The global context of decarbonisation means that the supply chains of resources and energy companies are changing rapidly and becoming increasingly intertwined, exposing the Australian resources and energy sector to modern slavery risks.
This rapid change creates new modern slavery risk areas that the sector needs to address as part of their reporting obligations under the Modern Slavery Act 2018 (Cth). To properly manage modern slavery risks, a robust approach is required, along with an understanding of existing systems and controls with an articulated pathway to enhancing them over time.
What is modern slavery?
Modern slavery refers to a range of serious human rights violations. The term is used to describe situations where coercion, threats or deception are used to exploit people and deprive them of their freedom. These violations are crimes in Australia.
What are some examples of modern slavery?
Modern slavery includes trafficking in persons, slavery, servitude, forced marriage, forced labour, debt bondage, the worst forms of child labour, and deceptive recruiting for labour or services.
The need to decarbonise means that the global energy mix is rapidly shifting. This shift is creating increasing crossover between the resources and energy sectors in both their operations and supply chains. It’s in this context that companies must challenge their thinking on where they’ll find risk to people. Transition is creating new and emerging human rights and social risks that we have to identify and understand.
Level of risk of modern slavery to the sector
What is the level of risk of modern slavery in the Australian resources and energy sector?
The level of risk of modern slavery in operations and supply chains depends on a range of intersecting contextual factors. Our research shows that there are four key factors which elevate the risk of modern slavery:
- vulnerable populations
- high-risk business models
- high-risk procurement categories
- high-risk geographies.
Where multiple high-risk factors co-exist, there is a greater likelihood that actual harm is being experienced, and additional controls are required to ensure that risk does not become harm.
- high demand for migrant and base-skill workers
- frequently operating in high-risk geographies or have supply chains that include these geographies
- short-term and temporary nature of some work, such as construction
- use of labour hire and outsourcing of construction and maintenance to third-party contractors
- chartering and contracting sea transport, a known high-risk sector.
What are the Modern Slavery Act 2018 (Cth) reporting requirements?
There are seven mandatory criteria that your entity must respond to under the Modern Slavery Act 2018 (Cth) requiring descriptions of:
- the reporting entity
- your structure, operations and supply chains
- the risks of modern slavery practices in your operations and supply chains and any entities owned or controlled by you
- actions taken to assess and address those risks, including modern slavery due diligence and remediation processes
- how you assess the effectiveness of the actions taken
- the process of consultation with entities owned and/or controlled by you
- any other information that you consider relevant.
Many resources and energy companies already report under the Australian Modern Slavery Act 2018 (Cth). In light of significant risk and complexity in the sector, it is important to build on existing initiatives and momentum in the ‘human rights and social licence to operate’ space, to explicitly incorporate modern slavery risk considerations, and adopt a program that facilitates continuous improvement.
The modern slavery guide
This guide, which brings together the business and human rights expertise of KPMG and the Australian Human Rights Commission, will help you understand how these high-risk factors affect the resources and energy sectors, and how that might shape company responses to managing modern slavery risk across operations and supply chains.
- Introduces modern slavery and explains in greater detail the reporting requirement.
- Considers specific intersections of resources and energy operations and supply chains with modern slavery, helping businesses to navigate this space.
- Highlights the importance of focusing on risk to people and the benefits of applying a broader human rights lens when considering the ‘S’ in ESG.
- Includes a practical checklist to guide resources and energy companies to take action to manage their modern slavery risks.
Considerations for organisations
Do you understand what behaviours and practices constitute modern slavery and likely risk factors for your business and sector?
Have you conducted a strategic conversation on risk appetite and level of ambition to respect human rights and contribute to eradicate modern slavery?
Are you able to report at a group-level on behalf of all subsidiaries and across all geographies?
Have you introduced assurance measures for reporting on modern slavery due diligence?
Have you established an effective grievance mechanism?