Take Action to Manage Modern Slavery Risks and Impacts

My previous blog discussed the gaps many Australian businesses face for effectively identifying and addressing modern slavery risks. This post focuses on actions that businesses can take to better manage these gaps, reduce the risks and impacts of modern slavery in their operations and supply chain and prepare for legislative reporting requirements.

 The top five actions businesses should consider as a starting point include:

 1.     Engage and educate widely internally and externally

2.     Review and update corporate due diligence processes

3.     Establish a clear governance framework

4.     Review current supplier risk management systems and risk definitions

5.     Understand supply chain (and where possible, start mapping)

All of these actions present opportunities for integration into existing business systems and processes.

 1. Engage and educate widely - internally and externally

Effective management of modern slavery risks is a cross-departmental / multi-stakeholder issue. It cannot be solved quickly through tick box forms and elaborate databases.

This is an issue that businesses will have to work on systematically and carefully over the next 12 months, 2, 3, 5, 10 years, in partnership with a range of stakeholders across industry, government and civil society.

So… start talking: run workshops, show videos – engage everyone in the organisation from cleaning staff to the CEO and Board. Incorporate modern slavery training into staff inductions, management meetings, toolbox talks – every opportunity you can.  Remember how 20 years ago we were having the same discussions around WHS?  What worked well back then?  What is still working well in terms of current communication and training programs? How did we effectively change our corporate safety culture?

As well as general awareness raising initiatives, it is important to provide more extensive modern slavery risk management training for key decision makers, including procurement personnel, contract managers, risk & compliance and legal staff.

Equally, it is essential to engage external stakeholders – your customers, investors, shareholders. Know what their expectations are of your organisation. Be accountable to them.

 2. Review and update existing commitment statements, policies, Codes of Conduct, operating procedures and KPIs to reflect your company’s expectations around human rights and modern slavery

You do not need to reinvent the wheel.

Start by undertaking a gap analysis of your existing policies, along with your Employee Code of Conduct. Where possible incorporate human rights and modern slavery expectations into existing policies (e.g. labour policies, WHS, bullying & harassment, anti-bribery and corruption, procurement etc) and communicate these widely to your internal and external stakeholders.

Look at your Employee and Supplier Codes of Conduct. What do they say about human rights or modern slavery? Are you missing an opportunity to inform and educate your staff, managers and suppliers about your expectations?

Importantly, consider how you will measure effectiveness of these policies. What KPI’s will you put in place across the organisation to measure action on the ground and real outcomes over the short, medium and long term?

 3. Establish a clear governance framework

Key steps might include:

• Building a strong, qualified Board of Directors and evaluating their performance;

• Having a documented human rights or modern slavery strategy with clear actions and targets;

• Defining roles, responsibilities and accountabilities among Board members, the CEO, Executive Officers and management;

• Emphasising integrity and ethical dealing throughout business practices and linking this to grievance and whistle-blower systems; and

• Evaluating performance regularly and reporting transparently.

4. Review your risk management system and incorporate assessment of your salient (or most severe) risks to human rights as well as the risks to your business.

The UN Guiding Principles make it clear that companies should prioritise human rights risks based on severity. Identifying salient human rights issues not only identifies greatest risk to people, but also where rights-related risks to the business are likely to be found.

Businesses should consider:

•  Business model risks - Cheap products, fast turn-around times, seasonal production all incentivise suppliers to pay workers less, demand more overtime and cut corners on safety.

• Business relationship risks - Consider your joint ventures with other companies or governments – is there evidence of poor human rights records?

• Operating context risks - Where do you operate? Do you do business in conflict areas, or areas with known corruption or a weak rule of law? These are more likely to pose risks in terms of your involvement (however unintentional) with human rights abuses.

• Workforce risks – Consider where you have low skilled or migrant labour in your workforce or supply chain. These workers are often employed through labour hire contractors and may lack full legal protection, freedom of association, access to remedy and face exploitative work conditions.

 5. Understand and map your supply chain

The Modern Slavery Act does not define ‘supply chain’, which leaves businesses questioning how many tiers out they should manage and for what purpose. Let’s consider this through a risk lens, but keep in mind that this is a complex, multi-step process:

Recognise the risks - You may know your first-tier suppliers pretty well, but how well do you know your suppliers at tiers two and three? How critical are they to your supply chain? Do you know the factories and the locations in which your goods or components are made? What would be the impact to your brand or company if a second- or third-tier supplier was exposed as using child labour or treating workers badly?

Create visibility and build a supplier map – this process will be most effective if you:

• Engage and motivate suppliers It is absolutely critical to engage your suppliers and get their support in mapping the supply chain by clearly explaining the benefits. A major incentive for the supplier is that they will also be able to understand risk in their own supply chains and improve their own business resilience.

• Work collaboratively Mapping a supply chain can be a complex, time-consuming and labour-intensive activity. Most industries share common suppliers, so what may be difficult to do for an individual organisation becomes easier to achieve collectively. Who can you collaborate with in your industry sector?

 A few final points

A progressive, action-oriented business with strong and ethical governance and effective human rights due diligence processes, will attract the best employees, loyal customers and purpose-driven investors.

A modern slavery or human rights framework /strategy that has been collaboratively developed and has strong buy-in across all levels of the organisation will not only help you meet your reporting requirements, but propel you beyond a strictly compliance-focused approach.

As with any change process, the first step is often the toughest. However, I strongly believe that with collective action and active engagement of all stakeholders including businesses, governments, NGOs and civil society, the injustices of modern slavery can be eradicated in our lifetime.

We just have to want to do it.