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Press Release: Five Signs that Change is Happening in Modern Slavery

Sourceable’s Robin Mellon points towards five signs that things are changing for the better when it comes to Modern Slavery, and why these changes are set to continue. Informed 365 are proud to be part of this change, with our partnership with the Property Council of Australia highlighted in the article. 

The five signs include:

• Investors are already looking for organisations that are taking action, not just making promises
• Australia’s Online Modern Slavery Register is increasing visibility and transparency
• More people are searching for organisations’ statements than ever before
• Partnership continues to be the new leadership, highlighting the partnership of the Property Council of Australia and Informed 365
• Awareness-raising, learning and training are coming to the fore

 Read the full article over at Sourceable.net here.

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What legal counsel need to know about the Modern Slavery Act

The passage of the Modern Slavery Act in 2018 has left many large companies concerned about how to meet their obligations under the Act. How do you effectively combat modern slavery, when the phenomenon by its very nature lurks in the shadows of supply chains that are often multinational and opaque? Companies often have thousands if not tens of thousands of suppliers across the tiers of their supply chain, yet frequently do not have transparency of what these supply chains look like, and unravelling these supply chains can seem like an overwhelming process. Modern slavery reporting entities and their suppliers are now entering an unfamiliar territory of trying to map their own complex, multi-tiered supply chains while understanding key modern slavery risk factors.

Unfortunately, this leads to too many companies paying lip service to their anti-slavery commitments, with AFR recently publishing research estimating that only 8% of Modern Slavery Statements lodged to date go past a rudimentary Tier 1 analysis. Fortunately, there is a better way, with technology enabling companies to turn policy in best-practice, faster and easier.

So, what does this all mean from the perspective of legal counsel? Firstly, it is critical to understand whether a company is a reporting entity, what their obligations under the Act are, and how they can meet these obligations.

What is modern slavery, and how is it relevant in Australia?

According to the Department of Home Affairs, “modern slavery describes situations where offenders use coercion, threats or deception to exploit victims and undermine their freedom. Modern slavery can occur in every industry and sector and has severe consequences for victims. Modern slavery also distorts global markets, undercuts responsible business and can pose significant legal and reputational risks to entities.” For many Australians, modern slavery seems like something faraway and unrelated to the realities of doing business in Australia; however, our close trade ties to the APAC region put Australian companies at great risk of inadvertent exposure to modern slavery in our supply chain, particularly at Tier 2 and beyond.

It’s also important to note that this is not only a problem that occurs overseas. It may surprise you to find that the Global Slavery Index estimates that on any given day in 2016, there were 15,000 living in conditions of modern slavery in Australia, predominantly in high-risk sectors such as agriculture, construction, domestic work, meat processing, cleaning, hospitality, and food services. Modern slavery happens within our borders, too.

Who is required to lodge a Modern Slavery Statement, and what does this Statement entail?

Large businesses and other entities in the Australian market with annual consolidated revenue of at least AUD$100 million are required to lodge a Modern Slavery Statement each year. Reporting entities are obligated to take reasonable steps to identify and address modern slavery risks, and maintain responsible and transparent supply chains.

Modern Slavery Statements must set out the reporting entity’s actions to assess and address modern slavery risks in their global operations and supply chains.

The Australian Government publishes these statements through an online central register, which can be found at https://modernslaveryregister.gov.au/

What needs to be included in a Modern Slavery Statement?

The Modern Slavery Act does not contain a prescribed format, but does include mandatory criteria as set out in Section 16 of the Act (which can be found here). Modern Slavery Statements must:

• identify the reporting entity
• describe the structure, operations and supply chains of the reporting entity
• describe the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls;
• describe the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes;
• describe how the reporting entity assesses the effectiveness of such actions (for example, process reviews, internal audits, compliance monitoring, reports from suppliers on their own compliance and initiatives);
• describe the process of consultation with any entities that the reporting entity owns or controls; and (in the case of a reporting entity covered by a statement under section 14)—the entity giving the statement; and
• include any other information that the reporting entity, or the entity giving the statement, considers relevant.

The reporting entity must also ensure the statement is approved by the ‘principal governing body’ of the reporting entity (for a company, this would be the board of directors) and signed by a ‘responsible member’ of the reporting entity.

What are the legal implications of the Modern Slavery Act?

Excluding the obvious ethical and reputational risks of modern slavery occurring in a supply chain, the legal risk is also great. Australian reporting entities must do their due diligence, and must be able to prove that they have done so; otherwise, there is significant risk exposure to litigation.

