Addressing modern slavery: What New Zealand businesses should know

There are approximately 40 million people in modern slavery today.  This may be a shocking fact for many given it is the year 2021 and the developed world we live in.  To combat these sad statistics, there has been a proliferation of legislation designed to combat slavery and human trafficking around the globe, with California, the UK and Australia leading the way.  Here in New Zealand, the Government has just released New Zealand’s Plan of Action against Forced Labour, People Trafficking and Slavery, which sets out the all-of-government approach to combatting these crimes (the Plan of Action).[1]

This alert considers the merits of legislative action against modern slavery and outlines some practical steps that businesses can take now to minimise modern slavery related risk in their supply chains and operations.

What is modern slavery?

The term modern slavery is used to describe situations where coercion, threats or deception are used to exploit victims and undermine or deprive them of their freedom.[2]

The nature of modern slavery means it is often hidden in the supply chains and operations of businesses and in the components of the products we purchase as consumers. The United Nations and the Walk Free Foundation estimate there are approximately 40 million victims of modern slavery around the world.

An assumption could be made that modern slavery is something that happens in far-off locations, but New Zealand is not immune to such practices. Last year New Zealand saw its first criminal conviction for both human trafficking and slavery in the High Court decision in R v Matamata [2020] NZHC 1829. In that case, the victims were lured from Samoa to New Zealand by the promise of better wages working in horticulture.  The Walk Free Foundation estimates one in 150 people are living in modern slavery in New Zealand, Australia and the Pacific region.

Modern slavery can occur in every industry and sector, but some are more susceptible due to the nature and location of the work, these include agriculture and fisheries, construction, healthcare services, IT services, hospitality, manufacturing, and mining. Similarly, there are also geographic drivers behind modern slavery. Some countries may have higher risks of modern slavery due to poor governance, weak rule of law, weak labour protections, and socio-economic factors like poverty. Modern slavery can also be linked to other crimes and activities that adversely impact human rights, such as corruption and environmental damage.

What just happened?

Last week, Workplace Relations and Safety Minister Michael Wood released New Zealand’s Plan of Action. The Plan of Action outlines 28 actions government agencies are taking through to 2025. The actions fall under three key pillars: prevention, protection, and enforcement, and cover a wide range of themes, including:

  • awareness raising and training;
  • the elimination of modern slavery from supply chains;
  • the strengthening of operational, policy and legislative settings to enhance enforcement and prosecution; and
  • international cooperation to support effective prevention and enforcement responses.

Action 16 requires the Ministry of Business, Innovation, and Employment to consider introducing legislation requiring businesses to report publicly on transparency in supply chains, to help eliminate practices of modern slavery. The current status of this work is “planned”.  A copy of the Plan of Action can be found here.

To coincide with the launch of the Plan of Action, 85 members of the New Zealand business community, including Countdown, Kathmandu, Noel Leeming, Datacom, and The Warehouse signed a joint letter urging the Government to instigate an inquiry into whether New Zealand needs a Modern Slavery Act. At this stage, it remains unclear how the Government will respond.

What is happening overseas?

We are seeing a general increase in demand from regulators, business partners and consumers for more sustainable supply chains, which includes both environmental and social sustainability. This trend is increasingly requiring businesses to address issues of modern slavery in their supply chains. The number of jurisdictions that require businesses to either identify modern slavery risks in their supply chains, take steps to mitigate such risks, or make public disclosures is increasing as governments seek to fulfil their commitments under international agreements.

Inspired by supply chain reporting requirements introduced in California in 2012, the United Kingdom introduced transparency disclosure and reporting obligations in supply chains in 2015. Australia has followed suit and implemented a similar framework in 2018. The EU and Canada have also announced their intention to introduce similar regimes.

The Australian reporting requirements are currently more prescriptive than the UK equivalent.  The regime requires businesses that meet the reporting threshold to describe what they are doing to assess and address modern slavery risks in their global and domestic operations and supply chains, including how they measures the effectiveness of the actions they are taking. Last year the UK Government announced it will introduce similar compulsory reporting requirements. Once implemented, such changes will help to harmonise the UK and Australian disclosure and reporting frameworks.

Does New Zealand need a Modern Slavery Act?

Unlike many other developed countries, New Zealand has no accountability legislation that requires transparency in supply chains. This means that New Zealand businesses and consumers could unknowingly be directly or indirectly supporting modern slavery through their operations or supply chains. However, as mentioned above, pressure is building from the business community on the Government to consider introducing a Modern Slavery Act for New Zealand.

In the meantime, we are seeing a Trans-Tasman ripple effect. Some New Zealand businesses carrying on business in Australia are now caught by Australia’s disclosure and reporting obligations and those that are not directly caught are being asked by their Australian partners that are caught, to address modern slavery. We are also seeing a growing expectation that where businesses are caught by modern slavery obligations in one jurisdiction, that modern slavery will be addressed in all the jurisdictions those businesses operate in. This pressure on businesses is only going to continue to grow as investors, consumers, and civil society expect businesses to be doing something or at least thinking about how to address modern slavery.

What should you be thinking about?

While there is currently no legal requirement in New Zealand to address modern slavery risks in your operations or supply chains, some New Zealand businesses will have legal compliance obligations under foreign legislation.  However, despite the lack of laws in this space, we consider that modern slavery risk is a reputational harm that New Zealand businesses must be aware of.   Not being aware of modern slavery risk, or addressing modern slavery practices, can have a detrimental effect on your supply chain, corporate reputation, brand value, and relationships with suppliers, customers, and other key stakeholders.

Given consumer focus across environmental and social issues, we consider that this is an area that businesses should act on now.  There are some practical steps you can take now to address modern slavery risks, these include:

  • mapping out your supply chain;
  • undertaking a risk assessment of your operations and supply chain to identify modern slavery risks;
  • developing modern slavery policies, frameworks, and supplier codes of conduct;
  • considering and amending your procurement and supply agreements;
  • developing due diligence, culture and corporate governance guidelines; and
  • conducting awareness seminars for boards, executives, legal and procurement teams.

If you have any questions about how modern slavery risks may affect your business, or you require assistance in taking any of the practical steps discussed above, please contact one of our experts.

[1] Adopting the Plan of Action fulfils New Zealand’s international commitment under the International Labour Organization’s Forced Labour Protocol.

[2] It does not include practices like substandard working conditions or underpayment of workers. However, these practices are also illegal and may be present in some situations of modern slavery. These practices may also escalate into modern slavery if not addressed.

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