As awareness of inequalities within the supply chain of many businesses grows, consumers are increasingly expecting brands to address modern slavery risks within their operations. According to the Department of Home Affairs, modern slavery constitutes practices that include human trafficking, slavery, servitude, forced labour, debt bondage, forced marriage, or the worst forms of child labour, typically within the supply chain, and is encountered around the world. This culminated, in Austra
Australia, in the passing of the Modern Slavery Act in 2018.
Large businesses and other entities with annual consolidated revenue of at least $100 million must now report they’re doing to stamp out modern slavery in their supply chain, and how they measure their success.
While the law has been in place for several years now, according to a recent report by Monash University, many businesses have yet to take the situation seriously.
Last year, more than a third of modern slavery statements submitted to the Australian Stock Exchange failed to meet the levels deemed appropriate by the report.
“[It’s] disappointing,” Dr. Nga Pham, one of the report’s authors, told Inside Retail.
“In many statements, it appears that the low disclosure quality was due to the lack of understanding of the company’s exposure to modern slavery risk, and the lack of commitment of resources to assess and address risks.”
And when it comes to retail more specifically, the picture isn’t much better. More than a third didn’t report how many suppliers they use, and more than two thirds didn’t report how much money they spend on their supply chain, nor where their suppliers are located.
In failing to publish a transparent look at supply chain operations, retailers are making it more difficult for the public, auditors, and themselves to fully understand the situation as it stands. Dr. Pham notes this could be a result of retailers lacking an overarching database of the suppliers they are engaged with – but even this carries implications for how businesses are tracking which suppliers they are supporting.
That’s not to say all retail businesses are failing to meet the Act’s standard. Last year, Wesfarmers, Woolworths and Bega received an A, while Blackmores and Super Retail Group received a B.
Other groups, such as Harvey Norman, Kogan, Adairs, Lovisa and Baby Bunting, received Es and Fs.
What can be done?
So, what were the main differences between those retailers that received higher and lower scores?? Dr. Pham said the groups that received a higher score take the situation more seriously, and in some cases had formed a dedicated team to tackle the issue directly.
For example: Woolworths, which ranked at the top of Monash’s report, provided an in-depth look at its operations across Australia and New Zealand, and identified potential risks inherent within the industries it trades in.
According to Woolworths, the seafood industry has been known to utilise forced labour, human trafficking, and debt bondage – alongside illegal and unregulated fishing practices.
In response, Woolworths has ensured its own brand seafood is 100 per cent covered by approved accreditation, as well as 58 per cent of its behind the counter seafood.
The starting point businesses should look at to improve their transparency is to more accurately understand the size and complexity of supply chain operations.
“This can be done by making sure that [a] company’s supplier database is current with information of the suppliers’ locations, type of contract, order size, type of products or services procured, supplier audit and compliance history,” Dr. Pham said.
“[And] companies should have standard modern slavery contract clauses with suppliers [and] design and disclose systemic due diligence processes for… screening potential suppliers, onboarding new suppliers, and ongoing monitoring of existing suppliers.”
Is it time for industry collaboration?
While the Department of Home Affairs created an Expert Advisory Group to advise businesses how to report odern slavery risks, especially during the pandemic, a group focused on retailers could go a long way to helpthe industry.
“We have seen initiatives led by various industry groups or communities of practices for their members to utilise the common resources to understand modern slavery or leverage influence on suppliers,” said Dr. Pham.
“Whether it is a centralised body or a collective group led by companies, it is important to share resources and expertise for companies to move up the learning curve.”