Here’s a suggested governance paper for your Board to consider. Feel free to improve this draft so it meets your organisation’s requirements.
Should we address modern slavery and ethical supply chain matters in our governance and policy framework?
Recommendation to the Board
That the … committee/s be asked to advise on changes to existing policy or development of a new policy addressing modern slavery and ethical supply chain management.
‘Modern slavery and global supply chains’, the Interim report of the Joint Standing Committee on Foreign Affairs, Defence and Trade’s inquiry into establishing a Modern Slavery Act in Australia was published in August 2017. This report recommends that Australia introduce a Modern Slavery Act, details of which are to be addressed in the Inquiry’s Final Report.
Several submissions to the Inquiry argued that Australian legislation should be consistent with international standards such as those described in the UN Guiding Principles on Business and Human Rights.
The Interim Report noted that “Australian NGOs strongly supported aligning any possible legislation with the UN Guiding Principles. For example, Anti-Slavery Australia submitted that the UN Guiding Principles:
… provide a flexible framework for businesses and states to prevent human rights abuses. Human trafficking and slavery are often caused by or occur alongside other human rights abuses, such as extreme poverty and violence against women. The preventative framework of the Guiding Principles is a valuable tool in the elimination of the causes and conditions of human trafficking and slavery.”
It seems likely that any mandated reporting requirements will have a relatively high threshold so that only larger enterprises would be targeted by the legislation. However, best practice standards and a ‘race to the top’ culture is promoted, along with a voluntary commitment by smaller organisations to the principles supported by the Act.
Andrew and Nicola Forrest have led the initiative in support of Australian legislation through the establishment of the Walk Free Foundation.
Development of an ethical supply chain policy can be seen as an extension of our Finance (Purchasing) Policy, a refinement of our Code of Conduct, or part of our Corporate Social Responsibility Policy. Aspects of the new policy position may also influence our Human Resources policies and procedures – especially regarding fair treatment of those engaged via Freelancer or Airtasker type projects, and our commitment to avoid sham contracting.
We recognise the importance of fairness and respect in our corporate values. These values need to be reflected in our corporate behaviours, and so, while it is unlikely that our organisation will be subject to mandatory requirements under the Modern Slavery Act, we acknowledge that our governance and policy framework will benefit from review in the light of this legislation, with the objective that we ensure our use of an ethical supply chain.
As a consumer of goods and services, we also have the opportunity to ask our suppliers about their commitment to ethical supply chains, and therefore contribute to social pressure to ensure that there are no forced labour or predatory practices in their supply chain. It could be argued that given our values, we have an obligation to do this.
Failing to address these issues in our governance and policy framework exposes us to the risk of reputational damage in the event it is discovered that we have ‘breached’ the (non-mandatory) standards set under the proposed legislation. Internally, such a breach would also conflict with our professed values, especially fairness and respect.
Some supply chain arrangements may require audit activity, which we do not have the resources to undertake on our own behalf. To the extent that we can benefit from published data about suppliers, or resource and information sharing with organisations like ourselves, we should do this to take our policy stance beyond mere rhetoric.
Request the Constitution and Policy Committee / Governance and Risk Committee to review current policies relevant to the principles addressed in the proposed Modern Slavery Act and ethical supply chain management, and recommend amendments or new policies as appropriate.
The committee should also be asked to confer with management and advise the Board regarding any implementation, training or resource issues associated with the introduction of new policy positions.
For immediate review and advice by March 2018, with a view to Board adoption of amended or new policies by May / June 2018.
Garry Pearson at PolGovPro Pty Ltd provides Board or committee briefings on this issue. He can be contacted on 0419 347 599 (or at email@example.com) to arrange a briefing.