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Dealing with modern slavery

Modern slavery

The Australasian Supply Chain Institute sheds light on modern slavery in the industry and what can be done from both ethical and legal standpoints to deal with this hidden crisis.

Modern Slavery

In the interconnected global marketplace, the goods and services we use and consume often have a complex journey through supply chains that span multiple jurisdictions. Behind these intricate networks, however, lies a disturbing reality: the human rights violation of modern slavery. This deeply unethical practice involves exploiting individuals through various forms of forced labour, human trafficking, and abusive working conditions, including extreme forms of child labour. The prevalence of modern slavery poses not only a moral crisis but also a significant threat to sustainable business practices. As such, investing time and materials into addressing modern slavery in supply chains is not just a choice; it’s an ethical and economic imperative (Nolan & Boersma, 2019).

The Hidden Crisis

Modern slavery operates in the shadows, as an issue hidden in plain sight, making it difficult to detect and combat. According to the Global Slavery Index 2023, there are now more than 50 million people who are impacted by modern slavery, with more than 41,000 cases in Australia (Walk Free, 2023). Often vulnerable individuals seeking better opportunities fall victim to this grave injustice, and experience a spectrum of workplace abuses as they toil in factories, fields, mines, and even within our communities. You can check out some of these stories from IJM Australia. Modern Slavery expresses the most acute forms of coercion and abuse, including physical and emotional suffering.

Ethical Responsibility

Organisations have an ethical responsibility to ensure their operations do not contribute to this violation of human rights, whether within their own facilities or throughout their value chain. Adopting an ethical stance against modern slavery reflects an organisation’s values and commitment to business and human rights guiding principles and sustainability targets. By actively working to eliminate modern slavery from supply chains, organisations send a powerful message that they are dedicated to more than just profit margins as they take active steps to value human dignity, social responsibility, and thriving communities.

Reputational Risk

In today’s digital age, information spreads rapidly, and considering big data and artificial intelligence, it will become increasingly difficult for business practices to remain hidden. Reports of Modern Slavery in supply chains can quickly tarnish a company’s reputation, eroding consumer trust and loyalty, and leading to unexpected legal and financial risk. Socially conscious consumers are increasingly demanding transparency and accountability from the brands they support and a failure to address Modern Slavery can result in boycotts, negative media coverage, and legal repercussions. In 2019, AUSTRAC fined Westpac AUD $1.3B for failing to appropriately assess and monitor the ongoing money laundering and terrorism financing risks associated with the movement of money into and out of Australia, which included transactions made for the Online Sexual Exploitation of Children (OSEC). Since then, Westpac has been partnering with International Justice Mission Australia to address the Online Sexual Exploitation of Children. This story shows that organisations which take proactive measures to combat modern slavery demonstrate integrity, cultivating goodwill among customers, investors, and stakeholders.

Legal and Regulatory Landscape

Governments and international bodies are enacting stricter regulations and laws to combat modern slavery and related human rights violations. Over the past 15 years, we’ve seen the proliferation of anti-slavery and due diligence in supply chain regulations, targets and commitments including the Modern Slavery Act 2018 (Cth) and most recently the  NSW Modern Slavery Amendment Act (2021). These laws require organisations to disclose efforts to eradicate modern slavery from their supply chains and operations. While non-compliance may not always lead to legal penalties, the need to comply can mean that organisations risk losing their license to operate in tenders, investment, and grant applications. Organisations must not only follow these regulations but also go beyond compliance to truly address the issue and make a positive impact.

Sustainability

Sustainability is more than environmental stewardship; it also encompasses social and ethical considerations. Moreover, the risk of modern slavery dovetails with environmental concerns, especially when it comes to the extraction of minerals that go into electric vehicles, the production of polysilicon in solar panels, and the disposal of toxic waste in factories where human rights violations exist. In short, modern slavery disrupts the very foundation of sustainable business practices, and those organisations who have transparent, ethical supply chains are better positioned to build long-term resilience. By identifying and rectifying vulnerabilities related to modern slavery, businesses reduce the risk of supply chain disruptions, legal liabilities, and reputational harm (Sustainability Matters, 2023).

Collaboration and Innovation

Combating modern slavery requires collaboration across industries, sectors, and borders. Collaboration is the key ingredient in effective risk management throughout a supply chain. No single entity can solve this complex issue alone. Businesses, governments, civil society organisations, and consumers must work together to share best practices, pool resources, and drive systemic change. Technological innovations, such as blockchain and data analytics, can enhance supply chain transparency, making it easier to trace the origins of products and identify potential instances of modern slavery. However, to fully understand the context of exploitation and concrete ways to provide remedy, organisations need to equip their supply chain, commercial and site management teams to know how to identify the risk and develop systems for effective monitoring and reporting (Nolan and Boersma, 2019).

Conclusion

Addressing modern slavery in supply chains is not just an option; it is a necessity. The moral imperative to alleviate human suffering is reason enough to act. Yet, the economic incentives are equally compelling, as a tarnished reputation can have far-reaching consequences. Positively, a commitment to responsible business practices can open the door to more commercial opportunities. To build sustainable, resilient, and ethical business practices, it’s imperative that organisations proactively combat modern slavery. By doing so, they contribute to a fairer, and more just world while securing their own long-term success in an era of Environmental, Social and Governance (ESG) reporting.

This communication is an initiative of the ASCI Ethics Committee to provide practical guidance to ensure the business can be conducted more responsibly while encouraging companies to incorporate environmental, social and governmental considerations into how they do business throughout their global supply chains.

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