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I will be posting and providing brief reflections on the essays that make up the excellent new online symposium organized by the marvelous Caroline Omari Lichuma and Lucas Roorda and appearing on the blog site of the Business and Human Rights Law Journal. Entitled Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe. The essays (and the symposium) means to expand the conversation about human rights from out of its hub in the UN apparatus in Geneva and begin exploring in more depth the sometimes extraordinary developments occurring outside the highest reaches of elite curation in the Global North.
The second of the essays is Keren Adams--"A Race to the Top? Progress and pitfalls of Australia’s Modern Slavery Act."
Keren Adams is a Legal Director at the Human Rights Law Centre in Melbourne, where she leads the organisation’s corporate accountability work. Keren has co-authored several reports on Australia’s modern slavery laws and has acted as an advisor to the Australian Government on the implementation of the United Nations Guiding Principles on Business and Human Rights.
Keren Adams's contribution follows below and may be accessed as originally posted here. Ling makes the following points which are worthy of some reflection:
1. Adams focuses on the Australian Modern Slavery Act, a pioneering disclosure provision enacted in 2018. As a regulatory measure it somewhere between the guidance models of Japan and Taiwan, and the mandatory measures increasingly utilized in Europe. Like all halfway measures it has proven to be exasperating both for those who prefer guidance measures and those whose taste run to mandatory measures overseen by an active administrative apparatus within enterprises and in the public sector. The exasperation has many sources. Adams identifies two of the major ones. First, it is impossible to measure the effectiveness of a purely disclosure provision, where data generated (the reports) are difficult to true to effectiveness (rates and severity of conditions and incidence of modern forms of slavery in Australia. What cannot be effec6ively measures quickly devolves into the performance of box checking. The second is that there appears to be no effective (or effectively measurable) sanctions mechanisms. The lack of sanctions affects the measure in two ways--by making it harder to enforce compliance with the reporting obligation and by making it impossible to sanction the conditions reported either in the market or through administrative measures.
2. Adams points to the market and its failures as a principal cause of the failures of transparency regimes driven by markets or non-state organs (for a consideration HERE). "These findings indicate profound weaknesses in the MSA as it currently stands. Compliance relies entirely on market forces: consumers, civil society organisations and the media are expected to monitor disclosure efforts by companies and expose those that are underperforming." ("A Race to the Top? Progress and pitfalls of Australia’s Modern Slavery Act"). To those ends a compliance-oriented public administrative apparatus, one tied to a parallel internal enterprise compliance apparatus might work better. "Perhaps most critically, with no independent body to oversee the law, it is very difficult to know whether companies are including accurate information in their statements, or whether key information is being left out." (Ibid.). Yet even that is impossible where the only obligation is transparency "rather than [on] the underlying actions companies should be taking, [that] inevitably results in many companies taking a superficial approach to mitigating modern slavery risks." (Ibid).
3. The question, then, is how to reform the Modern Slavery Act.
A. One way toward reform would focus on reporting compliance, the better specification of data for harvesting, and a more robust system of administrative measures as nudges depending on the data reported. The essential feature of this reform variant would be to both rely on the market for disciplinary measures (stock price, cost of capital (eg risk to lend), and to rely on the state for policy based nudging. Of course, a system of publicized civil penalties for reporting failures might also be useful.
B. Ironically, another way to approach reform is to do nothing. By doing nothing, Australian companies might be more effectively bound up in the mandatory and guidance based measures of Australia's trading partners in Asia and in the EU. But that too provides only partial effects. And it would cede Australia's regulatory destiny to others in a way that would cement its subaltern status within global trade circles.
C. Adams opts for a third pathway toward reform, one grounded in an "independent Statutory Review of the MSA undertaken in 2023 (Review). . . [and its] 30 recommendations for changes to strengthen the legislation, including lowering the turnover threshold for reporting, introducing penalties for non-compliance and, most importantly, introducing a requirement that companies undertake human rights due diligence on their operations and supply chains." (Ibid.). Convergence with European mandatory measures makes sense, if convergence was a conscious policy objective of reform. But it may be telling that Modern Slavery remains a functionally differentiated byway in the great stream of supply chain due diligence within which it may be located.
What matters, though, is the insights from experience. Disclosure without consequences provides a very thin regulatory reed, whether that regulatory scheme is anchored in the market or administered through a public administrative apparatus (my discussion here). Indeed as the UNGP teaches, rights or responsibilities allocated without allocating a parallel and equal set of remedial rights amounts to very little indeed.
Links to essays in the BHR Blog Symposium.
Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 5: Barnali Choudhury--"BHR Developments in Canada: Targeting Low Hanging Fruit"
Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 10: Lisa J, Laplante, "The United States 2024 National Action Plan on Responsible Business Conduct"Symposium on Business and Human Rights (BHR) Regulatory Initiatives Outside Europe: Part 11: Erika George and Enrique Samuel Martinez, "The Uyghur Forced Labor Prevention Act: An Assessment Of Enforcement Efforts"
A Race to the Top? Progress and pitfalls of Australia’s Modern Slavery Act.
In May 2024, Australia’s Fair Work Ombudsman secured record-breaking penalties against a massage parlour for the severe exploitation of a group of Filipino workers. For five years, the seven workers had been severely overworked and underpaid and were subjected to discrimination, threats of deportation and violence by the owner of the massage parlour, who threatened to have the workers’ families killed if they complained.
An estimated 41,000 people in Australia live and work in situations of modern slavery. Australian businesses source primarily from the Asia Pacific region, where over 15 million people are thought to be working in situations of forced labour.
