Season 3, Episode 9 – Game Changers: Inside Australia’s fight against Modern Slavery

Elena Lambros:

Hello and welcome to ESG Matters at Ashurst. I'm Elena Lambros, an Ashurst Risk Advisory partner specialising in sustainability and climate change. You're listening to season three of Game Changers. From innovators at the cutting edge of technology to impact investors funding a cleaner energy future, each and every one of our guests is changing the game in their field.

In today's episode, you'll hear our conversation with Chris Evans, the inaugural Australian Anti-Slavery Commissioner. Chris has served as the Chief Executive Officer of the Global Freedom Network of Walk Free, working with faith leaders to end human trafficking and modern slavery, and was a senator for Western Australia between 1993 and 2013. Let's jump in and hear the discussion. So, thank you for joining us today on the podcast, Chris. We're so delighted to have you here.

Chris Evans:

My pleasure.

Elena Lambros:

I thought we might just start with, for listeners who are beyond the compliance community, which are the ones that I normally interact with and most likely yourself. But just the question around why does tackling modern slavery belong on every boardroom today?

Chris Evans:

Well, I think the best way to think about it is the macro framing. The parliament asks business to tackle modern slavery, because they recognise that a lot of modern slavery is industrially based. It's inside the business or inside their supply chains. Money laundering, and a range of other business issues is being co-opted, if you like, to fight against that crime. So, it is important. It's criminal activity going on inside their business. It's obviously important that they don't benefit from criminal activity inside their business. And there's the issue of ongoing sustainability and risk to the company.

Of course, the other aspect of it now is governments increasingly holding companies to account for their performance and meeting their standards in these areas, both in Australia and internationally, and I expect that to progress ins Australia. So, there's a range of regulatory reasons on top of the moral and the criminal issues that I think combined make it a very serious issue for the board.

Elena Lambros:

Yeah, I would agree. And I think that we've actually seen this issue becoming more topical in the boardroom. And I do think just that understanding that your supply chain is very complex and that even somewhere like Australia, these modern slavery issues will be in your supply chain. And just being really focused on how you identify them and mitigate them would probably be incredibly important, both from regulatory and reputational reasons, I would expect.

Chris Evans:

Yes. And it's interesting. I've met with a lot of boards in the last year and done work with company directors, associations, and others. And interestingly, I've been really impressed by the literacy among board members about the issue. I think that probably hasn't necessarily gone wider in many businesses, but the board are certainly attuned to it. And I think they're attuned to the requirements placed on them. But I would say that perhaps they're relying too much on systems and reporting rather than focusing on the business's real risks, perhaps with the intensity they should be. And I think you quite rightly pointed out this is a problem domestically in Australia as well.

And there's been a couple of companies caught up through their use of security contractors recently. So, it's a very real issue, both for their domestic operations and their international supply chains.

Elena Lambros:

Yeah, absolutely. And I don't think when you think about the issues around modern slavery, that anyone would really want that in their supply chain and being responsible for bringing that into the organisation. So, definitely a topical one.

Chris Evans:

Well, the reality is this is about severe exploitation beyond just normal, if you like, improper employment conditions. This is about people being coerced, often lacking any freedom at all, paying for their own jobs and being in debt for years as they earn the right to pay off the debt to get the job. I mean, this is really severe exploitation and it's far too common in our supply chains around the world. And as I say, government's very keen to get business to lend their weight to the fight against this crime.

Elena Lambros:

Yeah, absolutely. And on that note, you are obviously our first anti-slavery commissioner - Congratulations and also really great to see Australia taking that step and leading the way on this issue through your appointment. Since your appointment, what do you see as the two or three most consequential achievements, whether policy shifts, regulatory guidance, or procurement forms that have really taken place?

