Australia is set to follow the UK in introducing a Modern Slavery Act, but supporters are calling for the local legislation to be even tougher.
Slavery is often thought of as a relic, but it remains a problem today.
The Global Slavery Index, produced by The Walk Free Foundation, shows there are more than 45 million people living in slavery today, worldwide. And the problem is close to home, with an estimated 30 million of them in the Asia-Pacific region and 4000 in Australia.
In 2015, the UK introduced a Modern Slavery Act, making it law for big companies to report on the risk of slavery in their supply chains. Since then, the Australian Council of Superannuation Investors (ACSI) has been lobbying for the introduction of a Modern Slavery Act here.
A public consultation on the proposed model for a reporting requirement on modern slavery in supply chains closed in October 2017, and the Turnbull Government has indicated it is set to introduce the draft legislation in early 2018.
ACSI chief executive Louise Davidson says the “dire statistics” on slavery are “unacceptable and shocking in this day and age”.
Davidson says it’s encouraging to see the government working towards establishing an Australian version of the UK’s Modern Slavery Act; however, she believes there is scope to make the local legislation even tougher than the UK law.
The current proposal allows companies too much autonomy to control what information, if any, they disclose on slavery risks and due diligence within their operations, Davidson argues, calling this “concerning and inadequate”.
‘If not, why not’ approach
“Australian companies lag behind their global peers when it comes to the disclosure and management of slavery risks,” Davidson says. “A reliance on voluntary self-reporting has not led to the level of transparency expected by long-term investors.
“If you are not reporting or carrying out particular due diligence, there [should be] an expectation that you will explain why. It may well be that companies have a legitimate reason, but the explanation needs to be clear and needs to satisfy investors and the broader civil society that indeed the decision is reasonable. [This] would require companies to address mandatory criteria or state why slavery is not a material risk.”
She adds that this ‘if not, why not’ approach is familiar to listed Australian companies, which report against the ASX Corporate Governance Principles, hence the ACSI recommended it to the government.
“We want a robust framework that facilitates the sort of cultural change and long-term learning that is necessary to combat slavery in supply chains,” Davidson says.
ACSI’s proposal would require companies with $100 million or more in annual revenue to report annually on their efforts to eliminate slavery from their supply chains, leading to increased scrutiny from investors and forcing companies to be more accountable.
Moral and financial hazard
Davidson tells Investment Magazine that aside from the obvious moral element of wanting to eradicate slavery from society, the issue carries a financial risk as well. It has the potential to threaten the reputation and long-term sustainability of companies that fail to act.
“Super funds have a responsibility to be confident that the companies they invest in are behaving appropriately and are taking all the steps they can to make sure they are not investing in slavery,” Davidson says. “Essentially, none of us want to think that our money would be invested in companies that are using slavery in their supply chains. Requiring disclosure will allow investors to engage meaningfully with companies on slavery-risk mitigation, leading to better informed investment decisions.”
A database and whistle-blower protections
In addition to the ‘if not, why not’ format, ACSI’s submission to the Modern Slavery Act public consultation in May 2017 offered two further recommendations: the establishment of an independent body that would monitor and assess compliance for a publicly searchable database, and protection for whistle-blowers.
Although the government has yet to release the draft legislation, it has provided detail on its preferred approach, and neither ACSI recommendation has been included.
ACSI members that have been vocal in their support of anti-slavery laws include IFM Investors, HESTA Super and Cbus Super.