Combating modern slavery requires more than policy commitments; it is all-too-easy to not shine a spotlight on the murky waters of a supply chain, but high-profile recent international cases (Nestle, Cargills, etc.) demonstrate that neither policy commitments nor ignorance are a particularly valid excuse. As such, reporting entities must take reasonable steps to put these commitments into practice, and there is a significant body of knowledge of how to do that. That said, this knowledge generally does not exist internally within individual Australian companies, which is why it is critical to work with modern slavery experts to form and execute on a robust modern slavery statement; furthermore, collaboration and knowledge-sharing within industries has proven to be the most effective way to get results. Finally, with much of modern slavery lurking in Tiers 2 and beyond, proactively equipping suppliers with the knowledge and capabilities to combat modern slavery is absolutely indispensable; your suppliers need to know their responsibilities, and how to deliver on these. We’ve recently seen retail behemoth Wesfarmers end contracts with 20 suppliers over concerns about modern slavery; if the suppliers you work with are unwilling to take the steps necessary to fulfill your legal and ethical obligations, they likely shouldn’t be your suppliers.

Many companies are struggling with the difficulty of navigating these previously unchartered waters, and the invisible nature of modern slavery can lead to decisionmakers putting the development of a robust strategy for combating modern slavery into the too-hard basket. But rudimentary analysis for box-ticking purposes won’t solve a problem that is worse today than it was yesterday, and which will be worse tomorrow than today.

What can be done to combat modern slavery?

Modern slavery is what is frequently called a ‘wicked problem’ in public policy. When a problem is ‘wicked’, it means that much of the problem is invisible and unmapped; multiple stakeholders must work together collaboratively to combat it, and despite best efforts a company cannot be entirely sure that it has been successful. However, this doesn’t mean that best efforts shouldn’t be made.

Many companies want to do the “right thing” where modern slavery is concerned. However, they may feel woefully under-resourced and underprepared to deal with the scope and nature of this problem. While it can seem overwhelming at the outset, there are best-practice expertise, methods and tools that be of great help.

Working together with others in industry means that a body of knowledge can be built, and we’ve seen that done to great effect in industries like fishing, construction and fashion. At Informed 365, we’re proud to be the provider of the Property Council Supplier Platform to stamp out modern slavery, currently used by 25 organisations to capture tens of thousands of suppliers and billions of dollars in annual procurement spend.

Lastly, agile tech solutions such as Informed 365 are essential in order to provide reliable & meaningful data, turning Corporate Social Responsibility and Environmental, Social, and Corporate Governance commitments from policy into practice. Here at Informed 365, our solutions help organisations to become more efficient through the automation of data gathering, visualisation and reporting processes that have traditionally been conducted manually (and taking up significant time and resources in the process). With CSR & ESG requirements becoming more and more important, and internal and external stakeholders increasingly demanding that companies act in a socially and environmentally responsible manner, our agile Business Intelligence systems can benefit companies of any size and industry.

We help our clients to track, calculate, monitor, visualise and report against any data, through a highly automated process requiring minimal input from busy or resource-poor companies. We offer our clients an end-to-end solution with our support team and onboarding assistants, making it easier than ever for Australian companies to breathe life into their CSR & ESG commitments.

If you would like to know more about Informed 365 and our offerings, contact our friendly team; we would be more than happy to assist. And if you enjoyed this article, you may be interested in our extensive resources relating to modern slavery, supply chain management and CSR reporting and certification, including our recent post on why you need a tiered approach to combat modern slavery.

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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.

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5 Steps Your Company Needs To Take To Help Form Its Modern Slavery Statement

To many Australian businesses and consumers, modern slavery is an invisible problem: a problem that happens elsewhere in the world, that we are vaguely aware of. Perhaps we are concerned about whether our purchasing decisions may be enabling modern slavery but are unsure how to go about making more ethical choices.

However, despite common perception of slavery as something that happens overseas, or indeed no longer happens, it is a problem facing modern Australia. The Global Slavery Index finds that an estimated 15,000 modern slavery victims are living in Australia, and that over 40 million people live in modern slavery conditions around the world; an estimated two-thirds of these people live in the APAC region, to which Australia has close trade links. Because of the complex and opaque nature of modern slavery, these figures may be significantly higher; recently, the UK increased its estimated number of people living in slave-like conditions from 10,000 to 100,000 – a staggering ten-fold increase. If a developed country like the UK has had such difficulty in grasping the scope of its modern slavery problem, it seems likely that the figures for the developing world may also be much higher.

