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.