Modern slavery in supply chains and COVID-19

Directors responsibility for modern slavery

This article was published in the Institute of Directors website on 21 May 2020

COVID-19 has demonstrated that strong and robust supply chains are important, especially in times of economic uncertainty. During COVID-19, workers in supply chains have faced increased vulnerabilities, poverty and been more at risk of modern slavery with factory closures,  order cancellations and lost jobs. COVID-19 has put corporate social responsibility to the test! Companies have increased expectations from their stakeholders to know their supply chain, know where risks lie and protect vulnerable workers in their supply chain, operations, products and services.

The Australian Modern Slavery Act and New Zealand Organisations

The Commonwealth Modern Slavery Act (Act) operationalises this responsibility. The Act affects 500+ New Zealand companies with a consolidated revenue of A$100 million carrying out business in Australia. New Zealand companies meeting this criteria are legally required to submit modern slavery statements to the Minister of Home Affairs outlining risks of modern slavery in its operations and supply chains, including supply chains it owns and controls.  The due date for reporting has been extended to March 2021.

Director responsibility for modern slavery statements

Modern slavery statements have to be approved and signed off by directors of company boards. They are required to be comprehensive and address the following according to Section 16 of the Act:

  1. The structure, operations and supply chains of the reporting entity;
  2. The risks of modern slavery practices in the operations and supply chains of the reporting entity and any entities the reporting entity owns or controls;
  3. Actions taken to address risks including due diligence and remediation;
  4. An assessment of the effectiveness of the actions the entity has taken to address modern slavery risks;
  5. The process of consultation that has taken place with entities the reporting entity owns or controls;
  6. Other relevant information, for example, policies, processes or training that have been implemented regarding modern slavery.

The Australian Border Force has encouraged reporting entities to address the impact of COVID-19 in modern slavery statements. Companies are encouraged to submit voluntary statements if they don’t meet the legal criteria for reporting.

Modern slavery statements should sit in front of a robust risk-management structure that competently identifies and mitigates modern slavery risk.

Modern slavery in supply chains should be on the agenda for all directors of New Zealand companies, regardless of whether they have to report to the Act or not. Understanding and addressing the impact to people in supply chain is part of a company’s responsibility to respect human rights.

Key questions for all directors regarding modern slavery 

  1. How is modern slavery currently identified in supply chain operations?
  2. What sectors, services, countries and entities are high-risk for modern slavery across supply chain operations?
  3. Are staff adequately trained and competent in understanding, detecting and responding to modern slavery issues?
  4. What reporting structure is in place to ensure that modern slavery risks are clearly communicated to the board?
  5. How may COVID-19 be affecting vulnerable workers in domestic and international supply chains and do we have responsibility to address this?

For more information about modern slavery reporting, see www.bhr.co.nz. Rebekah Armstrong is the director of Business and Human Rights Consultants; a firm that specialises in human rights and modern slavery in supply chain. To see if your company may be required to comply with the Commonwealth Modern Slavery Act – fill out this short survey.