Certain industries have been warned to get their act together by superannuation fund investors over upcoming changes to Australian law around modern slavery. With mandatory reporting now enshrined in law, updates have been called for in financial services, as well as mining and healthcare.
Super funds are worried that by not paying enough attention to what is going on behind the scenes in some sectors, they will not tackle some of the issues that could undermine solid growth, and thus tank super investments at a later date.
The whole process was kicked up a notch back in 2012 following a deadly and devastating fire at a textile factory at Tazreen in Bangladesh. With many consumers now wishing to seek out more ethical options when purchasing, this trend also comes into consideration as these funds try and keep on top of the market.
Now the Australian Council of Super Investors (ACSI) has delivered a set of guidelines for other industries to follow, with the top five most at risk of committing modern slavery other than textiles being mining, financial services, construction, healthcare as well as food, beverage and agriculture.
The main risks in all these areas stem from outsourcing in particular, which is why financial services finds itself at the heart of it in terms of where its IT operations are carried out, while healthcare will need to be sure of its supply chains when it comes to the manufacturing of vital resources such as surgical gloves.
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KPMG, who prepared the report, said those whose business strategy relies on ‘imported goods, particularly those from southeast Asia’, meant many ‘Australian companies are significantly exposed’ due to their positioning within the Asia-Pacific region and how much of the economy relies on imports and exports along those trade routes.
The report indicated that regardless of whether migrant labor was being used in direct operations or further down the supply chain, it still needed to be flagged up, as it was more likely that exploitation was taking place.
Construction has been another sector singled out for being problematic, and earlier in the decade there were serious concerns about how smaller contractors were able to get hold of low-cost migrant labor without being held to account.
Statistics cited in the report from ‘the Construction, Forest, Mining and Energy Union estimated at the time that 70% of NSW tilers were from a Korean-speaking background.’
The changes to modern slavery legislation in Australia came into effect on January 1, 2019, and any business in the country with a consolidated revenue of at least $100million must report on the risks within their supply chain of accessing exploited labor, and the steps they will take to address it.
A yearly ‘modern slavery statement’ must also be distributed by each board, while the home affairs minister has been given the powers to release the details of any companies said to be non-compliant.
Louise Davidson, the chief executive of ACSI, said business leaders needed to realize this was a responsibility for all of them, saying ‘we do not want to be complicit in perpetuating slavery.’
She admitted that how labor was used in supply chains was taken into account when ‘forming investment recommendations’, which indicates businesses behaving with corporate and social responsibility in mind may be able to benefit from it when it comes to super funds.