Are there slaves in your supply chain?

By Stephen Easton

April 18, 2018

A modern slavery act will introduce mandatory reporting rules designed to expose forced labour in supply chains, but it is not clear whether they will apply to government procurement.

Update (July 2018): the Australian government has since chosen to include government procurement in the Modern Slavery Bill it has committed to passing before the end of 2018.

Assistant Minister for Home Affairs, Alex Hawke, said detailed guidance for affected entities would be available before the rules come into effect. In his second reading speech, Hawke said all declarations under the laws will be published to promote transparency and ensure that the community can easily access and compare statements.

“[T]he government will publish an annual consolidated modern slavery statement for all non-corporate Commonwealth entities. Commonwealth corporations and companies will publish separate statements if they meet the revenue threshold.”

The threshold will be an annual revenue of $100 million. 

Even if they don’t, it is likely there will be a new procurement policy for the Australian Public Service at the very least, and it is reasonable to expect state and territory governments to follow suit in some way.

The problem is a growing concern around the world because it’s been getting bigger for years. If you want to know how many slaves work for you, personally, there’s a website for that. By one estimate, the average is five for each Australian.

Estimates vary widely. The Global Slavery Index recently arrived at a figure of 45.8 million people in some form of slavery across 167 countries. This widely quoted research was funded by iron ore miner Andrew Forrest as part of his influential anti-slavery project, the Walk Free Foundation, which is now working with the Australian Institute of Criminology on a national estimate.

As Commonwealth heads of government meet in London, the group has just released a new report calling on them all to implement 10 anti-slavery measures.

There are more slaves now than when slavery was legal in Britain and the United Sates, according to Mark Lamb, general manager of the Chartered Institute of Procurement and Supply in Australasia. The professional standards body for procurement has been running a campaign around modern slavery of late, and he firmly believes this is an issue public sector bodies need to take seriously.

CIPS is an 86-year-old global body based in the UK, providing qualifications, training and setting strong ethical standards for its members, and is the only one of its kind. Procurement is “one of these professions that hasn’t been well, shall we say, managed, or well understood” in Lamb’s view. “But it’s changing,” he told a small audience at the recent Public Sector Innovation Show.

Beyond getting value for money, Lamb said procurement professionals should be managing supply chain risk. Beyond the obvious moral grounds for pitching in with efforts to reduce slavery and labour rights violations, being linked to these horrors represents a serious kind of reputational risk. This is how ethical purchasing can also create value for organisations, he said.

Ethical standards are strongly linked to community expectations and breaching them can rightly lead to a serious loss of public trust.

Lamb flicked through a highlight reel of relatively recent headlines with countless examples of labour rights violations, which often affect migrants and guest workers, like Australia’s harvesters. Other supply chain scandals have also demonstred insufficient transparency – like when beef turned out to be horse in the United Kingdom, and imported frozen berries brought hepatitis to Australia.

“And when the supermarkets were asked, where did those berries come from? ‘China.’ That’s all they could really say. They had visibility over their first-tier suppliers, but not beyond.”

This year’s modern slavery legislation is driven by rising public expectations, but also likely to reinforce them by creating new responsibilities.

Lamb said CIPS hoped to be a “thought leader” on these issues and an educator of both procurement professionals and the public. “The CIPS role is to educate the profession, because we believe through education you can change behaviors; you can change the world.”

He encouraged those at the public sector conference to go beyond a minimum-compliance approach when the new requirements come in. “Because a lot of you, if you’re buying things, from anywhere in the world, chances are there is slavery in the supply chain.”

“You may not realise it, you may not be conscious of it, but let me tell you it does exist.”

A lot has changed in the UK since it passed its landmark Modern Slavery Act in 2015, he explained. The number of victims coming forward has increased by 63% and convictions are up 77% — his advice is: don’t wait to be caught up similar scandals here.

“Don’t wait to comply, really; we suggest you get one step ahead of the curve. There’s a huge opportunity here to try and eradicate risk.”

As part of what Lamb calls “licensing the profession” – moving closer to something more like the robust systems that maintain trust in doctors, accountants, lawyers and engineers – CIPS sets a code of conduct for its members, which has recently been updated to reflect modern expectations.

