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WITH THE MODERN SLAVERY ACT COMING INTO EFFECT EARLIER THIS YEAR, ASI ASSESSES THE POTENTIAL IMPACT ON AUSTRALIA’S STEEL SUPPLY CHAIN.
According to the 2018 Global Slavery Index, over 40 million people globally are subject to some form of modern slavery. Whilst Australia has one of the lowest rates of slavery in the world, with a prevalence of 0.6 victims for every thousand people, the realities of global trade and business make it inevitable that Australia is exposed to the risk of modern slavery through the products it imports. In fact, over US$12 billion worth of at-risk products are imported into Australia annually.
With the Modern Slavery Act coming into effect from the beginning of 2019, supply chains across many Australian industries are set to change. Some of the largest players within the Australian steel supply chain have been committed to ethical procurement practises for years, and are continuing to make good progress.
THE MODERN SLAVERY ACT
The Modern Slavery Act 2018 was passed into law in November 2018, and took effect throughout Australia from 1 January 2019.
Under the Act, Australian businesses and organisations with revenue of over AU$100 million per annum are required to report on the risks of modern slavery within their operations and supply chains, as well as the actions taken to assess and reduce these risks.
In a bid to ensure management support and buy-in, these annual reports must be approved by an organisation’s Board of Directors and signed by a company Director. The reports must then be submitted to the Minister for Home Affairs, and will be made publicly available on a central register managed by the Federal Government.
The Act defines modern slavery as any forms of exploitation in which a person cannot refuse or leave work because of violence, threats, coercion, abuse of power, or deception. In practical terms, this means that the definition of modern slavery encompasses servitude, child labour, forced labour, human trafficking, debt bondage, forced marriage and deceptive recruiting for labour.
THE IMPACT ON AUSTRALIAN STEEL SUPPLY CHAINS
Some of the largest players within the Australian steel supply chain have been committed to ethical procurement practises for some time now.
BlueScope Steel, for instance, is committed to conducting procurement and sourcing activities with high ethical integrity. Their procurement activities are conducted in accordance with their Bond (core company values), Guide to Business Conduct, and Responsible Sourcing Standard, which are designed to set standards that go beyond compliance with applicable laws and regulations.
Just some of the principles outlined in BlueScope’s Responsible Sourcing Standard include:
According to Andrew Watson, Procurement Manager, BlueScope, “The passing of the Modern Slavery Act has certainly reinforced the path that BlueScope was already on, and the program that we are currently rolling out across our global footprint. We started work on reviewing our approach to responsible sourcing over two and half years ago as part of a broader Sustainability project. For BlueScope, I think the Act has helped some of our suppliers understand why we are asking questions of our supply chain. Ultimately we and our suppliers all need to be a lot more aware of the risks in our supply chains and have processes in place to deal with these risks.”
“We started work on reviewing our approach to responsible sourcing over two and half years ago as part of a broader Sustainability project. For BlueScope, I think the Act has helped some of our suppliers understand why we are asking questions of our supply chain. Ultimately we and our suppliers all need to be a lot more aware of the risks in our supply chains and have processes in place to deal with these risks.” Andrew Watson, Procurement Manager, BlueScope.
In 2018, BlueScope partnered with a global independent sustainable supply chain consultancy to conduct a review of its capability and management approach to ensure alignment with its Responsible Sourcing Standard. This included a review of sourcing practices across the business with reference to best practice in other organisations and emerging legislation, such as the Modern Slavery Act.
The review guided development of an implementation strategy, including core capabilities and processes for the business to adopt. The review also included the implementation of an Environmental, Social and Governance (ESG) risk assessment and segmentation model, which has been applied to over 80% of its supply chain by value. This enables BlueScope to assess suppliers based on influence and risk, and then design a prioritised approach to engaging and assessing suppliers with reference to BlueScope’s standards and expectations.
A LONG WAY TO GO
Despite the ongoing work of companies such as BlueScope, the work to understand and eradicate modern slavery risks within the Australian steel industry supply chain remains in its infancy.
According to Andrew Watson, “As an industry we still have some work to do to fully understand modern slavery risk; there are not a lot of major players from within the steel industry operating within this space yet. While the Australian steel industry supply chain has good intentions and, if there was an issue uncovered, would act appropriately, very few businesses have robust processes to pre-emptively engage with their supply chain to uncover and address gaps. There is still a long way to go both in Australia, and globally.”
“While the Australian steel industry supply chain has good intentions and, if there was an issue uncovered, would act appropriately, very few businesses have robust processes to pre-emptively engage with their supply chain to uncover and address gaps. There is still a long way to go both in Australia, and globally.”
Andrew Watson,
Procurement Manager, BlueScope.
BlueScope Sustainability Manager Tim Rodsted comments: “If more of the tier one steelmakers are talking to their suppliers about how they manage risk within the supply chain, the process becomes easier. We can achieve a lot if we are all pulling in the one direction.”
“As an industry, we need to ensure that the work around risk management, supplier engagement and due diligence is being undertaken in the most efficient manner possible. “BlueScope is not the only manufacturer asking questions of its suppliers. So, as a global industry, how do we streamline these processes, without creating an unnecessary administrative burden? How does the global steel supply chain come together to help reduce risks of modern slavery?”■
