With the Australian government recently announcing its support for a Modern Slavery Act, Australian businesses have to put modern slavery firmly on their corporate agendas, writes Michael Milnes.
It is estimated that almost 4,500 people are trapped in some form of slavery in Australia. Worldwide, that number is closer to 45 million people. Rich countries like Australia risk being a lucrative market for goods or services that might profit from forced labour.
Existing anti-slavery laws can be difficult to enforce. The proposed Modern Slavery Act is modelled on a similar law in the United Kingdom and would require large businesses to publish an annual Modern Slavery Statement.
This statement sets out what risks the business faces and the actions it has taken to ensure its operations and supply chain are slavery-free. This is intended to encourage businesses to do more to monitor their supply chains and ensure they’re not supporting modern slavery, even inadvertently.
The statement must be signed off by a director or partner of the business, making it a senior management-level issue. This approach is widely thought to be showing promising results in the UK by triggering a so-called ‘race to the top’, with companies vying to be seen doing their part to stamp out modern slavery.
The UK experience shows that the proposed legislation has several implications for law firms. Firstly, clients whose businesses fall within the scope of the act often require advice on how to comply. The experience in the UK was that most businesses were proactive in updating their supply chain contracts to reflect the new legislation, for example, with clauses that require suppliers to provide information and to respect human rights.
Separately, law firms with operations in the UK that meet the revenue threshold have already started to comply with the UK act. As a result, many of the larger global law firms now already publish a Modern Slavery Statement on their website. If legislation is passed in Australia, any law firm that meets the proposed revenue threshold of $100 million will also have to publish their own statement.
Even smaller law firms that don’t have to comply with the proposed act directly are likely to see an effect. Large organisations that come within the scope of the act will be planning to do more due diligence on their upstream suppliers. When responding to tenders or starting work for these organisations, law firms, as service providers, will have to be ready to answer questions about their efforts to safeguard their own operations and supply chain.
As professional services firms, Australian law firms are unlikely to be engaged directly in modern slavery in their own operations. However, there may be potential risks in their supply chain. For example, a cleaning contractor engaged to clean the firm’s offices may underpay their workers, who then become economic slaves.
A firm’s computers may include components manufactured in another country using slave labour. It will be incumbent on the firm to investigate as far as possible, and to require its suppliers to provide undertakings that they do not engage in any form of modern slavery.
Employee training is an important first step for businesses that haven’t yet thought about the issue of modern slavery. Global law firms have already started to roll out training to staff with procurement responsibilities. One modern slavery compliance training course provided by Thomson Reuters, in partnership with the Ethical Trading Initiative, aims to create awareness of the problem, its implications, and the risk factors that should be considered.
If higher-risk suppliers are found, law firms can access other sources of information to start building a picture of their exposure to modern slavery risks.
Databases such as Thomson Reuters World-Check can be used to provide intelligence about slavery and other compliance risks posed by individuals and organisations that firms may deal with. Some law firms already require suppliers to provide information about their supply chains at the time they are engaged.
All businesses have the opportunity to do more to prevent goods and services that benefit from modern slavery from getting into the supply chain in the first place.
The purpose behind the proposed law is to create more transparency about what organisations are doing to tackle this problem. With more information about the steps that their law firms are taking, clients will then be able to make better-informed decisions about which firms to use, in line with their own anti-slavery stance.
Michael Milnes is the head of commercial law – Practical Law Australia, Thomson Reuters Legal.