Is your supply chain fair? Surprisingly, most of the enterprises are not even aware of modern slavery in their supply chains.

Today, the whole world is combating with the COVID-19, whose outcome hasn’t just been on health but has devastated effects on the economy of each country of the world.

Within a few weeks of it, business houses got shut, manufacturing units got closed, and the international supply chains were adversely affected. But do you know because of lock-downs almost all over the world, more and more people are still subjected to exploitation due to desperate conditions.  It is called modern slavery.

Australia hasn’t been fortunate enough to be safe enough from deadly outcomes of the outbreak of Coronavirus, with the unemployment rate escalating to twice the earlier existing figures. This new type of modern slavery will increase to unanticipated and devastating levels, with people being kicked out of jobs and needing work regardless of being exploited.

A brief idea about Modern slavery

Do you know slavery was abolished centuries ago? The definition of today’s slavery or modern slavery is altogether different and extensive-term. “Modern slavery” constitutes traditional slavery itself, along with involving servitude, compelled labor, human trafficking, debt bondage, forced weddings, fraudulent recruitment for services of labor, and child labor.

Imagine the situation of underdeveloped and developing nations, when developed nations like Australia are vulnerable to modern slavery. The smallest continent of the world has an estimated 15,000 people who are the victim of modern slavery currently. There have been numerous instances in Australia recently and in the past of sexual slavery, wage fraud, and sham contracting.

Reporting the risks

Various measures have been taken in Australia to help companies in recognizing the risk associated with modern slavery. Under the Modern Slavery Act 2018, with effect from 1 January 2019, organisations with origin in Australia or having operation therein, having over $100 million of revenue, are bound to report on the risk of practices of modern slavery in their operation.

Almost 3000 organisations in Australia have come under this norm. Other than this, as per the Act, organisations are needed to inform about the actions and their implementations in identifying and stoppage to modern slavery. All these companies are under the compulsion to submit their report to the government.

With the world still not been able to get rid of COVID-19, it is high time to focus on supply chains having a critically tough time in healing the wounds of an injured and collapsed economy.

How can accountants help?

Author of Modern slavery compass, DR Katherine Christ CPA, developed a tool to aid the organisations in reporting under the Modern Slavery Act. A finance professional plays an important role in the process of reporting.

“Accounting is rested with the responsibility of reporting and management process as per the Act. An accountant must play an important role here as it involves vigilance and reporting. If you strive hard to see, you will find that modern slavery exists in the supply chain. It is vital to maintain transparency with stakeholders and need to acknowledge it and should work with the contractors and suppliers to bring out the changes for victims.

Many infrastructure procurement executives remarked that the finance team of a company plays a noticeable role in the successful reporting of modern slavery.

Deepen Somaiya, an infrastructure procurement manager, remarked that “Accountants can bring a huge difference in the lives of people after discovering their potential, especially through the supply chain.

 Checking the supply chain

 As per the Act, only businesses with turnover exceeding the limit of $100 million are under the liability to report. But small and medium-sized enterprises (SMEs) are also important to put control over slavery in the supply chain.

There have been debates all over the world regarding the inclusion of SMEs under the compulsion of reporting about modern slavery in their supply chain.

What should be the steps of businesses on recognising modern slavery in their supply chain?

It varies from situation to situation. It is vital that you do not neglect the impact on humans. The first move on discovering the incident of modern slavery would be informing the concerned authorities to liberate the survivor and to take stringent action against the culprit.

It should be done diligently to avoid any threats to the life of the survivor along with that of the one who is informing. In Australia, the interest of the survivor is well protected in identifying modern slavery in organisations.

“In an example of modern Australian slavery, organisations are advised to contact cops ensuring proper scrutiny of the matter, and the culprits are held accountable for it.”

 Giving Prime Priority to People

Victim- centered approach shall be adopted without default, and the boycott of the supplier would not provide a solution for the problem. Modern slavery refers to risks to victims, not to businesses. Boycotting the supplier or company would be of no help or assistance to the survivor. This program has been utterly based on labor.

Creating impact

After reporting for four years on the UK, South 32 is now about to submit its first mandatory report under Australia’s Modern Slavery Act this year. The main motive of it is to bring change in the life of people in the list of the supply chain. South 32, too, joined the wagon to create the impact.

As mentioned earlier, many companies are not even versed in their modern slavery practice. Efforts have been invested by alliances in industries to bring out the impact than mere stocking up paperwork for suppliers. Supplier risk assessment questions have been drafted with assisting and guiding notes.

The first report is expected to get out anytime this year, but will the Act’s requirement be successful in making changes in the supply chain? It will be answered best by time, and the introduction of the Act is the first important step in Australia.

We need to wait and watch for a few years from now to understand the impact of steps taken to abolish modern slavery from the roots. Along with more stringent norms from the end of government, it is vital that society, too, plays a vital role in fighting the battle with modern slavery practices.