Over 40 million people are living and working as slaves in the world today. It is a staggering figure. It is outrageous!
In the current issue of the Company and Securities Law Journal (C&SLJ), Vol 37 No 2, Justine Nolan and Nana Frishling argue that globalisation has spurred the growth of modern slavery (including servitude, forced labour, deceptive recruiting, trafficking in persons, debt bondage, and child labour). No longer “confined” within national borders:
“Corporations, large and small, relentless in their pursuit of new markets, new technologies and lower production costs, have grown increasingly reliant on complex global supply chains to manufacture and distribute their goods.”
Companies rely on a series of contractors and suppliers in a range of countries to produce and transport their products, with 60% of global trade depending on the supply chains of 50 corporations, which directly employ only 6% of workers and have a “hidden” workforce of 116 million people. Such fragmented production and obscure employment relations facilitate modern slavery, suggest Nolan and Frishling in their article, “Australia’s Modern Slavery Act: Towards Meaningful Compliance”.
It seems that basal economic impulses have a causal role in the crises of modern slavery and climate change, and also impede effective action to deal with them. In “Company Disclosure of Climate-Related Reputation Risks”, also in C&SLJ 37.2, Andrew Belyea-Tate considers the potential impact on a company of its conduct that detracts from the transition to a lower-carbon economy: it exposes the company to the risk of material financial harm through, for example, divestment.
Belyea-Tate maintains that Australia’s disclosure laws are not adequate to the task of ensuring that companies disclose details of their activities that expose them to such risks. Considering provisions of the ASX Listing Rules and the Corporations Act 2001 (Cth) requiring disclosure of information (eg the financial reporting obligations in Part 2M.3 of the Act), Belyea-Tate suggests the essential weakness of the existing disclosure requirements resides in the inability to predict with precision how a company’s stakeholders will react to its conduct in a context in which “customers seek high-quality and/or price-competitive goods or services and investors seek profitability”.
Belyea-Tate advocates that companies be required to make climate change specific disclosures – disclosing detailed information about their contribution to, or detraction from, the transition to a lower-carbon economy. His model is the reporting requirement in the Modern Slavery Act 2018 (Cth) which requires companies in Australia with at least $100 million in turnover, to report on the risks of modern slavery in their supply chains and operations (see section 3).
In their consideration of the Modern Slavery Act, Nolan and Frishling recognise tensions pulling at efforts to achieve real corporate compliance with human rights standards. For example, the purchasing practices of buyers at the top of supply chains. Influenced by market pressures such as rapid technological obsolescence resulting in “severe price competition”, they in turn place pressure on contracted suppliers:
“Common buying practices include shortened production deadlines and production lead times, last minute changes in orders, delays in approval and fluctuations in and insecurity of orders. These practices lead to the imposition of volatile and unreasonable production targets and deadlines on suppliers. The brunt … is felt by workers, who are subjected to variable working hours, excessive and forced overtime, limitations on leave and breaks and unsafe working conditions … .”
Expectations that corporations should take their responsibility for, and respond to, such crises as climate change and modern slavery, is a manifestation of the growth of Corporate Social Responsibility (CSR) notions, which is explored in Adefolake Adeyeye’s article “Corporate Social Responsibility: Lessons for Australia”, also in C&SLJ 37.2.
Adeyeye, in discussing the various models of CSR, notes that the prevalent model in Australia, the business case via “enlightened self-interest” approach, is problematic. Closely aligned with shareholder primacy theory and the need to fulfil business objectives that will maximise shareholder value, she says that approach “may prevent companies from upholding responsible business conduct where there is a conflict”.
The range of available options for securing corporate compliance to help address modern slavery and climate change are considered in the articles, such as the United Nations’ 2011 Guiding Principles on Business and Human Rights discussed by Nolan and Frishling. Nolan and Frishling also note the absence of “penalties to urge compliance” with the disclosure requirements in the Modern Slavery Act, though they do not consider this fatal. Belyea-Tate is less sanguine about this aspect of that Act, and urges a penalty regime, including (alluding to his proposed reform) for non-compliance with “any climate change specific disclosure requirement”.
Adeyeye is perhaps more forthright, however, in calling for a robust legal response to compel corporate adherence to broader responsibilities than just profit maximisation:
“There is the need for laws to strengthen business compliance and work hand in hand with soft regulation. … for enabling laws and an environment that compels the choice of ethical considerations over business considerations …”
There is an elephant in the room.
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 International Labour Organisation and Walk Free Foundation 2017 and The Walk Free Foundation’s Global Slavery Index of 2016.