To most Australians, the word “slavery” will conjure up images of another time, another place – of ancient Rome or America’s deep south prior to that country’s civil war. Yet, slavery remains such a real issue that a Modern Slavery Act will soon be introduced in Australia.
The legislation is expected to follow the UK blueprint which was enacted in 2015. Its focus will be to identify and address slavery in the supply chain of Australia’s largest private and public sector organisations. When the legislation commences, it is expected it will be mandatory for enterprises with revenue exceeding $50 million to report annually on the measures they have taken to ensure there is no slavery in their supply chains. These statements will require board level (or equivalent) approval.
There are three reasons Australia’s SMEs will be indirectly impacted by the legislation:
Based on the UK experience, it is believed the act of reporting will prompt Australian businesses to create more resilient supply chains. In the two years since legislation was enacted there, some organisations identified and disclosed forced labour and other human rights abuses in their supply chains. Those abuses may very well have been caused by SME suppliers.
In Australia, sectors such as retail, food, clothing, hospitality, cleaning, and electronics are particularly exposed to the risk of modern slavery as they rely on low-skilled or outsourced labour.
How can Australian businesses in these and other sectors ensure they have ethical, slavery-free supply chains? Right now, few will even have a comprehensive understanding of their first-degree suppliers, let alone their supply chain practices.
Preparing for the legislation will take time and won’t be easy. Decisions will need to be made, including in relation to how deep into the supply chain a business is willing and able to investigate. Forward-thinking organisations would be wise to begin the process now by researching, reviewing and revising their supply chain practices. As well as managing and mitigating the risk of reputational damage, there are clear business benefits to be gained from doing what’s right. Just Capital research reveals the one hundred most ethical and enlightened companies in America consistently and continuously outperform their industry competitors.
Jacqueline (Jaci) Burns, Chief Marketing Officer, Market Expertise