Legislation

Nestlé claims Australia’s Modern Slavery Bill is flawed and will cost customers in the end

05-Sep-2018 - Last updated on 05-Sep-2018 at 11:29 GMT

Australia is seeking to introduce a Bill to combat slavery in the labor market. Pic: Oxfam America

Related tags Slavery

Proposed law is ‘sensible’, but absence of penalties is counterproductive, says Swiss chocolate giant

A new anti-slavery bill requiring Australia’s biggest companies to address modern slavery in their supply chains could cost customers, says Nestlé.

The Australian government’s Modern Slavery Bill will require Australia’s largest businesses, with annual consolidated revenue of more than $100m (US$71m), to publish annual statements on the steps they are taking to address modern slavery in their supply chains and operations.

Nestlé has warned customers could face additional costs if Australia requires companies to report on modern slavery risks.

The Sydney Morning Herald reported that Nestlé, owner of more than 2,000 brands in 189 countries, has told a senate committee that Australia's proposed mandatory reporting requirements could add "cost and time" to businesses and suppliers, "which will need to be borne somewhere."

Mandatory requirements

"While we are of the view that the mandatory requirements are sensible, in practical terms this difference means that multinational companies will have to prepare bespoke statements for each country in which they are required to report," Nestlé’s submission said. " ... Not all suppliers may bear those costs themselves; some may pass them on to customers/consumers."

Nestlé informed Australia’s legislators that the Bill will "go significantly beyond those of the UK Act," which it claims only encourages businesses to report against similar criteria.

Modern slavery, as described in the Bill, ‘is a term used to refer to a range of exploitative practices including slavery and slavery-like practices/conditions (such as debt bondage, servitude, forced marriage and forced labor) and human trafficking (also referred to as trafficking in persons).’

The reports would have to cover issues related to the above description within businesses' operations and supply chains.

Nestlé told confectionerynews.com in June that forced child labor in the cocoa supply chain is unacceptable and it is against the practice. In July this year, it implemented a new responsible sourcing standard with mandatory requirements of suppliers relating to pay rates, working hours and workers' ages.

Financial penalties

The Swiss manufacturing giant also requested the Australian government examine implementing financial penalties for companies that failed to file a statement.

" ... our view is that the absence of penalties will be counterproductive in the medium term, and that penalties for failure to report should be a focus of the three year review," it said.

Its submission was backed by Human Rights Watch, a nonprofit, nongovernmental human rights organization. Elaine Pearson, the organization’s Australia director said: “Australia’s modern slavery bill takes some critical steps toward holding companies to account for serious abuses in their supply chains, but to be truly effective the law needs teeth.

“The bill should lower the threshold for reporting, require the government to publicize a list of companies required to report its practices, and impose penalties for noncompliance.”

1 comment

Human Rights...What does Australia's MSB achieve?

Posted by Roger Bing, 07 September 2018 - 21:55 GMT

After taking note of the article I read the Australian Modern Slave Bill 2018.

I believe that Australia is making a noble attempt to correct the wrong in supply chains as it relates to slave labor on products entering its market. Having said that, I agree with Nestlé and the Human Rights Watch; the bill requires teeth to be truly effective.

However, I also believe that the bill falls short in other ways, as well.

A half-dozen companies generating less than $100 million in revenue can have just as much, if not more, influence on slave labor within a supply chain than one corporation earning over $100 million. It seems unjust to limit responsibility of ones supply chain based on the company's turn-over. Slave labor issues are everyone's responsibility; from suppliers to consumers.

To battle slave labor practices there needs to be total transparency in the supply chain. It should be the responsibility of a company to track the products it purchases through its supply chain, and to hold their suppliers accountable. But how far down the supply chain is considered practical for a company to trace labor practices? Should a cereal manufacturer have to trace every ingredient in its products all the way back to the farm? That would be a huge cost - if not unrealistic to execute.

Then what responsibility does the Australian Government have if a slave labor activity is revealed?
This again relates to the teeth in the program.

Not to be critical, here are suggestions. Briefly, the Australian Government should provide an assessment of slave labor practices for every country that supplies products to its market. It should categorize slave labor issues with a determination of government actions if slave labor issues are uncovered.
In concert, all companies should be required to trace products in its supply chain back one level down the supply chain. As a fictitious example, a retailer of seafood would be responsible to trace their seafood to their wholesaler and ensure that the wholesaler is abiding by the law. The wholesaler is responsible to ensure that the importer of their seafood is abiding by the law. The importer is responsible to ensure that the exporter is responsible, etc., etc. Eventually it gets down to the fisherman or the aquaculture farm. This can be accomplished through 3rd party verification as well. Yes there would be a cost, however, broken down in such a manner the cost maybe be negotiated out at each level, subject to the strength of the purchasing team. As one would expect a supplier would serve more than one customer so a third party verification could be a shared expense or a cost of doing business by the supplier. Regardless of cost, what is the price if a product is found to be manufactured through the use of slave labor?

A Modern Salve Labor Bill requires full transparency throughout the entire supply chain and it requires "teeth" by the government and the market place, in totality.

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