Modern slavery is pervasive across many industries which impact the average Australian: from fast fashion to the construction industry, food to electronic components and suchlike. : Many products and services purchased in Australia come from Australian companies with murky supply chains that have high exposure to modern slavery risk factors. Australian companies and consumers alike have become increasingly aware of this phenomenon, and concerned about it in recent years, especially in light of media scandals surrounding supply chain management, as well as the passage of the Commonwealth Modern Slavery Act 2018. This Act entered into force on 1 January 2019, establishing a national Modern Slavery Reporting Requirement. Large companies and other entities in the Australian market with annual consolidated revenue of at least $100 million are required to file annual Modern Slavery Statements, demonstrating that they are taking reasonable steps to identify and manage or mitigate key modern slavery risk factors in their supply chain. Companies of smaller sizes can also voluntarily submit Modern Slavery Statements evidencing their efforts in this matter.

Even with the best of intentions, combating modern slavery can initially seem an arduous task for companies, especially where supply chains span borders and are complex and multi-tiered in nature. Many companies delivering services also assume that modern slavery is only a problem in product & commodities-based industries; however, companies from diverse sectors can be exposed to modern slavery risks and must take proactive steps to ensure that they both identify these risk factors and combat them effectively. 

With this in mind, Informed 365 has compiled this list of five key steps which companies should take towards ensuring that their Modern Slavery Statements are more than words on a page; that they form a robust, strategic and proactive basis for an ethical supply chain which identifies, minimises and mitigates modern slavery risks as much as possible.

1. Adopt A People-Centric Perspective

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.

– Emeritus Professor Rosalind Croucher AM,

President of the Australian Human Rights Commission

As we have touched upon, human rights should be at the centre of an approach to combating modern slavery. People-centricity is critical to forming your modern slavery statement, taking an approach of identifying risks to people from a human rights due diligence perspective, and addressing the most severe risks to people first. Your company’s commitment to modern slavery should be based on a commitment to human rights and grounded in the due diligence framework outlined in the 2011 United Nations Guiding Principles on Business and Human Rights (UNGPs).

Your company’s commitment should be front-of-mind when they make decisions about choosing what suppliers you should do business with. By embedding a people-centric human rights perspective in your company commitment, training your people on their responsibilities, and sharing that this is something that matters deeply to your company, your people will be better placed to keep this commitment in mind when making important decisions that could otherwise expose your business to modern slavery risks.

2. Understand The Business Risks Of NOT Addressing Modern Slavery

Today’s consumers have unprecedented access to ethical purchasing information and will make purchases in alignment with their values; a company whose supply chain is even inadvertently linked to slavery may find themselves dealing with a scandal.

Failing to proactively identify and address modern slavery risk factors, as well as monitoring and reporting on this engagement, exposes your company to both reputational, ethical, and legal risk, as well as exposing people to horrifying conditions. A Modern Slavery Statement is a legal requirement for larger companies; but even where it is not a legal requirement, the case for a proactive approach to combating modern slavery is clear both for your company’s reputation, and from an ethical perspective so that your directors, employees, shareholders & stakeholders, and the people who purchase your goods and/or services can do so with pride, knowing they are buying from, working for, and investing in a company that lives by its values.

3. Identify Modern Slavery Risk Factors

The opaque nature of modern slavery means that your efforts to combat it must be more than a plan on a page. It is very easy not to find modern slavery for companies that do not go out looking for it. But assuming a lack of risks and reporting accordingly is not enough to meet the reporting requirements of the Modern Slavery Act; beyond that, it is not enough to rest assured that you have done your best to ensure an ethical supply chain. Due diligence is key.

When forming your company’s first Modern Slavery Statement, you may find yourself struggling to map beyond Tier 1, particularly as it takes time to build up the capacity of your Tier 1 suppliers to identify and address risk factors of their suppliers, and so on. This is a problem faced by many companies, and is somewhat to be expected, but this should not be left on the too-hard shelf; rather, your company should act with transparency, note any areas that still need to be addressed moving forward, and plan accordingly. Be honest about what you do not yet know, clarify how you intend to fill these gaps, and set timelines for when you expect that you will be able to do so.