It is against this backdrop that Australia’s Modern Slavery Act 2018 (Cth) (MSA) was introduced to much fanfare in 2018. For the first time, large Australian businesses (with a turnover of over $100 million) would be required to publish annual statements on a central Government register reporting on their efforts to tackle modern slavery within their global operations and supply chains.
The scheme was essentially voluntary, with no legal or financial consequences for companies that failed to report. Instead, the then conservative Government claimed that the new transparency regime would promote a “race to the top” by business to address forced labour. Those that failed to act would be punished by the market and consumers, severely tarnishing their reputations.
“No hard evidence” of meaningful change
Five years on, over 7,000 modern slavery statements have been published on the Australian government register relating to nearly 8,000 entities headquartered in over 50 countries. Over 2.2 million searches have been conducted of the Register, evidence that the MSA has generated enormous public interest.
Yet whether the law is achieving its primary aim of helping to address modern slavery in the operations and supply chains of Australian companies is doubtful. An independent Statutory Review of the MSA undertaken in 2023 (Review) found that most stakeholders were of the damning view that there was “no hard evidence that the Modern Slavery Act, in its early years, has yet caused meaningful change for people living in conditions of modern slavery”.
The Review noted that both independent studies and government evaluation had found “high levels of apparent non-compliance with the Act” and while the quality of statements had improved over time, the change was “not significant enough” and still resembled a box-ticking exercise for many companies.
The Review’s findings accord with the Human Rights Law Centre’s own research over the last three years with civil society and academic partners. We reviewed statements published over two reporting cycles by 102 Australian companies sourcing from four sectors known to have high risks of modern slavery – garments from China; gloves from Malaysia; seafood from Thailand and horticultural produce from Australia.
Our research found that, despite widely reported cases of exploitation and forced labour in these industries, 43% of the companies reviewed were failing to identify these obvious modern slavery risks in their statements. Only 28% of garment companies that sourced from China, for instance, mentioned the risk of Uyghur forced labour in their supply chains. Likewise, only one in two food companies identified horticultural produce from Australia as a high-risk area.
Actions reported by the companies to address modern slavery risks were generally restricted to developing policies, requiring suppliers to sign codes of conduct and providing internal training on modern slavery risks. There was far less evidence of actions aimed at addressing the drivers of modern slavery or improving wages and conditions for workers.
Only around 20% of companies, for instance, disclosed evidence of responsible purchasing practices, such as measures to avoid downward cost pressures or unrealistic timeframes for suppliers, both of which are known drivers of exploitative labour practices. Just 26% of companies said that they undertook due diligence on any new suppliers and only 21% expressed a commitment to ensuring workers in their supply chains were paid a living wage. While 58% professed to support freedom of association for workers, only 14% were able to point to evidence of collaboration with trade unions in addressing modern slavery risks or lifting labour standards within their supply chains.
The problem with transparency regimes
These findings indicate profound weaknesses in the MSA as it currently stands. Compliance relies entirely on market forces: consumers, civil society organisations and the media are expected to monitor disclosure efforts by companies and expose those that are underperforming. This is a complex task, certainly not achievable for consumers and undertaken by civil society largely on a pro bono basis.
The Act’s focus on reporting only, rather than the underlying actions companies should be taking, inevitably results in many companies taking a superficial approach to mitigating modern slavery risks.
Perhaps most critically, with no independent body to oversee the law, it is very difficult to know whether companies are including accurate information in their statements, or whether key information is being left out.
Rubber-glove manufacturer Ansell is a good case in point. Ansell has consistently performed strongly on Australia’s modern slavery reporting benchmarks. Yet at the same time, the company has faced persistent allegations of forced labour in its Malaysian supply chain and, as a result, was the subject of a forced labour import ban imposed on its suppliers by US Customs and Border Protection in 2022. Former workers engaged by one of the company’s Malaysian suppliers subsequently brought legal proceedings against Ansell in the US courts, alleging the company knowingly profited from their forced labour.
Due diligence: the way forward?
There is now a critical opportunity to reform the Modern Slavery Act and make it more effective. The Review has made 30 recommendations for changes to strengthen the legislation, including lowering the turnover threshold for reporting, introducing penalties for non-compliance and, most importantly, introducing a requirement that companies undertake human rights due diligence on their operations and supply chains.
Following developments in Europe, a due diligence obligation within the MSA would require companies to investigate, address and report on their actions to address modern slavery in their supply chains. It would shift the focus of the Act from mere reporting towards a requirement for companies to take action. Rather than pushing liability down the line onto suppliers, companies would be required to properly map their supply chains and work with their suppliers to address risk areas.
To be effective, of course, any due diligence requirement incorporated into the Modern Slavery Act would need to be coupled with robust oversight and enforcement mechanisms. The Human Rights Law Centre has recommended that amendments to the law include an explicit duty on companies to prevent modern slavery, enforceable through both regulator-imposed penalties and civil liability. Workers subjected to modern slavery in a company’s supply chain would be able to seek direct remedy from the parent company, unless the company could demonstrate it had taken all reasonable steps to prevent the abuse through appropriate due diligence. Such an obligation would, we believe, have the potential to drive the real changes to corporate practices necessary to tackle modern slavery.
The current Labor Government has already signalled its intention to strengthen the Modern Slavery Act, and has recently passed legislation to establish a new Anti-Slavery Commissioner to promote compliance with the law and support victims of modern slavery. It remains to be seen, however, whether the Government will make the more transformative changes to the Modern Slavery Act that are needed for it to fulfil its potential.
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