Long and complex supply chains increase the risk of links with some form of labour standards risk. Companies that are already reporting under the UK’s Modern Slavery Act will have taken steps to investigate their manning agencies, repair yards, bunker suppliers, providores, port agencies and update the questionnaires they use in charter chains. Suppliers may not themselves be required to report under any legislation, but are increasingly likely to be responding to customers who must report. Accordingly many businesses - regardless of where they are based - will sooner or later find themselves on a trajectory towards reporting as a result of the introduction of laws in the UK, EU or Australia. Steps in preparation for meeting reporting requirements (or indirectly, the expectations of customers and counterparties for their reporting) include:
- Mapping the organisation’s structure, businesses and supply chains.
- Formulating policies in relation to modern slavery – this will involve collating current policies, identifying gaps, adapting existing policies and formulating new policies, as needed.
- Carrying out a risk assessment – identifying those parts of the business operations and supply chains where there is a risk of modern slavery taking place. Due diligence for owners should include vetting managers, agents, officers and, in the case of time or voyage charterers, their counterparty ship owners.
- Assessing and managing identified risks – this may include carrying out further due diligence in the entity’s operations and supply chains and reviewing and adapting contract terms and codes of conduct with suppliers.
- Considering and establishing processes and KPIs to monitor the effectiveness of the steps taken to ensure that modern slavery is not taking place in the business or supply chains.
- Carrying out remedial steps where modern slavery is identified.
- Developing training for staff on modern slavery risks and impacts.
The burden of increased regulation may also create competitive advantage for compliant operators in some trades and markets. On the whole, history suggests that the pace of change will be uneven and slow. Nevertheless, it is clear that the power of public scrutiny has already spurred the relatively rapid rise of modern slavery, as a business risk for the shipping industry.
Norton Rose Fulbright has experience globally assisting clients with modern slavery risk management and reporting, as well as broader business and human rights advice and worked closely with the Joint Standing Committee on Foreign Affairs, Defence and Trade Inquiry into a Modern Slavery Act, providing regular pro bono assistance and participating in the public hearing held in Sydney on 23 June 2017. Click here to download the submission. Norton Rose Fulbright also has been actively participating in the Attorney-General’s Department national consultation process to refine the Government’s proposed Modern Slavery in Supply Chains Reporting model.
Norton Rose Fulbright is currently collaborating with BIICL on a further research project focusing on human rights issues in supply chains which will seek to provide recommendations to companies, including those subject to reporting obligations under modern slavery legislation. Please contact Abigail McGregor, JP Wood or Greg Vickery to discuss further how modern slavery legislation may impact on your business and ways to manage your supply chain risks.