09 December 2020
In an eventful year and with the first season of modern slavery reporting deadlines fast approaching, it is important to revisit these obligations and their underlying objectives.
What is modern slavery?
Modern slavery describes the use of coercion, deception, threats and financial pressures to exploit and undermine the freedom of 40 million workers around the world. These situations include but are not limited to:
Modern slavery in the property and construction sector
Property and construction is a labour-intensive sector heavily reliant on international raw material supply, complex global supply chains and foreign labour.
Reliance on imported raw building materials and complex supply chains means that companies often have poor visibility of the manufacturing process and less confidence that the materials and services they use are ethically sourced.
Labour-intensive industries are more susceptible to modern slavery due to the high demand for low-skilled labour forces globally. For example, Qatar's development requirements to host the 2022 FIFA World Cup has seen a huge increase in demand for manual labour and an influx of migrant workers. There have also been widespread reports of modern slavery practices and migrant worker mistreatment as a result of this infrastructure boom.
One does not need to look as far as Qatar to observe instances of modern slavery. These practices are common in developed countries, including Australia.
Examples of high-risk functions within the property and construction sector include:
Australian companies and foreign entities conducting business in Australia with a consolidated revenue of over $100 million are required to submit an annual modern slavery statement under the recently enacted Modern Slavery Act 2018 (Cth) (Act).
The original deadlines for the first round of reporting under the Act were extended by three months to allow entities to meet their obligations and assess new modern slavery risks linked to the COVID-19 pandemic. The below table shows the first round of deadlines for modern slavery statements, which are dependent on a company’s financial reporting period.
Approximately 3,000 companies will be subject to this first round of reporting and must disclose the following seven mandatory reporting criterion in their statements:
The Modern Slavery Register
The Federal government launched the Modern Slavery Register on 30 July of this year, which is the World Day against Trafficking in Persons. The register will act as a public repository of modern slavery statements.
Functionally, the register allows companies to submit modern slavery statements and the Australian public to:
In practice, this register will act as a self-regulation mechanism using transparency and publicly available information to drive compliance. The government has opted to apply reputational pressure rather than harsh financial penalties for non-compliance. It will no longer be possible for companies to enjoy blissful ignorance as public perception and company reputations will be impacted by the information laid bare on the register.
Opportunities and risks for companies
Boards must look at the register as an opportunity to positively impact the lives of the people they interact with directly and indirectly around the world. A bi-product of this is highlighting their ethical sourcing capability and building their reputation as an organisation
Proactive boards are looking at the register not as another reporting hurdle but as a chance to refresh and develop best practices.
This process starts with the ‘heart’ of the organisation:
These values should govern the sourcing decisions of the company.
The ‘head’ of the organisation can then drive the code of conduct by implementing changes, such as:
Companies who do not have the necessary visibility of their supply chains and labour force should see this as a chance to review the company’s values and align their practices with the Australian standard. If they choose not to, they will damage their reputation, public trust, investor and lender confidence and employee perception as their statements are easily compared with those of industry leaders at the click of a mouse.
Authors: Natashia Ackroyd & Sam Marks
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.