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Key role for sustainability managers in modern slavery law compliance

13 August 2018 12:59pm

Sustainability managers in large businesses will have an important role to play in ensuring compliance with modern slavery legislation, according to Deloitte risk advisory principal Dr Leeora Black.

A federal bill, currently before the House of Representatives, will apply to businesses with a turnover of more than $100 million, while a similar NSW law that was passed in June applies to those with a turnover of more than $50 million.

Businesses covered by the legislation will be required to assess their supply chains and operations for risks of slavery, forced labour, human trafficking and the worst forms of child labour.

They must also issue annual modern slavery statements that will be available to the public on a central, government-administered register.

Supply chain knowledge and engagement skills advantageous

Sustainability and procurement managers will generally be "centrally involved" in efforts to ensure compliance, working with senior executives in other areas such as risk and strategy, Black told Footprint.

The work sustainability managers have already done to identify supply chain environmental risks and greenhouse gas emissions is likely to stand them in good stead, making it easier to extend their scrutiny to human rights risks, she said.

Their stakeholder engagement skills will also be useful in discussions with suppliers, Black added.

However, sustainability managers will still need to strengthen their risk assessment skills, and there would be new challenges for many companies, she cautioned.

"Many organisations are still in a very basic situation where they don't have complete visibility over their suppliers yet," she said.

Accounts payable information may be in several parts of a company, and mapping supply chains will be a crucial early step for these businesses, she noted.

Greater take-up of global sustainability initiatives

Black added that human rights are a component of all major international sustainability initiatives, and predicted modern slavery legislation would prompt more Australian companies to make "greater use" of these.

They include the UN Global Compact, which already counts numerous Australian companies – including eight top-10 ASX businesses – among its 9,000 signatories.

The UN Sustainable Development Goals also refer to human rights, as does the Global Reporting Initiative (GRI) and the ISO20400 standard on sustainable procurement, Black noted.

In an indicator of the steep learning curve that lies ahead for many companies, Black pointed out that only a few hundred Australian businesses currently report using the GRI.

Furthermore, not all of them do so in a way that treats human rights as a material risk.

Yet up to 3,000 businesses will have to start reporting on human rights as a material risk, once the new federal law is in place, she pointed out.

Black added that levels of awareness and preparedness remain worryingly low.

A survey of corporate social responsibility managers carried out late last year found only about 60% were aware that modern slavery legislation was in the pipeline, she said.

In addition, only a very small minority thought their businesses might be exposed to modern slavery risks, Black said.

That view is at odds with the fact that an estimated 45 million people suffer in slave-like conditions today and about half those are in the Asia-Pacific, she said.

Black reiterated that the main tip for sustainability managers is to work closely with other executives to ensure compliance.

"Don't try and do this on your own," she said. "Work collaboratively with your colleagues on this."

A Senate committee inquiry into the federal Modern Slavery Bill is due to report on August 24.

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