Working with relevant external experts who specialise in helping companies to identify this risk is an important step. Your business is expert at what it does, but you are unlikely to have the in-house expertise or capabilities to combat modern slavery effectively without outside help. It is, however, important to note that combating modern slavery is not a task that can be wholly outsourced or set-and-forget; again, you are the expert on your business, and should work collaboratively with the experts you engage with, and relevant stakeholders making supply chain decisions to explore and map areas of modern slavery risk to your company, and more broadly in your industry (naturally, these differ significantly between industries).

Working collaboratively with other companies in your industry where possible can help you to distribute the workload and costs involved in some aspects of risk identification and management; for example, the Property Council of Australia has launched a supplier platform dedicated to delivering a consistent, streamlined approach to Modern Slavery reporting.

Executives often perceive the process of mapping supply chains and identifying risk factors to be difficult, costly, and unmanageable; after all, large companies often deal with hundreds if not thousands of suppliers, especially by the time that lower tiers are mapped. However, modern slavery overwhelmingly lurks in the lower tiers – out of sight and out of mind unless businesses proactively pursue the issue. Conventionally, many of the processes involved in identifying modern slavery risk factors have been manual and arduous; however, agile tech solutions such as Informed 365 allow difficult and time-consuming tasks such as monitoring, tracking and visualising supply chain management to be largely automated, enabling your company to provide reliable & meaningful data more efficiently and effectively as you transform both your Corporate Social Responsibility and Environmental, Social, and Corporate Governance responsibilities from plans-on-a-page to real-life practices. 

Lastly, it is of critical importance to meticulously document your risk-mapping processes, both to ensure that you can prove due diligence, and so that you can grow your knowledge base of what your supply chain looks like and identify and minimise, manage, and mitigate risks moving forward.

4. Develop Minimisation, Management, And Migration Strategies

Your tactics to reduce exposure to modern slavery risk factors will not look exactly the same as those of any other company; however, certain strategies will apply generally across industries. These include ensuring that the entire organisation is trained to understand what modern slavery is, and what their responsibilities are; evaluating risks of both existing and new suppliers; mapping and auditing your supply chain; and sanctioning or cutting off contracts with suppliers who do not meet requisite standards. You should make policy commitments for remediation if it is identified that modern slavery has been detected in your supply chain.

Having identified risk factors and developed strategies to address these, you are now better positioned to structure a robust, strategic Modern Slavery Statement.

5. Structure Your Modern Slavery Statement

Your company’s Modern Slavery Statement should clearly describe your commitment to tackling modern slavery and demonstrate the steps you have taken to act upon these policies: your risk-mapping processes, your policies & procedures, actions that you have taken and intend to take, training that relevant stakeholders have undergone, relevant parties that you have engaged with, and your action plan moving forward.

You should include the mandatory seven key components that a Modern Slavery Statement, which are:

• Name of organisation
• Structure and operations
• Key modern slavery risks
• Actions taken
• Effectiveness of actions
• Consultation within your organisation (incl. overseas)
• Other initiatives.

The resulting Modern Slavery Statement will vary considerably from company to company, and industry to industry, but if you have carefully addressed the previous steps, then your Statement will be based a robust strategy that has taken reasonable steps towards identifying and acting upon risks and planned for how to address these.

To understand the actual format of a Modern Slavery Statement, we suggest visiting the Australian Government’s Online Register for Modern Slavery Statements, where you can see almost 250 Statements lodged to date, covering almost 500 entities. It is, however, important to note that a robust Modern Slavery Statement is not a copy-paste job; unfortunately, an analysis of 121 modern slavery statements cited in the Australian Financial Review finds that only 8% of Australian companies are going beyond a basic analysis of modern slavery in their supply chain. While this register can help you understand the general format of a well-written Statement, it is no substitute for due diligence. Remember, your Statement is not just words on a page: it is a commitment towards ethical behaviour and a key part of your business strategy, informing the decisions you make as a company.

Highlight your policy commitments, including how you will handle any mistakes or oversight; as mentioned earlier, admit what you do not yet know and where you have room for improvement. Act with transparency, with due diligence and in good faith, and you will be best positioned towards fulfilling your reporting requirements, protecting your supply chain from modern slavery risk factors, and protecting the human rights of people who are involved in your supply chain in Australia and overseas.