Chris Evans:

I think the first thing I'd say is that I've spent a lot of time engaging with business about the issues and what tools they need, encouraging compliance and speaking to boards and the people operating and running the systems to combat modern slavery inside businesses. And to be honest, the most important message I've been trying to deliver is that the system is designed for you to find modern slavery. You shouldn't be fearful of finding it. Finding modern slavery in your supply chain is a success. That's the system working. And I know there's been a lot of concern inside boards and inside businesses that if they find it, it's a problem, and that revealing that they found it might hurt them on the stock exchange or reputationally when the reality is that's what the system's designed to do. Find it, fix it, and declare that you've had this instance brought your attention. Despite some of the concerns, a range of Australian's biggest companies, Rio Tinto, Coles, Woolworths, have all made declarations about finding these things. And that's largely because they've got the most sophisticated systems and are applying best practice. I go out of my way to congratulate them if they find it and declare it, because that's the system working and boards ought not to be afraid provided they respond appropriately, from declaring that they found modern slavery inside their business or supply chain.

Elena Lambros:

Yeah, you can't fix something that you don't know about.

Chris Evans:

No. And we wouldn't be putting in all this endeavour if we didn't think it wasn't there and that finding it was the way we dealt with it. So, I think if people get away from the focus on reporting and actually looking for problems and looking to impact those, then we'll see more and more reporting of people having found and dealt with modern slavery.

Elena Lambros:

Yeah. So, it's really moving away from just reporting at a higher compliance level to actually fundamentally making some changes that are having some really positive outcomes for those people who would otherwise have remained in a very horrible situation.

Chris Evans:

That's right. And I mean, one of those companies this year found child labour being impacted on their supply chains through a contractor., some were very young ages and working in terrible, unsafe conditions. I regard that as a tremendous outcome.

Elena Lambros:

It is, it is.

Chris Evans:

It should please every employee of the company that they did something about it. So, as I say, getting that message through that we should celebrate finding and fixing and addressing those issues rather than being fearful of that. And I think that's a really important psychological shift inside business and to be honest, the lawyers who advise them.

Elena Lambros:

No, I can see that as a really big shift. And I think if you really want change, it's without having those systems and those processes and really taking it to that more sophisticated level, it's very difficult to enact that.

Chris Evans:

I would issue a note of warning, people want to rely too much on systems, as a solution to the problem. And that's usually about being able to report against a system. Whereas actually identifying your key risks, looking and using site-based inspections gives you much better results in the end. Going and having a look, being very clear about what your risks are, not the scattergun approach of everyone worrying about the ballpoint pens or the soap in the bathrooms or the 10 chairs they bought. But if you're in a business where it's a big part of your business say purchasing rubber gloves out of Malaysia, you know that's a problem. You don't have to be a rocket scientist, you understand that's an issue. You can Google it. So, I'd want to see some focus on that from every company who's doing a lot of importing of rubber gloves. Now, if you're only bringing in 10 pairs a year, focus on your higher risks. But if you're a major hospital, you ought to be taking interest in that, and that should be a key part of your focus. So, it's about identifying the major risks, not using a scattergun approach, but addressing those high risks of slavery inside your business.

Elena Lambros:

Yeah, that real prioritisation of your actual risks allows you to do more meaningful change.

Chris Evans:

Yes.

Elena Lambros:

And then I know another potential issue that people have had previously that looks like it is now resolved is around collaboration and issues around competition. So, the ACCC recently updated its 2024 guidance on sustainability collaborations, and it used some modern slavery case studies developed jointly with your office. Do you just want to talk us through why that's important for effectively addressing modern slavery and how businesses could be thinking about this differently now that the ACCC has released this guidance?

Chris Evans:

Well, to be honest, the most common feedback I got from practitioners inside big businesses in Australia and from these boards was their fear of cooperating with competitors or people in the same industry on responses to modern slavery. They were very fearful of that the ACCC might interpret that activity as anti-competitive. And I think, there's been quite conservative legal advice being given to those companies about the risks involved. And I understand why, but I think it was overly conservative, a lot of the advice and a lot of the decisions taken were overly cautious.

