What are we doing to encourage companies to address labour abuses in their supply chains?
There’s a flurry of activity in the UK at present as companies and civil society gear up for the supply chain transparency provision in the Modern Slavery Act to kick in. From 1 April, companies carrying on a business in the UK with an total annual turnover of £36 million or more must report on steps they are taking to ensure that slavery, forced labour and human trafficking is not taking place in their own businesses or in their supply chains. Around 12,000 companies will be caught by this new rule.
The UK Act reflects growing global recognition of the problem of forced labour and other forms of labour exploitation in supply chains and the need to take action. The International Labour Organisation reports that there are almost 21 million people worldwide trapped in forced labour alone. Some 19 million are in the private sector, with illicit profits totalling US$150 billion annually.
As regulatory measures go, the UK transparency rule is very light touch. Companies are required to produce a Slavery and Human Trafficking Statement for each financial year. This statement must be approved by the board of directors and signed by a director. It must be available via a prominent link on the company’s homepage. The British government has produced guidance on what companies might include in such a statement. But ultimately a company can comply by producing a statement saying it is doing nothing.
The measure relies on civil society doing the legwork to drive improvements through naming and shaming and benchmarking. It also relies on consumers and investors using the information made available to them to make more informed decisions and drive change.
Even as a transparency tool, it has issues. There is no single reporting format, and companies are not required to post their statements in a single repository. Civil society has to compile all the data, as well as analyse and publicise it.
But it’s a step in the right direction. The rule is inspired by the Californian Transparency in Supply Chains Act. This pioneering regulation also has its deficiencies, not least of which is a high level of non-compliance. But it has had a positive impact.
As pointed out by Phil Bloomer, Executive Director of the Human Rights Resource Centre, well-known brands such as Hyundai, Caterpillar and Krispy Kreme have found themselves in the spotlight for reporting that they were taking no action. Other companies have used the mechanism to detail improvements in their approach to labour and human rights risks in their supply chains.
Apple, for example, has worked with NGO Verité to respond to findings that workers in its supply chain were being charged high recruitment fees leading to debt bondage by seeking to eliminate the practice and to reimburse workers. At the very least, this law had compelled many companies to think about and account for what they are doing (or not doing). It has also helped create increased corporate, investor and consumer awareness.
Of course, this isn’t an issue that is only faced by those on the other side of the world. The Asia Pacific region has 56% (11.7 million) of the global total number of forced labourers. Revelations of serious labour exploitation within the Australian and global supply chains of major Australian companies are increasingly frequent. This includes clothing, consumer electronics, sporting goods, agriculture and seafood. The sale by Coles, Woolworths and Aldi of Thai seafood products made using forced and child labour is just one recent example.
So what is Australia doing?
The Australian Government’s National Action Plan to Combat Human Trafficking and Slavery 2015–19 includes a multi-stakeholder Supply Chains Working Group. This Working Group, established in 2014, is tasked with examining strategies to address serious labour exploitation in the supply chains of goods and services.
Some Australian businesses are taking action. Research shows, however, that many aren’t. A recent study of supply chain management in the electronics industry found that Australian brands were among the worst performers when it comes to managing risks of labour exploitation.
A similar study into the Australian fashion industry found that more than 75% of those included in the research did not know where their cotton, fabrics and inputs were sourced from.
A December 2015 report co-authored by the Australian Human Rights Commission found that many Australian businesses that engage with human rights issues still tend to focus their efforts on areas in which they have direct operational control. They lack clear strategies and processes to identify, manage and respond to human rights risks in their supply chains.
Last but not least we have NGOs, networks and research centres doing immensely valuable work in this area. But as legislatures in other countries have recognised, civil society can’t do this on its own. Government needs to act.
We could start with something like they’re doing in the UK. Or we could even do better.