Moving Forward

Modern slavery is what is commonly known in policy circles as a “wicked problem”, with multiple, inter-related drivers. As an ethical company, you should show what you are doing to commit to the solution, rather than taking the all-too-common approach of saying the bare minimum and hoping that the invisible modern slavery risk factors remain invisible. Sadly, many companies who adopt human rights policies surrounding modern slavery, human trafficking and so on take very little action to act upon these policies.

Having read this far, we think it is safe to say that you want your company to be different; that you want to take practical action to be a good corporate citizen and are not satisfied with joining others in burying your head in the sand. You understand that policy alone is not enough to protect human rights, and that practical action is necessary. As such, your Modern Slavery Statement should be a guiding light for your company, based on detailed planning, recognition of the complexity and opacity of the modern slavery issue, and proactive strategies to prevent modern slavery from occurring in your company’s supply chain, identify modern slavery where it does occur, and sanction & remediate accordingly.

With Informed 365, you will be more able to achieve this. Our solutions help organisations to more efficiently turn their CSR and ESG policies into practice, including tackling modern slavery, by automating traditionally manual data gathering, visualisation and reporting processes. With an ever-increasing focus on companies acting in a socially and environmentally responsible manner, CSR and ESG have become integral to doing business in today’s world; we help companies who want to do more than pay lip service.

With Informed 365, it is easier for organisations with a turnover of over $100m to meet their annual Modern Slavery reporting requirements, as well as smaller organisations who voluntarily choose to combat modern slavery in their supply chain. With our agile Business Intelligence systems, you can easily track, calculate, monitor, visualise and report against any data, through a highly automated process requiring very little time or resources from you. With our support team and onboarding assistants at the ready, we can offer an end-to-end solution for companies who are committed to doing good through their work.

Want to know more about Informed 365 and how we can be of service to your company? Explore our resources on modern slavery, ethical sourcing and supply chain management, and CSR reporting and certification, including a recent webinar on Modern Slavery Implications & Case Studies hosted by Shark Tank’s Andrew Banks, and contact us to assist with any enquiries, demo requests and suggestions.

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Combating Modern Slavery – Why You Need A Tiered Approach

Australian companies of all sizes are increasingly realising that modern slavery is not just something that is happening elsewhere, or a problem for the developing world to face alone. Australia’s close trade links to the APAC region, where approximately two-thirds of victims of modern slavery are based, result in many opportunities for modern slavery to permeate our supply chains. Despite this, an analysis of 121 modern slavery statements cited in the Australian Financial Review finds that only 8% of Australian companies are going beyond a basic analysis of modern slavery in their supply chain. As well as being murky waters ethically, this opens companies up to litigation. 

We have seen examples recently in the US with high-profile lawsuits against companies like Mars, Cargill, Nestlé, and Hershey, all of whom pledged almost 20 years ago to end modern slavery and child labour in their supply chains. You can read more about these cases in the Washington Post, where they assert that “the odds are substantial that a chocolate bar bought in the United States is the product of child labour”, and identify that a significant barrier facing these companies in eradicating child slavery is that they still cannot identify the farms where all their cocoa comes from, let alone whether slavery was involved in its production.

Unfortunately, modern slavery in Australia is all-too-often an invisible problem. With the increasing shift from vertical integration to sourcing more inputs from developing countries to save costs and retain a competitive edge, leaving companies more open to the potential of modern slavery in their supply chain. We sporadically hear of high-profile cases, for example when media shines a spotlight on the pervasive nature of human trafficking and abuse of workers in the global supply chain of the canned tuna that ends up on our supermarket shelves; indeed, a parliamentary inquiry in 2017 estimated that almost $2 billion of seafood imported to Australia in the previous year was produced with a high risk of forced labour. 

From the clothes we wear, the food we eat and the suppliers we choose, Australian consumers and businesses are most likely unwittingly benefiting from modern slavery through many of our purchasing decisions.

Slavery Lurks Deep in the Shadows of Australian Supply Chains

How is Australia reacting to this issue, so clearly against our values yet so complex and opaque? With the passage of the Modern Slavery Act in January 2019, Australian entities and entities which carry out business with Australia with a minimum annual consolidated revenue of $100 million now have modern slavery reporting requirements under the Act. However, as mentioned earlier, the majority of Modern Slavery Statements do not involve robust, strategic supply chain analysis beyond Tier 1 suppliers.

Supply chains are divided into different tiers, with Tier 1 suppliers being contracted directly to provide goods and services, who may then subcontract to ‘Tier 2’ suppliers and so on. 

