unlikely to be effective or to qualify as “reasonable steps” in the eyes of the law.

The challenges of best-practice 

Even among those companies that are determined to form robust, best-practice strategies to identifying key modern slavery risk factors and combating these, the murky nature of international supply chains means that this can be a difficult task. Many companies do not know even who their Tier 2 suppliers are, and a supply chain may appear squeaky clean until it does not: for example, Amnesty International says it has traced cobalt used in smartphones, cars and computers to mines in the DRC, where children as young as seven work in life-threatening conditions. In other words, mapping Tier 1 is only the beginning: most modern slavery is found beyond Tier 2. (You’ll find more on why a multitiered approach to supply chain analysis is critical to combat modern slavery here.)

Accordingly, helping to equip Tier 1 suppliers with the right capabilities to identify and prevent modern slavery in their own supply chains, and raising their awareness of the need to do so, means they will be better equipped to understand both your obligations and theirs, and better equipped to ensure their own supply chain is ethical.

Some questions to ask your suppliers

The first steps towards equipping your Tier 1 suppliers to combat modern slavery in the lower tiers of your supply chain involves knowing what to ask. The right questions will help you to understand where they are now and what gaps do exist.

Some critical questions to ask your suppliers include:

1. To what extent have you mapped your own supply chain?

A company that excels at combating modern slavery will have mapped their entire supply chain for key products and services, as well as identifying key suppliers at all levels of their supply chain. A company which has made moderate progress towards mapping their supply chain will have identified major Tier 1 suppliers, as well as partially or entirely mapping supply chains for key products and services. Lastly, a company who is in the early stages of this process will have identified major Tier 1 suppliers but have little to no visibility of supply chains below Tier 1.

A company in the early stages of supply chain mapping should be expected to take reasonable steps towards progress in this area. Unfortunately, some suppliers will not be willing to do so. Keep in mind, among companies required to file a Modern Slavery Statement, your reporting requirements are not merely to write policies that gather dust; your own company is expected to take reasonable steps to identify and prevent modern slavery. Working with companies who do not map their own supply chains in turn may lead to exposure to business risks such as litigation, reputational damage and a loss of social license to operate – as well as the ethical implications of benefiting from human rights abuses. If your suppliers aren’t up to task, it’s likely better to take your business elsewhere.

2. How have you mapped your supply chain?

The purpose of this question is to gauge whether suppliers use a third party to identify overall risks of modern slavery and human trafficking in supply chain, keeping in mind that the domain knowledge required to effectively map a supply chain is often not available within a company. Expert advice will doubtlessly lead to more effective results.

3. What does your supply chain look like?

For example:

• What countries are your products and services sourced from?
• Do you conduct independent/unannounced audits of supplier operations?

It’s all too easy to present well to operational audits when a supplier is aware that you’re coming. If a Tier 1 suppliers pre-announces its visits to its own Tier 1 suppliers, it’s very difficult to gauge the realities of supplier operations. It’s reasonable to expect your suppliers to conduct independent and/or unannounced audits.

Likewise, the countries where your supplier’s products and services are supplied from matter. To what extent are worker rights protected by law in those countries? If local legislation is weak in these matters, you will have to communicate to your supplier what expectations they should be setting for their own suppliers.

4. What are your responses to key slavery risks?

For example:

• What policies does your company have in regard to modern slavery and human trafficking?
• What standards are your employees and contractors obligated to follow, and what are the penalties for non-compliance?
• What training do your employees and contractors undertake in regard to modern slavery?
• If modern slavery is identified in your supply chain, what sanction & remediation processes do you undertake?

Employees and contractors need to be equipped with the knowledge of how to spot modern slavery and human trafficking: there are many signs, but it’s all-too-easy for these to go under the radar. Employees and contractors should be trained in this matter, as well as how to prevent modern slavery, and what steps to take where it is identified. They should understand your company’s policies and the role they have to play, their obligations, and penalties for non-compliance.

Furthermore, the policies your Tier 1 suppliers hold should include commitments surrounding sanctions and remediations where modern slavery is found; this is a critical part of a robust modern slavery strategy.

5. What are the working conditions of your workers like?

For example:

• How many employees do you have; where are they located, and what sort of employment relationship is involved (permanent, seasonal or contract)?
• Do you utilise any labour hire?
• Do the people working for your company have access to independent whistleblowing?
• Are they free from discriminatory practices?
• Are the conditions they work in safe?
• Are they compensated fairly for their work?
• Do they have the right to join a trade union?
• Are you aware of low-skilled migrant workers working in your organisation’s supply chains?

Likewise, these are questions you can expect them to ask their own Tier 1 suppliers, upon which those suppliers can be expected to ask the same of theirs. By doing so, you can gain a far more nuanced understanding of the working conditions of those people who provide products and services to your company.

 

Knowledge is Power

Many of your suppliers are likely to be in similar shoes to your company: wanting to do the right thing and avoid exploiting the vulnerable, yet unsure how to do so. After all, modern slavery is horrifying, not just from a business perspective but from an ethical one. The key is to equip your suppliers with knowledge and capabilities, so they are better positioned to ensure ethical sourcing.

Informed 365 provides an agile tech solution that automates traditionally manual data gathering, visualisation and reporting, delivering reliable, meaningful data in a way that’s easier and faster. With our integrated solutions, your company can efficiently track, calculate, monitor, visualise and report against any data – with minimal input required. We offer an end-to-end solution with our support team and onboarding assistants.

​We develop customised, real-time CSR (Corporate Social Responsibility) platforms with predictive capabilities and unlimited analytics to provide visibility and transparency that allow more informed decisions. To learn more about Informed 365, and how we can empower your company to put its CSR & ESG commitments into practice, contact us. We’d be more than happy to assist with any enquiries, demo requests and suggestions.

For more insight into modern slavery, and your company’s role in combating this phenomenon, explore our resources section for articles such as 5 Steps Your Company Needs to Form Its Modern Slavery Statement, and The Long Road to Corporate Transparency. You’ll also find plenty of podcasts, media coverage and webinars on modern slavery, ethical sourcing & supply chain management, and much more.