Modern slavery risks in Australian agribusiness – Lexology (registration)

Globally, 45.8 million people are estimated to be in some form of modern slavery. Two thirds of the 45.8 million are in the Asia Pacific. The prevalence of modern slavery and its predominant location explain why:

Supply chain monitoring and reporting requirements are gaining traction as a preferred method of top-down anti-slavery regulation. Top-of-the-chain businesses, perceived to have the ability and the resources to investigate and oversee supply chains, are the prime contenders to be the target of modern slavery regulation. These businesses also have an interest in avoiding the reputational damage that comes with being implicated in slavery-like practices.

As Australia looks abroad to guide its fight against slavery, the agribusiness sector would be wise to take a moment to consider labour practices both at home and in overseas supply chains.

What does modern slavery look like?

Modern slavery has various forms. It encompasses human trafficking, slavery and slavery-like practices such as servitude, forced labour and debt bondage. In the agribusiness sector, indicators of modern slavery may include underpayment or withholding of wages, excessive overtime, unfair recruitment fees, confiscation of passports or identity documents, restriction on freedom of movement and association, unsafe working environments, unsuitable living conditions and limited access to food and healthcare.

Unskilled and migrant workers are particularly vulnerable to exploitation. These vulnerabilities are compounded by the difficulty of overseeing work in isolated areas of rural and regional Australia. Workers on farms, food-pickers and those working in processing and manufacturing are vulnerable to exploitation and forced labour. Businesses facing increased price competition, e.g. in the consumables sector, may feel compelled to tolerate modern slavery practices in their operations to remain competitive in the market.

The position in Australia a snapshot

Human trafficking, forced labour and slavery are comprehensively criminalised in the Criminal Code Act 1995 (Cth). These offences have extended geographical jurisdiction and include conduct occurring outside Australia provided the offender is Australian. Corporations can be held liable for committing any of the slavery offences but may be able to rely on a narrow defence if they can prove that they exercised adequate due diligence to prevent the conduct.

While the vast majority of prosecutions in Australia to date have concerned sexual exploitation, instances of forced labour and wage exploitation are sure to face increased scrutiny. The Inquiry into establishing a Modern Slavery Act in Australia, launched in February 2017, is already drawing the spotlight onto these issues. The Inquiry will consider, among other things, the prevalence of modern slavery in supply chains of Australian businesses and whether legislation similar to the UKs Modern Slavery Act 2015 (MSA) should be introduced in Australia.

The Federal Opposition recently indicated it would propose a Modern Slavery Act for Australia requiring major Australian companies to report on measures they are taking to reduce slavery in overseas as supply chains or risk being fined or named and shamed in Parliament. The Business Council of Australia welcomed this step. If modern slavery legislation can secure bipartisan support, as was the case in the UK, we can expect a flurry of activity in this space as businesses work to ensure they are compliant.

Lessons from the UK

The private sector is seen as a key player in the fight against modern slavery. In the United Kingdom, businesses with a turnover of 36 million or more are required to produce an annual slavery and human trafficking statement describing the steps the organisation has taken, if any, to ensure that slavery and human trafficking is not taking place in its business or any of its supply chains. The UK legislation is predicated upon a model that encourages businesses to actively and voluntarily seek out and eliminate modern slavery in their operations, rather than turning a blind-eye. On this view, the fight against modern slavery should not be seen as a corporate box-ticking exercise.

The UKs Independent Anti-Slavery Commissioner recently visited Australia to speak to the taskforce overseeing the Inquiry into establishing a Modern Slavery Act in Australia (Taskforce). The Commissioner reiterated his view that the MSA has been successful by pushing modern slavery up the business agenda and into the boardroom but that more can be done.

The Taskforce will be sure to closely scrutinise the UKs experience. There is a very real possibility that the Inquiry will recommend adopting similar legislation requiring transparency in supply-chains and possibly imposing comparatively more rigorous reporting requirements on Australian companies.

Find out more in UK Modern Slavery Act - seven things businesses in Asia need to know.

Transparency in supply chains

Top-down supply chain regulation like the MSA is designed to encourage large, consumer-facing businesses to exert downward pressure on their supply chains.

This presents particular difficulties in the agribusiness industry. Agricultural supply chains can be complex, fluid and transnational. The practices of tier-two suppliers who supply the tier-one suppliers are often opaque. Modern slavery in such multi-layered and extended supply chains can be near-impossible to detect. Australian businesses with regional supply chains need to be particularly vigilant as two thirds of the estimated 45.8 million people in modern slavery have been identified as being located in the Asia Pacific. It will be essential for businesses to implement robust ethical sourcing policies and due diligence procedures. As greater regulation and transparency requirements in the modern slavery space loom on the horizon, Australian agribusinesses need to consider whether their practices, and those in their supply chains, can withstand scrutiny.

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Modern slavery risks in Australian agribusiness - Lexology (registration)