Following the UK, Australia has recently introduced Modern Slavery Supply Chain Reporting Requirements. I know it’s a dirty word, but I’m a millennial- so this impressed me. While I have concerns about anything which may add unnecessary red tape to our industry, I am big advocate for equality and sustainable development in cities, so I’m loving that the Fourth Industrial Revolution is bursting bubbles across supply chains everywhere and anywhere.
Now, here’s the but (it was always coming). During many discussions with industry about the legislation, I’ve become increasingly concerned that industry is not taking it as seriously as they should, people don’t believe that modern slavery exists in Australia.
Modern slavery exists and the built environment needs to pay attention
While it’s hard to imagine that modern slavery exists in Australia- it does. In fact, the 2018 Global Slavery Index estimates that in Australia there are 15,000 people living in modern slavery.
So what is modern slavery and why haven’t we heard about it before now?
Search the internet for ‘modern slavery in Australia’ and you will find discussion papers, articles about the legislation, and action groups – no actual hard evidence of modern slavery. In contrast, the key search terms ‘illegal workers’ will display pages of news articles. The news articles commonly speak of detaining illegal workers, arresting their employers and the raids to get them there. What about the backpackers picking our fruit in the country? Illegal workers are modern slaves- we’re just not ready to call it out for what it really is.
Modern slavery includes:
- Modern slavery crimes which are already recognised by our legal system, such as servitude, forced labour, deceptive recruiting for labour, forced marriage and debt bondage.
- The worst forms of child labour, including forced labour, child trafficking and work which by its nature or circumstance is likely to harm the health, safety or morals of children.
- Trafficking in persons for the purpose of exploitation, including forced labour, slavery or practices similar to slavery. Slavery-like practices, include practices that do not meet the threshold for ‘slavery’ (i.e. the exercise of ownership rights over another person) but nonetheless involve serious exploitation. The inclusion of this broad sub-category of modern slavery indicates flexibility in the proposed terms of the Reporting Requirements to recognise the range of exploitative practices in modern supply chains.
Why should built environment firms pay attention to this?
The new legislation means that out of sight, out of mind, is no longer an option. Ignorance is not an acceptable excuse and rightfully so. We have a moral obligation to ensure we are not unconsciously supporting modern slavery.
The built environment procures the most materials, and has one of the most complex supply chains of any industry, so this is an issue for all firms to pay attention to and start preparing for.
In 2017 the Commonwealth Government proposed to enact Australian Modern Slavery in Supply Chain Reporting Requirements. New South Wales passed its Modern Slavery Bill 2018, now the Modern Slavery Act 2018 (not yet in force) which will;
- require certain entities with revenue of $50M to provide Modern Slavery Statements; and
- provide for an administrative and compliance framework around the Reporting Requirements, to promote awareness of, and transparency in relation to, modern slavery in supply chains.
Now here’s the trick, even though your firm’s revenue may not be over $50M, it actually still applies. The legislation has been designed so that the mandated formal reporting is undertaken by entities that can carry the burden of additional admin, and are assumedly procuring larger amounts, making them the best focus area. However, they can be penalised for the activity of firms within their supply chain- meaning that although their immediate practices could be squeaky clean, if they have purchased from a firm which has modern slavery in their supply chain- they can be penalised. This domino effect means that each firm has a part to play in ensuring that the supply chain is free of modern slavery – irrespective of their turn-over.
Scott Alden, Partner at Holding Redlich is a procurement expert, and has predicted how this might play out in future contracts.
“This will become an increasingly common feature of commercial contracts requiring parties to monitor and address risks of modern slavery in their supply chains. With penalties of over $1 million for non-compliance with these new laws, we can expect to see specific indemnities where one party causes another to suffer a fine in relation to its Modern Slavery Statement.”
Globally we can see transparency in supply chains becoming top of mind, and as tools like blockchain are widely adopted this will become easier to understand exactly which entity we are purchasing from and if their corporate practices align with good values. Until then however, it may take some firms years to verify their supply chain. Firms may need to start implementing the following:
- An educational program to explain what modern slavery is.
- A complaints / whistleblowing process for staff that may identify bad practice within the firm’s supply chain.
- An audit of their current supply chain to identify risks.
- Open conversations with other organisations to learn how they will be addressing the issue.
Organisations should also be thinking quite broadly about their supply chains. Asking questions such as; who are the cleaners, caterers and delivery people? Where are the construction materials being made/and by whom? Also, with the emerging trend of virtual assistants and offshore staff, we need to investigate what the working arrangements are.
It’s safe to say most of us don’t really know the answers to these questions. The Chartered Institute of Procurement and Supply recently conducted an ‘Australian Modern Slavery Survey’. It showed that:
- 1 per cent of respondents did not think they will be able to comply with the Reporting Requirements based on current management practices.
- 20 per cent did not have measures to ensure supply chains were free from modern slavery.
- 80 per cent indicated that reputational risk of identifying modern slavery in supply chains was the central concern of businesses.
Maybe it’s the #eldermillenial in me, but irrespective of the $1M penalty, I think this issue is very important. The business case is not as important as the moral case. The Design Futures Council measures its activities against the UN Sustainable Development Goals, we are working hard to educate members and the broader industry, that the Fourth Industrial revolution isn’t just about technology, it’s about a whole new operating model for society, one where we can meet the basic needs of every human on the planet. With a driver like that, bubbles across supply chains will continue to burst, so we may as well be a proactive part of the solution.
Want to know more about the legislation and what your business can do?
The Design Futures Council has organised an event designed to examine the modernisation of the supply chain. Click here to find out more about it.
About the author
Alexia Lidas is Managing Director of the Design Futures Council and a board member of the Australian Smart Communities Association (ASCA). She has represented the built environment to State and Federal Government on future trends within technology, procurement, contracts, project finance, talent, sustainability, diversity, community and stakeholder engagement. A passionate advocate and collaborator, who enjoys connecting industry with ideas, and for this reason she is a trusted advisor many private and public steering committees and lobby groups.