Posted By Rachel Alembakis on in Corporate Reporting, Fund Management, Social, Top News

Ed note: The Sustainability Report is pleased to present this article from Katherine Christ of the University of South Australia and Roger Burritt of the Australian National University

Dr Katherine Christ and Professor Roger Burritt

Revealing the world of modern slavery is a critical aspect of movement towards a just and sustainable society. It is critical because exposing the stories of suffering as well as publicising moves companies make to rid their organizations of modern slavery practices helps to build a groundswell of understanding, empathy and opposition. But how can Australian companies make sure they are not complicit in modern slavery?

Roger Burritt, ANU and Katherine Christ, University of South Australia

In leading companies zero tolerance is the norm. Andrew Forrest, Chair of Fortescue Metals, has acknowledged that in the mining industry ‘We had slavery in our supply chains’. Fortescue used direct action as the strategy to weed out instances of forced labour practices in its suppliers. Problems in at least 12 of Fortescue’s suppliers were identified and driven out of the chains; his words act to condemn the acceptability of modern slavery practices. In one supplier workers “[had] a life expectancy of five years and food which just kept them alive…18 to a room which you wouldn’t call your larder … and not able to leave…That company…was supplying goods to us and to companies all over… Australia.” So touched by their concerns were Andrew and Nicola Forrest that they established the Walk Free Foundation in 2012 which encompasses their vision to end modern slavery on a global scale. The example of Forrest and Fortescue highlight the potential for Australian business to take a leadership role working to eliminate modern slavery in global supply chains.

Nevertheless, evidence suggests many Australian companies still lag behind leaders like Fortescue. It could be argued this is to be expected given much modern slavery is related to the desire of businesses to produce cheap goods. However, associated with this are labour practices where conditions of work remain the minimum for human survival with human beings owned by businesses through forced labour, wage exploitation and debt bondage.

Within Australia the number of modern slaves is conservatively estimated at about 14,300 of a global total, according to the 2016 Global Slavery Index, of an estimated 45.8 million people. Although these numbers are relatively small each case represents misery personified. We hear about the cases of 7/11 and Caltex where wages are cut in unacceptable arrangements, but the most significant damage is through forced labour in overseas supply chains where the protections of our legal system are unavailable, local legislation where it exists is not enforced and corrupt practices pervade.

The market mechanism allows modern slavery practices to continue because arms-length transactions between buyers and sellers of goods and services anonymize the conditions existing in supplier operations. Codes of conduct can be introduced to control direct contracts with suppliers, but it is much harder to control companies which supply suppliers (e.g. Tier 2, 3, 4, etc. suppliers). The extended supply chain presents a problem that even leaders in Australia, such as Adidas Group, admit is intractable.

In developed countries a history of legislation to restrict modern slavery is beginning to emerge. The UK has its Modern Slavery Act 2015 which encourages but does not enforce ethical sourcing policies and practices by large companies and under Section 54 (1) requires a commercial organisation to which the section applies to prepare a slavery and human trafficking statement for each financial year of the organisation. The French go further with their Corporate Duty of Vigilance Law 2017 a legally binding obligation for parent companies to identify and prevent adverse human rights and environmental impacts resulting from their own activities, from activities of companies they control, and from activities of their subcontractors and suppliers, with whom they have an established commercial relationship. Extended supply chains are not included and remain an issue.

Through its current ‘Inquiry into establishing a Modern Slavery Act in Australia’ (see Rachel Alembakis ‘Government launches inquiry investigating need for Modern Slavery Act’ 24 February, 2017) the country has an opportunity to rise to the challenge set by Forrest and others. Parliament is currently in the process of reviewing submissions which will consider whether similar or improved measures to those adopted in the UK (and France) should be introduced in Australia.

Appropriate action could help establish best practice by requiring Australian companies to face up to their complicity in the modern slavery that occurs indirectly through their supply chains where arms-length transactions can be an excuse to turn a blind eye to inhuman practices all in the name of turning an easy profit. It is often said all that evil needs to flourish is for good men to do nothing. The time has come for Australian business to show its metal.

 

About the Authors:

Dr Katherine Christ is a researcher and academic from the University of South Australia. Katherine holds a First Class Honours Degree in Accounting and a PhD in environmental management accounting. Her research interests include but are not limited to, environmental accounting, water accounting, and sustainability in the global wine industry. Results from Katherine’s research have been widely disseminated appearing in academic and professional publications within Australia and internationally.

Dr Roger Burritt is an Honorary Professor at the Fenner School of Environment and Society, ANU College of Medicine, Biology and Environment, The Australian National University, Canberra, Australia. He also holds visiting positions at the University of Kassel, Leuphana University of Lüneburg, and the University of Zaragoza. Roger has long term research interests in environmental, social and governance aspects of companies and other organisations. He is widely published in accounting, management and environmental journals, and presents regularly at international conferences. His particular research interest is in environmental management accounting.

Rachel Alembakis

Rachel Alembakis

Publisher/Editor at The Sustainability Report
Rachel Alembakis has published The Sustainability Report since 2011. She has more than a decade of experience writing about institutional investments and pension funds for a variety of publications.
Rachel Alembakis

Rachel Alembakis has published The Sustainability Report since 2011. She has more than a decade of experience writing about institutional investments and pension funds for a variety of publications.

Rachel Alembakis

Rachel Alembakis

Publisher/Editor at The Sustainability Report
Rachel Alembakis has published The Sustainability Report since 2011. She has more than a decade of experience writing about institutional investments and pension funds for a variety of publications.
Rachel Alembakis

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