On modern slavery, we need moral leadership not market morality

This week the Senate passed a Bill seeking to amend Federal customs regulations to prohibit the import of any goods made using forced labour.

The government introduced the Modern Slavery Act in 2018. Do we need another law on this issue? Do we now need to make it unlawful to import goods produced by forced labour into Australia?

The short answer is yes.

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Modern slavery in supply chains of Australian supermarkets

Supermarkets in Australia and around the world are under growing pressure to clean up their supply chains and rid them of modern slavery.

Discount chain Aldi last week became the first of Australia’s supermarkets to sign up to the Slave-Free Alliance, an offshoot of global anti-slavery organisation Hope for Justice.

Under the agreement, Aldi committed to conducting a human rights risk assessment of its operations as well as providing modern slavery awareness training to its employees and business partners, so suppliers and staff with product sourcing responsibilities can identify the signs of modern slavery and take action.

But University of Technology Sydney Business School modern slavery expert Martijn Boersma said Aldi’s decision to sign up to the Slave-Free Alliance was “more on the symbolic side of things than on the substantive side of things”.

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Human Resource Management: For the Worker, Company, or both?

Question: I went through a ghastly experience at work and went straight to our HR team. They said they would treat my experience with “the utmost seriousness”, but were not sympathetic or helpful. It was clear from the very start they didn’t believe what I was saying and intended to side with the person who caused me such grief, no matter what.

I spoke with a friend about it who said words to the effect “HR departments aren’t there for employees. They’re there for the company.”

It’s been months and I’ve finally had the issue resolved separate from the HR department. I don’t work for the company anymore. But my question is, is my friend’s advice true? Is going to HR a waste of time no matter where you work, or was this just a bad HR team?

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New Research Article: Multi-Stakeholder Frameworks for Rectification of Non-Compliance in Cleaning Supply Chains

There is now an expanding body of literature on the significant problem of business non-compliance with minimum labour standards including ‘wage theft’. Extended liability regulation beyond the direct employer is seen as one solution to this non-compliance in fragmented but hierarchically organised industries—such as the cleaning industry. This article uses empirical evidence to assess the effectiveness of one such regulatory scheme, the Cleaning Accountability Framework (CAF), in addressing non-compliance with minimum labour standards (including provisions of the Fair Work Act 2009 (Cth) and the Cleaning Services Award 2020). We find that CAF has been successful in identifying and rectifying certain non-compliance, improving working conditions for some cleaners involved in the scheme. We synthesise the key success factors of CAF in view of envisioning the adoption of such co-regulation frameworks in other industries. We also propose legal reforms that will support change across the cleaning industry.

The article was published in the Federal Law Review.

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Why do Companies Find it so Hard to Choose Between Profit and Principle?

Businesses with ties to the Xinjiang province in China find themselves at a junction.

Caught in debates concerning Uyghur people being the victim of modern slavery and genocide, they must deal with concerns expressed by Western governments and human rights groups, and an increasingly agitated Chinese Communist Party.

Some commentators have suggested that foreign companies that (in)directly profit from the systematic exploitation of Uyghurs in China must choose between profit and principle.

It seems like a straightforward question: do companies want to profit from the state-organised repression, exploitation and extermination of an ethnic minority, or do companies condemn the treatment of Uyghur people in China and deal with the backlash?

The conundrum underlying the question is as old as capitalism itself: what social costs are we willing to accept in order for companies to make a profit?

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How an Industry Known for Exploiting Workers is Cleaning Up its Act

The cleaning industry has long had a reputation for exploiting workers, as cut-throat competition delivers contracts with profit margins so thin there’s little room to pay cleaners their legal entitlements.

The Cleaning Accountability Framework, with the help of a group of business, law and IT researchers, is making inroads into what has seemed at times an intractable problem.

Dr Martijn Boersma, who lectures in industrial relations and business ethics at the University of Technology Sydney Business School, has been working with CAF and says non-compliance with labour standards has been a big issue in the cleaning industry.

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Banning Goods Produced By Uyghur Forced Labour

The Customs Amendment (Banning Goods Produced By Uyghur Forced Labour) Bill 2020 is currently under consideration by the Australian Senate Foreign Affairs, Defence and Trade Legislation Committee and a report is due by 12 May 2021.