Because modern slavery by its very nature lurks in the shadows and is difficult to identify, there is all too much room for directors who take a “policy over practice” mindset and settle for only a Tier 1 analysis of their supply chain to become complicit in modern slavery. However, companies who wish to be proactive towards eliminating the risks of modern slavery from their supply chains must take a more in-depth look; modern slavery overwhelmingly occurs not at Tier 1, but at Tiers 3 and 4 as well. The Parliament of Australia finds that the risks of modern slavery are particularly prevalent at these lower tiers, particularly in developing countries with less regulation, oversight and/or enforcement. 

“We think we’re a good company in Australia, but the T-shirts worn by our engineers have come to us off the back of the suffering of other people.” – Dr David Cooke GAICD, MD, Konica Minolta Australia

While no company can ever be entirely certain that they have wiped slavery from their supply chain, only by mapping a company’s supply chain at a deeper level and working towards continuous monitoring and improvement can companies rest assured that they have engaged in due diligence, both from a corporate social responsibility perspective and potentially from exposure to lawsuits; Australia’s Modern Slavery Act makes it clear that a superficial approach is inadequate, and as we’ve seen in the high-profile cases in the US, ignorance is not necessarily an excuse. Furthermore, the reputational risk is great if slavery is identified in a supply chain; customers, employees and investors will be reluctant to purchase from, work with or invest in a business who espouses a commitment to combating modern slavery yet is caught facilitating it.

“The back of this shirt will say ‘made in Bangladesh’ but what that actually means is that this shirt was assembled in Bangladesh. The fabric, the cotton, the dye, if there is a zip in it, if there is a button in it—all of those materials that go into assembling that product in Bangladesh can be sourced from elsewhere, of which there is largely not a lot of transparency. It can be up to three tiers or four tiers in a supply chain, and that is where the workers are vulnerable to exploitation.” – Kate Nicholls, supply chain consultant, addressing a 2018 Parliamentary Inquiry into establishing a Modern Slavery Act in Australia

Barriers to A Multi-Tiered Approach

With such a clear ethical imperative and business case to proactively combating modern slavery, why do most companies not dive deeper? While the risk factors of modern slavery vary greatly between companies, the barriers to taking a multi-tiered approach are often similar even across industries. Many believe that going beyond Tier 1 would be difficult, costly, and unmanageable; many do not really know what their supply chain looks like beyond Tier 1. Furthermore, suppliers may be reticent to divulge the identities of their suppliers, for fear that they may be bypassed by the buyer.

With this conundrum in mind, how can we make sure that the supply chains we work with to engage in our business activities do not involve human rights violations? Policy alone is not enough to identify, prevent and end modern slavery; practical action must be taken to address modern slavery risk factors. This will look different for every company, and key risk factors may arise in surprising places.

Key Recommendations

In order to turn your company’s policy commitment to combating modern slavery into best practice, you must firstly recognise that modern slavery is a complex problem, and combating it is an ongoing process involving continuous monitoring and changemaking. Like many of your business strategies, your work in combating modern slavery cannot be perfect overnight, nor is it ever entirely done. Set an initial framework, including what you know now and what gaps you have identified, what you can do now and what you intend to do later (with timelines). Monitor and review the effectiveness of your strategy and tactics, and pivot accordingly.

Mapping your supply chain to ensure ethical sourcing is key. Larger companies of the size that are subject to modern slavery reporting requirements frequently have thousands, if not hundreds of thousands of suppliers by the time Tier 4 is reached, making this a complex but not impossible process; for example, Wesfarmers has ended contracts with twenty of its Tier 1 suppliers over concerns about modern slavery. 

Focus initially on areas of high risk, utilising external expertise to shine a spotlight on areas you may not have previously considered; after all, while your company is an expert on its business, it is unlikely that it has in-house expertise on modern slavery. 

Collaboration is also key to bringing about meaningful change, as individual organisations often do not have the resources or “buying power” to influence supplier behaviour. Rather, organisations should ideally work together in an industry-wide approach, forming industry-wide expectations on social and environmental matters in order to create a much greater impact while distributing costs. This consistent approach must be underpinned by awareness, training, and genuine cooperation with suppliers.

Technology for social good

Lastly, agile tech solutions such as Informed 365 are essential in order to provide reliable & meaningful data, turning both your Corporate Social Responsibility and Environmental, Social, and Corporate Governance responsibilities from plans-on-a-page to real-life practice. Our solutions help organisations to become more efficient through the automation of data gathering, visualisation and reporting processes that have traditionally been conducted manually (and taking up significant time and resources in the process).

