Getting the Modern Slavery Act right for Australia

 

Getting the Modern Slavery Act right for Australia

 

Despite the general abolition of slavery in the 19th century, the International Labour Organization reports that more than 21 million people are presently affected by ‘modern slavery’, a term encompassing trafficking, forced labour and slavery. Largely to blame are transnational corporations (TNCs) which heavily rely on outsourcing in their supply chain. In 2015, the United Kingdom parliament addressed this problem by introducing the Modern Slavery Act (‘UKMSA’) which aimed to eradicate modern slavery by imposing disclosure obligations on TNCs.

Australia is set to follow suit having launched an inquiry into appropriate federal legislation in February. The Chair of  the Australian parliament’s Foreign Affairs and Aid Sub-Committee Chair, Mr Chris Crewther indicated that the UKMSA could serve as an example for Australia’s own legislation. However, the UKMSA is not without problems and so care should be taken to replicate it in Australia unqualifiedly. For example, the UKMSA lacks sufficient accountability measures to keep TNCs in check, and hence make a meaningful impact against modern slavery.

The UKMSA are targeting TNCs to ensure action is taken against modern slavery. Broadly, the UKMSA’s main legal obligation is contained in Section 54 which requires every UK organization, with a total global annual turnover of £36m, to produce a statement on the steps they have taken to identify and eradicate modern slavery in their supply chain. The statement should be approved by the board of directors and published on the organization’s website.

While the UKMSA was designed to promote transparency, the vagueness of Section 54 allows TNCs to meet reporting requirements without directing any effort to eradicate modern slavery While reporting mechanisms are a step in the right direction it is essential that reports created are comprehensive and accurate. Unfortunately, the UKMSA doesn’t clearly enforce this and will allow TNCs to comply with Section 54 by simply stating that no steps have been taken. The UKMSA misses an opportunity to set a comprehensive standard framework of what disclosure statements must contain. Currently, Section 54(5)(a)-(f) merely includes suggestions of vague elements of disclosure rather than mandatory requirements. For instance, Section 54(5)(c) suggests that the TNC may include information about ‘due diligence processes’. Here, ‘due diligence’ is a broad term with multiple interpretations, and the UKMSA fails to specify the precise requirement or definition. Moreover, the notion of disclosure requirements itself is passive, and nothing in the UKMSA actually compels TNCs to take action to proactively address modern slavery.

More perplexing, is the fact that the UKMSA has limited accountability mechanisms. That is, companies who fail to comply or decide to issue inaccurate statements face no penalties or legal liability. Arguably, attaching this would hold TNCs to account and pressure them to provide rigorous statements. Apart from the reputational risk of non-compliance, there is currently no clear incentive for TNCs to comply properly and this has resulted in the widely diverging quality of current statements. This is reflected in recent study of the Business & Human Rights Resource Centre  which examined the first twenty-seven disclosure statements from FTSE 100 companies. They found that only two could be deemed as “better” statements that fully address the suggested elements contained in Section 54(5)(a)-(f). The rest only met minimum requirements and grossly lacked information, despite the fact these FTSE 100 companies have enough financial resources to thoroughly check their supply chain.

Undoubtedly, Australia’s future act should be a landmark stride towards eliminating modern slavery and mimicking the toothless regime of its UK counterpart would be a misstep. Instead, Australia should draw insights globally, from a mix of soft and hard law, that use harder measures to tackle modern slavery.

In order to combat modern slavery, Australia must, at the very least, establish a legally binding regime. It should also attach civil liability for non-compliance, akin to the Californian Transparency in Supply Chains Act 2010. Specifically, the act empowers the Californian Attorney-General to file a civil action seeking injunctive relief against companies who fail to comply with the CTSCA. Borrowing this attribute can direct Australia towards confronting modern slavery more effectively.

 

The author, Belinda Goh, was the Australian Journal of Human Rights Student Editor for Semester 1, 2017. She is in her penultimate year of a combined Bachelor of Commerce/Bachelor of Laws at the University of New South Wales.

 

photo©Xomiele