Professor Justine Nolan and Dr Martijn Boersma have made a submission arguing that the Australian Government should:

  1. Expand the proposed Bill to prohibit the importation of all goods produced or manufactured using forced labour (regardless of their geographical origin).
  2. Consider the ability to impose fines on importers and end-buyers who import prohibit good and apply such fines for the provision of institutional support for survivors of trafficking and modern slavery.
  3. Ratify ILO Protocol of 2014 to the Forced Labour Convention, 1930 (PO29) to ensure the development of  holistic legislative framework that will sit alongside the Modern Slavery Act, and a new law that bans the importation of goods produced or manufactured using forced labour.
  4. Consider publicly disclosing which goods are prohibited from importation, as well as associated importers, manufacturers and geographical locations.

 

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Business & Human Rights: The Days of Toothless Laws Are Coming to an End

When the UK Modern Slavery Act was introduced in 2015 and its Australian counterpart followed three years later, these pieces of legislation were heralded as ground-breaking.

Both Acts require entities that meet the annual revenue threshold to report on the risks of modern slavery in their operations and supply chains, what actions they have taken to address those risks, and what the outcomes of those efforts have been.

Crucially, the Modern Slavery Act in each country lacks hard sanctions for non-compliance and solely relies on stakeholder scrutiny and market forces for enforcement.

The UK Home Office states that “failure to comply […] may damage the reputation of the business. It will be for consumers, investors and Non-Governmental Organisations to engage and/or apply pressure where they believe a business has not taken sufficient steps”.

In Australia, Home Affairs states that non-compliance can “damage your entity’s reputation, undermine your ability to do business with other entities and damage investor confidence.”

While Australian entities are yet to report, reporting in the UK has been underwhelming. In 2017, 43 per cent of companies on the London Stock Exchange did not produce a report, nor did 42 per cent of the top 100 companies that were awarded government contracts.

It appears that many businesses in the UK had no fear of a consumer backlash for being non-compliant with the Act, even if that consumer was the government itself.

The vague threat of reputational risk thus seems insufficient to prompt action. This is corroborated by the UN Special Rapporteur on Contemporary Forms of Slavery, who commented that  “soft law’ frameworks have […] had a limited effect in ensuring corporate and state accountability”.

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“Addressing Modern Slavery” at BAD in Sydney

The full program for the 2020 Bad Sydney Crime Writers Festival, which will run in-person on 7–8 November at the State Library of NSW, has been announced.

Festival guests appearing in front of a live audience include journalists Jess Hill, Gary Jubelin, Kate McClymont and Mark Morri; novelists Tom Keneally, Garry Disher, Caroline Overington and Chris Hammer; and Jana Wendt in conversation with former NSW deputy police commissioner Nick Kaldas.

Other sessions, some of which will be live streamed, include ‘The Crime of Modern Slavery’ with Justine Nolan, Martijn Boersma and Jennifer Burn, and ‘Auschwitz in Fiction after 75 Years’ with Alan Gold, Suzanne Leal, Diane Armstrong and Michaela Kalowski. New trends in crime writing will be examined by Benjamin Stevenson, Greg Woodland and Petronella McGovern in ‘Fresh Blood, New Writing’.

See the full program. Get tickets for in-person sessions, or book tickets for live stream sessions.

The session on Modern Slavery will take place on Saturday 7 November, at 2.30pm.

The Social License to Operate: A Concept Fit-For-Purpose?

David Murray, former chair of troubled investment firm AMP, has been called out as being unfit to meet shareholder expectations of modern boards, due to what many believe are outdated views on risk and governance frameworks.

One of the points of criticism is that Murray had criticised the notion of “the social license to operate” in a campaign against including this term in the ASX Corporate Governance Guidelines.

Does David Murray have a point? Do we even know what a social license to operate entails?

While businesses are arguably being held to a higher social standard than before, it is questionable whether the social license to operate, as a concept, is fit for purpose.

In a forthcoming book chapter, I examine concepts such as the “social license to operate” as well as similar notions such as “corporate purpose” and “stakeholder capitalism”.

The research concludes that the use of these concepts is unlikely to result in structural changes to ways of doing business – and their use is more likely to uphold the status quo.

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