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Two out of three companies failing to address modern slavery risks – calls to revamp laws

Two out of three companies failing to address modern slavery risks – calls to revamp laws

Human rights organisations and academics are urging the Australian government to revamp the country’s modern slavery laws.

It follows a new report which reveals that two out of three companies are still failing to identify and address obvious risks of modern slavery in their supply chains. 

The report, “Broken Promises: Two Years of Corporate Reporting Under Australia’s Modern Slavery Act,” examines the second year of corporate statements submitted to the government’s Modern Slavery Register by 92 companies sourcing from four sectors with known risks of modern slavery: garments from China, rubber gloves from Malaysia, seafood from Thailand, and fresh produce from Australia.

The report found that:

  • 66% of companies reviewed are still failing to comply with the basic reporting requirements mandated by the legislation, with some companies not submitting reports at all
  • 56% of the commitments made by companies in the first year of reporting to improve their modern slavery response remained unfulfilled based on their second year statements
  • 43% of companies reviewed are still failing to identify obvious modern slavery risks in their supply chains
  • There is a 6% increase in the number of companies appearing to be taking some form of effective action to address modern slavery risks
  • two in three companies still failing to act

This report is a follow-up to “Paper Promises? Evaluating the Early Impact of Australia’s Modern Slavery Act,” which was released earlier this year. The Modern Slavery Act 2018 (Cth) is under a three-year statutory review led by Professor John McMillan AO and is due to report in March 2023.

The coalition of human rights organizations are calling on the government to take immediate action to strengthen the legislation by:

  • Requiring companies to undertake due diligence to prevent and address modern slavery in their operations and supply chains
  • Introducing penalties for companies that fail to comply with the Act
  • Ensuring appropriate oversight and enforcement of the Act by appointing an Independent Anti-Slavery Commissioner

Professor Justine Nolan, Director of the Australian Human Rights Institute (UNSW Sydney) says It is time for Australian companies to move from ‘paper-driven’ responses to effective action on modern slavery. 

“Too many companies are still failing to identify obvious risks or are simply making vague promises that are not being fulfilled. This report reveals an urgency to strengthen the law to require action not just reporting, as well as to equip and resource a regulator to provide greater oversight and enforcement of the Act,” Justine said. 

Freya Dinshaw, Senior Lawyer at the Human Rights Law Centre, said: “There is little evidence the law is driving meaningful action by companies to lift conditions for supply chain workers at high risk of exploitation.”

Amy Sinclair, Regional Representative for Australia, New Zealand, and Pacific at the Business and Human Rights Resource Centre, said, “The Modern Slavery Act has failed to instigate a ‘race to the top’ by companies wanting to confront modern slavery, more of a slow crawl; with companies averaging a mere 7% rate of improvement in two years.”

The coalition of human rights organizations is urging the government to use the current statutory review to make key reforms to the law and to strengthen it in order to better confront exploitation and address the human rights abuse of modern slavery.

According to figures from the International Labour Organization (ILO), 50 million people worldwide are living in slavery and 28 million are trapped in forced labor in 2021. 

The ILO states that forced labor is highly present in developed countries, with over 52% of all forced labor found in upper-middle-income or high-income countries. This highlights the importance of supply chain due diligence and the role of corporate procurement and supply chain teams in reversing this trend. The challenge is to incorporate labor rights due diligence and protections into procurement actions throughout the supply chain, while visibility and leverage over labor practices decrease with each additional tier. Only 11% of companies in the EcoVadis Network conducted supplier environmental and social risk assessments, and only 5% performed child and forced labor internal risk assessments in 2021.

How procurement professionals could address modern slavery risk

Valerie Touchon is chief impact officer at EcoVadis in Supply Chain Brain suggested a framework for procurement professionals to use to address human rights due diligence. 

Valerie says companies can take steps to monitor and manage risks related to modern slavery and human rights by starting with international policy frameworks and guidelines, such as the UN Guiding Principles on Business and Human Rights

The framework includes:

  • establishing or updating their sustainable purchasing policy and supplier code of conduct to cover these issues
  • conducting risk mapping using intrinsic risk data on human rights to identify high-risk suppliers
  • train buyers on identifying social and environmental risks in the supply chain
  • encouraging supplier engagement and transparency by conducting assessments of supplier labor practices and requiring clauses in supplier contracts. For suppliers who fail to engage or have poor labor practices, companies should implement second-level efforts such as on-site audits
  • Ongoing risk mitigation and monitoring should be implemented through worker voice surveys, capacity building, and corrective actions to improve labor practices.
  • Recognition and incentive programs should be established for good practices and remediation efforts should be taken when incidents are discovered.
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