With the Modern Slavery Act (Cth) requiring organisations with a turnover of over $100m to report annually, we can help make this process much more efficient. Moreover, with CSR & ESG requirements becoming more and more important, and internal and external stakeholders increasingly demanding that companies act in a socially and environmentally responsible manner, our agile Business Intelligence systems can benefit companies of any size and industry.

We help our clients to track, calculate, monitor, visualise and report against any data, through a highly automated process requiring minimal input from busy or resource-poor companies. We are positioned to offer an end-to-end solution with our support team and onboarding assistants, making it easier than ever to breathe life into your CSR & ESG commitments.

If you would like to know more about Informed 365 and our offerings, contact our friendly team; we would be more than happy to assist you with your enquiry, demo request and suggestions. If you enjoyed this article, you may be interested in our extensive resources relating to modern slavery, supply chain management and CSR reporting and certification, including our recent post on five steps your company needs to take to help form its modern slavery statement.

The Modern Slavery Act Australia: What you need to know

With the Modern Slavery Act fully operational, your organisation may now be subject to stringent annual reporting obligations. Here, we take a deep dive into everything you need to know about how the Modern Slavery Act may affect your organisation and what you need to do to stay compliant.

What is Modern Slavery?

While different countries use different legal terminology, ‘Modern Slavery’ generally describes the situation where coercion, threat or deception is used to exploit a person and to undermine their freedom. The term includes crimes of human trafficking, slavery and slavery-like practices such as servitude, forced labour, forced or servile marriage, the sale and exploitation of children and debt bondage.

How does Modern Slavery affect Australia?

Australian businesses may be unaware of the risk of slavery in their operation or supply chain. Globalisation has made it increasingly difficult to know if products offered in the Australian market profit from or exploit Modern Slavery somewhere within their production process.

In Australia alone, the Global Slavery Index estimated that 15,000 people were living in “conditions of modern slavery” in 2016.

On a global scale, it is estimated that over 40 million people are engaged in Modern Slavery and US$150 billion per year is generated from forced labour in the global private economy. An approximate two-thirds of the global slave trade is predicted to be occurring in the Asia-Pacific, with some of Australia’s biggest trading partners, including China, Malaysia, Indonesia and Thailand, as host to some of the most egregious crimes.

So even if the internal practices and tier 1 suppliers of your organisation may not display signs of Modern Slavery, there may be traces of slavery found in your deeper tiers. In fact, a 2015 survey of retailers and their tier 1 suppliers found a 71% likelihood of slavery in their supply chains. Unfortunately, this means that if you haven’t identified Modern Slavery in your operation, then it may be because you are not looking in the right places.

The Modern Slavery Act and who needs to report?

On 1 January 2019, the Modern Slavery Act 2018 (Cth) (Modern Slavery Act) became effective and its requirements are now fully operational.

If your entity is based or operating in Australia, with annual consolidated revenue in excess of $100 million, then you are now required to submit an annual Modern Slavery Statement within six months after the end of your financial year. This Statement requires board approval and is to outline the risk of Modern Slavery in your operations and supply chains (including any entities owned or controlled by your entity), the actions taken to address those risks and the effectiveness of your responses. Once submitted, these statements will be kept by the Minister for Home Affairs in a central registrar and may be accessible by the public.

It is estimated that over 3,000 Australian businesses will be required to report under these obligations. Other entities that are based, or operating, in Australia may report voluntarily.

What are the risks of non-compliance with the Modern Slavery Act?

While at this stage, there are no financial penalties for non-compliance, there is the risk of reputation damage for any organisation choosing not to comply. Additionally, the Minister is authorised to ‘name and shame’ any entity failing to meet the reporting obligations, which may risk public criticism and shareholder activism.

What should your affected organisation do?

If your organisation is required to submit a Modern Slavery Statement, then you should begin by considering the requirements of the statement and reviewing your policies, training, whistle-blower mechanisms and contracting practices. You should put in place a plan to meet the requirements of the Act, which will require input stakeholders from across the relevant business units of your organisation.

At Informed 365, we have been helping some of Australia’s largest organisations prepare for their Modern Slavery reporting statement. We would be most happy to walk you through the process we have taken with other reportable entities and assist you in your process. Please call us on 1300 552 335 to speak further.