But we worked very hard and very closely with the ACCC to try and address that, to provide some assurance to business that the cooperation would not, if you like, attract negative attention from the ACCC. There'd been very little guidance from the ACCC previously, which would give any business the confidence to proceed. So, we worked on those, the ACCC in the end issued eight new examples, which identified practices that companies could cooperate on, which would not draw any competitive concerns, but which actually facilitate a much more effective response to modern slavery. A lot of activity that would make a real impact was not being undertaken. There was a reluctance to undertake that work.

So, I think it's a very important development. I congratulate the ACCC for being open to our approaches and working hard on that with us. And one of the strengths in Australia's response so far is the number of cross-sector, cross-industry groups that have come together to work on developing modern slavery responses. And their work has been impeded a bit by those concerns from each company about how much they can cooperate. So, there's been some really good work done, but a frustration that they could do more.

The new ACCC guidance confirms there's a range of things you can do without having any anti-competitive concerns, and that will leverage much more influence and much more impact on protecting people working in supply chain. It's a tremendous result.

Elena Lambros:

Yeah, no, it's a really great outcome because that collaboration is so important, particularly when you're dealing with not everyone has the same amount of influence across their supply chain. So, that collaboration really helps, doesn't it?

Chris Evans:

The key is leverage. If you only have a small buyer from a large producer, then you're not going to have much leverage with them. And secondly, there's costs involved in resourcing remediation and other action. So, if you can come together to support that, there's a range of cost savings for business as well. So, there's a whole range of good reasons for that cooperation. And as I said, I think the parliament, through the Modern Slavery Act, envisages cooperation, both within particular industries and with other sectors. And my role envisages that as well. So, driving that's a key part of what we want to do. And to be frank, it's a very key part of having impact.

BHP and Rio Tinto might have impact on their own. Many of the smaller businesses won't have that impact unless they're combining and sharing resources and sharing information.

Elena Lambros:

Yeah, that's absolutely right. So, it makes a much stronger impact, which when you think about the people that you were talking about before, child labour in some horrible circumstances, that's really where you want to see the change.

Chris Evans:

Yes. There's too much focus on process and reporting. Why are we doing this? Always go back to the objective. It's to end exploitation, to stop children working in mines, to stop children having to work on farms or for people to be involved in situations where they can't leave their employer, they don't have access to their passport, they've had to pay for the job and they're in debt. It's about them. That's why we're doing this. And if we're not impacting on them, we might as well pack up and go home. So, that's what we've got to focus on, not on the quality of the glossy report at the end of the year, but on are we having impact?

Elena Lambros:

Yeah. And that's a very strong message and a really key takeaway. If you think about continuous improvement, what areas do you think reporting entities could bring more focus to then as they think about their due diligence efforts? And would this look different for particular entities like small, medium enterprises might look at this a little bit differently to some of those larger organisations you're referring to?

Chris Evans:

Well, I think we've talked about being much clearer about their major risks and focusing on those. I think there needs to be a focus on site-based due diligence. I would urge companies both their domestic and international operations to focus on labor hire and subcontracting arrangements. Again, you don't have to be well-versed in these issues to know that these are areas where there's higher risk of exploitation, both in Australia and overseas. So, I'd like them to audit those arrangements and satisfy themselves that they're happy with how that's operating because each time there's a subcontract arrangement, you lose visibility and control over your supply chain.

And so, I think there's a range of things they can do there. But fundamentally, I think business should start moving towards a proper due diligence system. The reality is the world is changing, their capacity to operate either in Australia or internationally is going to require best practice, due diligence process. I think there's a very real prospect of the Australian legislation requiring that of the large businesses operating under the Modern Slavery Act in the next year or two. And if you want to sell your goods into Europe in the next couple of years, you're going to have to be meeting the European standards or they won't be buying off you.

