Modern Slavery Cheatsheet: Top Questions To Ask Your 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 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:
To What Extent Have You Mapped our 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.
How Have You Mapped Your Own 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.
What Does Your Supply Chain Look Like?
- 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.
What Are Your Responses To Key Slavery Risks?
- 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.
What Are The Working Conditions Of Your Workers Like?
- 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.
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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.