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Why Do You Need to Take into Account Modern Slavery in Your Supply Chain

Why Do You Need to Take into Account Modern Slavery in Your Supply Chain?

When it comes to your supply chain, do you know where your products come from? Are you confident that the people who made them were treated fairly and paid a decent wage? How do you respond to a case in your supply chain involving potential modern slavery?

Businesses in nearly all industries must be prepared to combat modern slavery and secure decent practices throughout their supply chains. This means being proactive in your sourcing decisions, maintaining robust supplier relationships and having policies and procedures in place to identify and address possible red flags.

Detecting modern slavery may be one of the most difficult challenges multinational corporations and buyers of overseas components and goods face in the 21st century. It is recommended that businesses conduct due diligence on their supply chains by detecting and assessing human rights implications, acting on the results, tracking these measures and communicating how impacts are resolved.

At Madison Marcus, we can help ensure that your firm complies with regulations and you will receive assistance with recruitment, ethics, whistleblowing and procurement, risk assessments and anti-slavery indicators.

What Is Modern Slavery In Supply Chains?

You might be thinking about what is modern slavery and how it affects the supply chains. According to Australian law, all types of modern slavery, including human trafficking, servitude, forced labour, debt bondage and forced marriage, are considered serious crimes. In Australia, it is estimated that up to 15,000 individuals are living in modern slavery.

Modern slavery in Australia encompasses human trafficking, forced labour and domestic servitude [1]. Businesses abuse complex supply chains most often. Despite firms of all sizes taking all necessary precautions to treat their employees reasonably internally, the globalisation of supply chains has made it harder to ensure that suppliers follow the same standards.

Companies that unknowingly support modern slavery will face serious consequences. Due to the righteous tightening of legislation, companies that violate labour rules may face hefty legal consequences. Also, reputational damage may cost more. Slavery in supply chains could damage organisations’ market position if consumer confidence plummets. 

Organisations may avoid risks, attract investment and grow by following ethical procurement practices and being open. Examples of identifying modern slavery indicators include:

  • Unlawful withholding of wages
  • Withholding identity documents
  • Excessive work hours and restriction of movement
  • Deducting exorbitant fees for remuneration
  • Inflated loans to be paid back to the employer.

There are many reasons for businesses to take action against modern slavery in their supply chains. Modern slavery is a violation of human rights. Companies that knowingly or unknowingly support or profit from modern slavery are complicit in human rights abuses.

How to Monitor Modern Slavery Risk?

On 1 January 2019, the Commonwealth Modern Slavery Act of 2018 (the Act) became effective. A national requirement for reporting modern slavery was established under the Act (Reporting Requirement). Large companies and other Australian market participants with annual consolidated revenue of at least AUD$100 million are subject to this reporting requirement.

The reporting requirement aids the Australian business community in recognising and mitigating the hazards of modern slavery whilst also preserving accountable and open supply chains. Reports must include a ‘Modern Slavery Statement’ that outlines the risks of modern slavery to their entities and the steps taken to address those risks. Through a Modern Slavery Statements Register, this declaration will be made publicly accessible online.

The reporting entity’s activities to evaluate and address modern slavery threats in its international operations and supply chains must also be outlined in these statements. These declarations are made public by the Australian government via a central register accessible online.

How to Conduct Modern Slavery Due Diligence?

Any business must continually evaluate its prospects, clients, staff, cash flow, assets, insurance policies and third-party suppliers. Due diligence is a crucial business activity. The Modern Slavery Act has made it necessary for organisations to create several statements to show the government, the general public, clients and investors that they are being transparent—not just because they are compelled to but also because they value it.

Obtaining an annual modern slavery statement issued by your suppliers is an excellent starting point for identifying hazards of contemporary slavery in your supply chain. This document must disclose the efforts taken to ensure that slavery and human trafficking do not occur inside the organisation’s activities and supply chains.

What Is a Modern Slavery Risk Assessment?

A modern slavery risk assessment is a due diligence process whereby businesses can evaluate their vulnerability to modern slavery. Businesses may conduct a self-assessment or engage an external expert to assist with the evaluation. The risk assessment results will help businesses identify where they are most vulnerable to modern slavery and take steps to address those risks.

Under the Modern Slavery Act, a reporting entity must take ‘reasonable steps’ to assess the risks of modern slavery arising from their business and supply chain. This evaluation is called a modern slavery risk assessment.

A modern slavery risk assessment will help an entity to:

  • Understand where in their business and supply chains there might be a greater risk of modern slavery occurring;
  • Identify what they can do to mitigate or manage those risks. There is no one-size-fits-all template for conducting a risk assessment, as the process will vary depending on the size and complexity of the business and its supply chains.

How Madison Marcus Can Help You

Facing modern slavery issues in your business can be difficult. Whether you’re trying to address it in your workplace or evaluating the risks of modern slavery in your supply chain, it is important to be prepared.

Madison Marcus provides comprehensive services and solutions to businesses, governments and not-for-profit entities that are struggling with the complexities of the Modern Slavery Act 2018 (Cth) (the Act).

We can help you on:

  • Advising on the best way to structure your modern slavery statement
  • Assisting with the development of policies and procedures to mitigate the risk of modern slavery occurring in your business and supply chain
  • Conducting training for your staff on the Act and your organisation’s obligations
  • Reviewing your contracts with suppliers to ensure they comply with the Act
  • Auditing your business and supply chain to identify potential modern slavery risks.

For all enquiries, contact us here.


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