So, there's a whole range of drivers now, which I think means business should be saying to themselves, this is coming. Our efforts so far have been a little on the modest side. And quite frankly, the picture's very patchy across Australia. Many large businesses have done a great job and are really almost at that standard now, but the vast majority have a way to go and many of them, quite frankly, have not complied even with the basics of the Modern Slavery Act. One of the things I've been doing is encouraging greater compliance because many companies at the bottom end, if you like, have got away with not reporting at all.

The ATO and the Attorney General's Department are now in a much better position to identify that non-reporting. So, I think there's a wake-up call coming for some of those companies about their failure to comply. One of the changes to the act, I think, will be a much greater focus on compliance. At the moment, it's almost like we've got a voluntary act. It's the only law in Australia that's voluntary. I think the parliament will be duty bound to really move from soft reporting to hard law in this area, and I think that will occur in the very near future.

Elena Lambros:

I think that's really great to hear because I think those expectations both from the Australian Parliament and making it a hard law as such, and also expectations from your end users and selling into Europe. There are a lot of factors that are influencing this more due diligence-based approach and actually making those changes.

Chris Evans:

Yes. And to be frank, large companies who are doing it properly are pretty frustrated at them being undercut by companies who aren't making any effort. So, one, they're benefiting from perhaps quite dodgy supply chains, and two, they're not investing in their business in the same way. So, just as companies complain about some of the online operations coming into Australia and undercutting, if you like, this is essentially a case of some Australian businesses or Australian-based businesses undercutting their competitors by being soft on the crime of modern slavery.

Elena Lambros:

Yeah, no, that's a really well-made point, particularly around being a good complying, a good law-abiding, good moral organisation really.

Chris Evans:

Yes.

Elena Lambros:

So, I think we've touched on quite a number of these things along the way, but I thought just in terms of being able to close and leave our listeners with one final thought, is there any a practical step that you think organisations can implement this quarter or one policy shift that you think would meaningfully accelerate worker outcomes across Australian supply chains?

Chris Evans:

Well, I think I'd go back to two of the earlier points I made. I think one is, in a broad policy sense, invest in bringing your standards up to a due diligence standard. You're going to be required to do it at some stage in the near future. You might as well start the journey now. Not only will that be good for that journey for you, but it will actually give you much better protection against risk and much greater satisfaction that you're doing the job.

Two, I'd suggest that you get involved in one of the cross-sector industry groups, which will facilitate that cooperation and knowledge sharing and resource sharing and open up those opportunities that the ACCC has made clear and available to you.

And the other thing I'd say, is look at the low hanging fruit Really have a serious look at your labour hire and subcontracting arrangements. Don't think it's just an overseas problem. It's a problem here. The exploitation in the agricultural, security and cleaning industries in Australia is rampant, it is well-known and is not getting picked up by a lot of companies because they're not looking properly. So, if you wanted to make a real impact and avoid being one of those companies like those who've been caught up recently in some quite scandalous behaviours, have a look at your labour hire and subcontracting.

But I think really making a commitment to go to a proper due diligence system will serve the business very well. And the sooner they start, the less of a scramble there will be when it's made mandatory. And I think they'll have a more mature system that will serve them well and allow them to compete internationally as international standards rise.

Elena Lambros:

Thank you, Chris.

Chris Evans:

My pleasure.

Elena Lambros:

Thank you for coming on and really appreciate you sharing your thoughts and also expectations around the future direction of where legislation is going to go. So, thank you.

Chris Evans:

Thank you. And thank you to Ashurst for being interested and active in the space.

Elena Lambros:

Thank you.

Chris Evans:

Thank you.

Elena Lambros:

Thank you for listening to this episode of ESG Matters at Ashurst. I hope you found this episode insightful. To subscribe to future episodes of Game Changers and to hear previous episodes, click on the link in the show notes or search ESG Matters at Ashurst on Apple Podcasts, Spotify, or wherever you get your podcasts. And while you're there, please feel free to leave a rating or a review. And finally, to learn more about all Ashurst podcasts is at ashurst.com/podcasts. In the meantime, thanks again for listening and goodbye for now.