Stamp out slavery by seeing further into your supply chain

Amid the global disruption from COVID-19, it can be easy to forget the world continues to turn, writes Henrik Smedberg.

We still face all the same challenges and risks that we did before – and these cannot be overlooked, pandemic notwithstanding. Case in point: modern slavery.

In the first week of August, the Australian government took a big step in reminding us of this. It marked ‘World Day Against Trafficking in Persons’ by launching its much-anticipated online Modern Slavery Statements Register and a new Government Procurement Toolkit.

Henrik Smedberg

Assistant Minister for Customs, Community Safety and Multicultural Affairs Jason Wood MP said that the register will provide “Australian consumers, investors and civil society with an unprecedented window into the global supply chains that produce the goods and services we use every day”. Anyone can go online and scrutinise the statements submitted to the register by government agencies and Australian businesses.

The launch of the registry comes one and a half years after The Commonwealth Modern Slavery Act 2018 entered into force on 1 January 2019, establishing a national Modern Slavery Reporting Requirement. Reporting entities, such as large entities with an annual consolidated revenue of $100 million, the Australian government itself and corporate Commonwealth entities, are expected to use the centralised portal to submit their modern slavery statements.

The annual Modern Slavery Statements called for are designed to encourage the Australian business community to identify and address their modern slavery risks and maintain responsible and transparent supply chains.

A new solution to an old problem

While for some, talk of slavery may feel like an anachronism, this is far from accurate. By the government’s own estimates, between 2015 and 2017, there were up to 1,900 modern slavery victims in Australia. The United Nations has put the figure at more than 40 million worldwide.

Modern slavery includes human trafficking, slavery, servitude, forced labour, debt bondage and worst forms of child labour. It disproportionately impacts women and girls. More than 70 per cent of modern slavery victims are female. Modern slavery can occur in every industry and sector but some are considered more at risk than others.

Nowhere to hide

Whether you’re a government agency or a business, getting started on the path to greater transparency and compliance involves a few steps. Review your forced labour policy, segment your supply chain by category and geography, monitor continuously for risk signals, design a risk assessment and controls framework, remediate identified risks and automate assessment processes.

The reality is that many government agencies and businesses don’t have the tools required to keep track of the risks in their extended supply chains due to the herculean task of data aggregation.

Transparency through tech

To effectively meet the mandatory reporting criteria under the Modern Slavery Act, executives must adopt a technology-led approach in order to accurately monitor and track their supply chains. This is critical to ensuring that unfair and abusive practices haven’t crept into second and third-tier suppliers in the supply chain.

Technology platforms like digital business networks provide newfound visibility into supply chains, enabling organisations to quickly and easily evaluate trading partners against huge volumes of data points, determine their exposure to risk and make more informed decisions. This provides buyers the opportunity to proactively, instead of reactively, manage these risks.

For example, SAP’s cloud-based Ariba Network, where more than 3.46 trillion US dollars-worth of business-to-business transactions happen annually, currently gathers third-party data from over half a million data sources. This includes whether a potential trading partner keeps its supply chain clear of forced labour and has a record of responsible environmental stewardship.

With these data points in hand, how businesses and government agencies interpret the data to mitigate their reputational, financial and environmental risks will be critical. Organisations must make sure they are making way for staff charged to turn these insights into meaningful action.

The same technology can give organisations both the supply chain visibility needed to become compliant, and much needed awareness and flexibility at a time when supply chain resilience is more important than ever. The outcome from acting on these insights is not just a legal and ethical requirement, but it is also proven that doing good is great for business as consumer demands are rising. With government spending always under extra scrutiny, it is vital for government agencies to lead the way.

A reputational chain reaction

While it may have been unspoken, there has been a view that ‘what happens in the supply chain stays in the supply chain’. But this simply will not do in today’s environment. Those that fail to recognise this can expect to pay the price for complacency through lost reputation, revenue, challenges retaining talent and legal action. However, acting on this, taking a stand and driving change in everyday people’s lives will be rewarded by consumers.

Expect the “window” that the Modern Slavery Act and register provide to create a technology-fuelled “race to reputation” that will not only drive compliance but also broader organisational resilience and a more equitable society.

Henrik Smedberg is Regional Vice President for SAP Ariba ANZ

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