Supply chain scrutiny to stop modern slavery

Supply chain scrutiny to stop modern slavery

Wed, 11/10/2017 - 21:34
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Winston Cheng

GENUINE: Winston Cheng says online marketplace JD.com’s commitment to authenticity will help it combat slavery in its supply chains.

Julie Bishop

Supply chains throughout the Asia Pacific will come under intense scrutiny in coming years, with more than 40 countries in the region preparing legislation to eradicate modern slavery, a practice Australian Foreign Minister Julie Bishop says simply should not exist in 2017.

A late August gathering of business and government leaders from 45 countries across the region, known as the Bali Process, was told there were more than 45 million people enslaved worldwide, with two thirds of those in the Asia-Pacific region.

Perhaps even more shocking is the fact that forced labour generates annual profits of more than $150 billion, according to the International Labour Organisation.

As a first step towards eliminating the practice, Ms Bishop said the Australian government would introduce legislation similar to the United Kingdom’s Modern Slavery Act, which was put in place in 2015.

The Australian legislation will require businesses with turnover of more than $100 million to provide proof on an annual basis that they are committed to eliminating human trafficking, debt bondage and forced labour from their supply chains.

It will also require companies to demonstrate ethical recruitment practices to protect workers that are at risk.

“Everyone is affected by this insidious criminal practice of the abuse of people’s human rights in supply chains,” Ms Bishop told reporters following a forum held by Perth USAsia Centre.

“We are all consumers and we are all taking part in the global economy.

“There are dark corners in global supply chains where people’s human rights are trampled, where there are appalling labour practices, and we are working with government and business together to eradicate modern slavery.”

Each of the member countries of the Bali Forum committed to follow Australia’s lead on supply chain scrutiny, with ‘Indo Pacific Modern Slavery Acts’ proposed to be rolled out in 45 countries throughout the region.

Global businesses that operate across different jurisdictions would be required to report once, with a standard reporting framework to be developed.

The new laws have the potential to have a significant impact on trade routes between China and Australia, with the Walk Free Foundation’s Global Slavery Index estimating there are more than 3.3 million people enslaved in China, equating to 0.2 per cent of the country’s population.

Elsewhere along the trade routes, there more than 18 million people estimated to be enslaved in India, 2.1 million in Pakistan and 1.5 million in Bangladesh.

However, China’s Belt and Road initiative, the trillion-dollar planned upgrade of roads, ports and rail infrastructure along the old Silk Road path linking Asia with Europe, could provide opportunities to eliminate slavery from supply chains.

“The One Belt One Road initiative is new, it is about infrastructure support for our region, and at the same time that we are raising awareness about this debate, I feel confident that those that are engaging in these initiatives will be very conscious about the need to ensure integrity and ethical behaviour in these supply chains,” Ms Bishop said.

“China is one country that is focusing on this issue, we had a Chinese business leader address the forum this morning about the efforts that they are taking to ensure that there is integrity in their supply chains.

“But there are many countries in the region where this issue is rife, in fact no country is immune.”

One of the Chinese business leaders participating in the forum was JD.com international president Winston Cheng, who said he would apply learnings from the discussions to guide an ethical expansion of the online marketplace’s operations out of China into South-East Asia.

Mr Cheng said JD.com would ensure its supply chains were operated in an ethical manner by utilising a similar strategy to its existing growth plan.

“How JD.com has been able to grow faster than our industry is we only sell authentic products,” Mr Cheng said.

“By working directly with brands and companies that are fully set up along the supply chain, then we would hope that we can combat this practice.”

However, the testimony of Fortescue Metals Group chairman Andrew Forrest showed that ensuring a supply chain is free from corruption is not an easy task.

Mr Forrest, who is also head of Walk Free Foundation, said he discovered slavery in one of the iron ore miner’s supply chains in the Middle East and witnessed atrocious conditions being endured by workers first hand.

However, when Mr Forrest confronted his trading partner with the findings, he was assured the practice was not occurring.

“I explained to him what I’d seen and what I’d heard, and he gave to me the second most telling comment that I remember in my march against human slavery,” Mr Forrest said.

“He said ‘Andrew, I’m sure there is no slavery in my supply chains. There was when I bought this large business, I can’t think that it’s grown back’.

“I said ‘it’s there, and I want you to do something about it at once’.”

Mr Forrest said 32 minutes later, his partner had outlined the exact steps the company would undertake to eliminate any instances of human rights violations, which included the surrender of passports, middle-men controlling pay packets and appalling living conditions.

Thai Union group director of sustainable development, Darian McBain, recalled a similar discovery at one of its supply chains.

Ms McBain said modern slavery came to the attention of Thai Union, which was founded in 1977 by Chinese-born businessman Kraisorn Chansiri, after a 2014 expose by The Guardian newspaper revealed some of the seafood producer’s outsourced processing workers were part of a people trafficking operation off the coast of Thailand.

“It was a seminal moment for the seafood industry, that slavery really was happening in our supply chains,” Ms McBain said.

“Then Thai Union started to think ‘what is our role in all of this’?”

Ms McBain said Thai Union moved to eliminate the practice by bringing its processing workers in-house, ensuring those workers had appropriate documents and access to healthcare, while also receiving fair remuneration.

“That set off a chain of processes where the Thai Frozen Foods Association said that all of their members must also do a similar thing,” Ms McBain said.

“Leadership really has knock-on effects, but we absolutely cannot take on these issues on our own.

“Thai Union is large in the seafood space, but in the global space, we aren’t such a big company. We absolutely must work with others.”