He points out slavery is explicitly written into one section of the new and comprehensive ethics statement. CIPS members agree to undertake “due diligence on appropriate supplier relationships in relation to forced labour (modern slavery) and other human rights abuses, fraud and corruption” and continuously develop their knowledge of these issues.

Lamb has also worked with the Walk Free Foundation to develop an “ethics e-learning test” for its members. He said some organisations, such as the Metro Trains company in Melbourne, have made all their relevant staff go through the module to earn an ethical stamp of approval from CIPS.

“It’s actually not an easy test, but when I say test, it’s not about passing or failing,” he explained.

“You can re-sit it, so it’s really more about informing you as to what are the issues in ethical procurement.”

Supply chain transparency is rare with most organisations having little or no visibility below the second tier. When Forrest went looking in his own supply chain, he famously found 12 suppliers that had connected his business to forced labour.

How does one look further? “It’s about getting to know your suppliers, asking the right questions, and digging, digging and digging, to encourage full transparency across your supply chain,” Lamb explained in broad terms.

The CIPS boss said educational resources like the online ethics test were a good starting point in learning how to really look further down the rabbit hole.

He sees a worldwide movement building support to address the issue, and urges the people who buy important things for big organisations in Australia to get on board, take pride in their jobs, and help expose these serious crimes. How Australia’s new law will affect government agencies, however, is still up in the air.

Ministers considering their options

The Turnbull government has committed to getting the proposed modern slavery bill passed into law this year, and began public consultations around the supply chain transparency rules soon after an interim report emerged from an inquiry by the Joint Standing Committee on Foreign Affairs, Defence and Trade.

That was last August. The Commonwealth’s starting position was that government agencies shouldn’t have to comply with the new reporting requirements. The suggestion was that instead, the feds could lead by example with a new internal policy for the Australian Public Service, leaving state and territory governments to decide on their own approaches.

“Commonwealth procurement is already governed by a legislative framework that sets out rules for spending public money, including in relation to ethical sourcing,” argued a consultation paper published by the Attorney-General’s Department.

“The Australian Government is considering ways to demonstrate leadership on modern slavery through procurement, including through consideration of an appropriate Procurement Connected Policy on Human Rights.”

Existing procurement-related policies are in aid of Australian companies, the Indigenous business sector, and gender equality. The consultation paper doesn’t describe what one focused on human rights might look like, and how it would enhance supply chain transparency.

More recently it has become clear that there is strong support for the new modern slavery legislation to apply to all kinds of organisations including government agencies. Through the inquiry, the committee was persuaded to explicitly recommend that governments and their agencies should all be covered by the new supply chain reporting requirements, in its final report in December.

A statement of support from Human Rights Commissioner Edward Santow, co-signed by another diverse group of organisations, also promotes a legislated requirement that extends to government agencies.

“Public procurement is a major component of the overall economy with consequences for the enjoyment of human rights,” continues the open letter.

“The Australian Government should be required to comply with the proposed reporting requirement. The Australian Government should work with State and Territory Governments and lead by example in reporting on actions taken in public procurement to address modern slavery.”

Alex Hawke, the Assistant Minister for Immigration and Border Protection, said he expected the government to table its formal response to the inquiry’s 49 recommendations in June, in a February speech hosted by the Walk Free Foundation and the Salvation Army.

The plan is to introduce the legislation by mid-year. There was relatively strong participation in the consultation process, with almost 100 written submissions from organisations representing a diverse slice of society and industry.

The Assistant Minister said there had been “more than 30 direct meetings with key stakeholders” following 12 roundtables run by the AGD last year, and states the process demonstrated “broad support for Government’s proposed reporting requirement model” in speaking notes provided by his office.

The Turnbull government aims to put “world-leading” anti-slavery legislation in place, according to to Hawke, who argues aspects of the reporting requirements will “improve on” similar legislation passed elsewhere.

As for the public sector, Hawke has left the way open for further debate. He is “carefully considering the scope for the reporting requirement to apply to the Commonwealth government where appropriate, to ensure government matches these requirements on business”.

About the author
Inline Feedbacks
View all comments

The essential resource for effective
public sector professionals