Sunday, 22 October 2017

Regulating modern slavery in supply chains

What viable but principled regulatory model is best suited to regulating business supply-chains to ensure that they do not tolerate or promote forced labour, human trafficking, etc ('modern slavery')?

Does legislation that requires corporate reporting on measures taken within one's supply-chain to address these risks -- but which does not imposes statutory consequences for not complying -- have a place here?

Many activists argue 'Not'.

I would disagree. One can be highly motivated about addressing modern slavery in business supply-chains, yet support legislative models that others dismiss as 'undemanding'.

Australia is proposing a legislative model on this issue, drawing on s. 54 of the UK's 2015 Modern Slavery Act. The consultation on the proposed approach closed last week. (See the Consultation Paper here).

Last week I made a lengthy submission to that consultation.

Here is the gist...:
  • If the aim is to foster business engagement in preventing and solving the underlying problems, a model that give businesses space to address its operations and supply chains (which they know better than any regulator could), that is not prescriptive about reporting, and that does not impose penalties for non-compliance is defensible ... 
... but only ....
  • If the model clearly signals to business that more demanding / intrusive regulation is conditionally being held in reserve for a period, and will be implemented if the uptake by business is merely perfunctory and the reporting patterns do not indicate proper engagement in due diligence and other processes to identify, prevent, resolve and remedy human rights risks...
The current proposed model does not include penalties for non-compliance with the reporting requirement. Yet it makes no overt or explicit signal to business that there may be more demanding legislation in future if business uptake and response is weak.

This is from the intro to that submission, making the above points:

"... The point of all this is not the adoption of ‘tough’ regulatory postures for their own sake (even if these were politically viable): instead the point is to find ways to incentivise and support Australian entities to systematically identify and to prevent or address the underlying human rights risks...

... many features [of the proposed legislation] which this submission supports (such as refraining from any statutory consequences for non-reporting) are ultimately only justifiable, or likely to be received as legitimate by civil society, on a certain condition. This is that there ought to be a clear, signalled government message to business that government ... is prepared in future to consider more intrusive, demanding legislative measures if it is found that the proposed approach is not engendering meaningful engagement with the problem..."

JF

See previous posts on 'modern slavery' and its regulation (in Australia and generally), most recently here.

Monday, 2 October 2017

Responsible business in a Trump era (III)

Just how compelling is the 'business case' for firms and funds to adopt and implement human rights policies?

Here I mean planning, self-assessment and reporting policies and systems that are explicitly framed in human rights terms -- not the wider idea of a 'business case' for being socially responsible.

Among the outgoing Obama administration's last actions in December 2016 was to shepherd in a US 'National Action Plan' on 'Business and Human Rights' (BHR).

The evidence so far shows clearly that a Trump-led US federal government will not lead, in policy, messaging and regulatory terms, in the BHR area. Indeed it will evidently not do so on the responsible or even sustainable business agendas more broadly.

If that is so, it may nevertheless happen that in the US and beyond, big business and the financial and insurance worlds drive parts of this broad agenda itself, not waiting for a national government lead.*

With important caveats, I have recently blogged on this possibility.** These blog-posts were offered in the search for a 'silver lining', from a BHR perspective, to Trump's election. Of course European governments + the EU (and others) might lead in America's stead. But the US matters.

If it happens that business does not wait for such a lead, it may be because there is a perceived 'business case' for it (even if part of that case is just longer-term anticipation by business of a degree of reversion in regulatory trends in a post-Trump presidency).

The 'business case' concept in the BHR field derives from the wider corporate accountability / responsibility field. It is a familiar feature of the CSR field, in particular. 

'Business case' is of course shorthand for the idea that whatever the ethical, moral or legal reasons for mitigating a business's social, enviro and governance impact, it makes good commercial sense, especially in the longer term, to embrace this agenda.

We need to be cautious about a 'business case' at the broad level: business sectors and sub-sectors -- and individual firms within these -- may have very different incentive structures (etc.) in responding to or anticipating social impact issues. The 'business case' concept is a more sound one when describing how those incentives etc might be approached in particular contexts, making a case each time.

For years the CSR and then emerging BHR fields spent considerable energy on articulating a general 'business case'. Yet in recent years BHR advocacy has sometimes appeared to proceed on the basis not only that the business case for acting on human rights risks is self-evident, but that it is or will go further and become an important driver of uptake by business of the BHR implementation agenda.

The thrust of the current post is to suggest that the Trump era will now put to the test claims made in recent years about the strength and obviousness and appeal of the business case for self-starting action on human rights risk.

Put another way (and partly for provocation's sake), it is easy to assert the existence of an obvious business case for business to be pro-active about addressing human rights impacts, but we need to be careful about assuming that this has some sort of self-executing logic to it.

At very least, it seems unlikely that all aspects of BHR will advance at equal pace and degree. Parts of some sectors in business may go with some aspects of the BHR agenda (eg 'modern slavery' in supply chains), while not on others; we may see uptake on some measures (eg human rights due diligence in larger listed firms and financial houses), but little movement in areas such as access to remedy.

Of course many would argue that because human rights are universal non-negotiable normative imperatives, emphasising the commercial advantages of investing in a human rights-consistent business is a wrong starting-place to 'motivate and justify' corporate engagement in human rights implementation.*** This is partly the thrust of a recent Harvard Business Review article entitled 'We shouldn't always need a business case to do the right thing'.

I think there is unarguably a business case for some kinds and sizes of firms to take the BHR agenda seriously. Demonstrating empirically that such action protects or creates commercial value is more difficult.

Jo

* This comment relates to the federal government: the same reactionary approach to promoting sustainable and responsible business conduct is not necessarily true of state-level governments in the US, some of them major economies in their own right, such as California.
** My previous posts on 'responsible business in a Trump era' are here (February 2017) and here (November 2016).
*** See Posner and Baumann-Pauly, 'Making the Business Case for Human Rights', in Baumann-Pauly and Nolan 2016, section 1.2.

Friday, 11 August 2017

Corporate supply chains and modern slavery

What are some factors in regulating corporate action and transparency on human rights risks across supply chains?

Today I present* to an Australian parliamentary enquiry into whether the country should adopt legislation similar to the UK's Modern Slavery Act 2015, in particular s. 54 of that Act, which requires larger UK firms to publish a statement on whether they've taken steps to address human trafficking and forced labour in their operations or supply chain.

I've included a link below to the full written submission that I speak to (and 200 or so other submissions from government, businesses and industry groups, civil society and others).

This post is to make 5 general reflective comments, briefly:

1. 'Great expectations': many submissions over-state the regulatory reach and effect of both a government such as Australia and large companies in respect of their supply chains. While advocates want to draw the 'business and human rights' paradigm into service in addressing many of the imbalances and inequities of the globalised production system, we need to keep perspective. Legislation addressing 'modern slavery' in Australian corporate supply chains is important and can have some practical and messaging effects. But the phenomenon reflects deep governance capacity and incentive problems in developing countries. Such problems cannot be 'fixed' by even the most comprehensive and sophisticated regulation in investor-sending countries.

2. 'Definitions matter': while many submissions address problems in labour conditions here and abroad, 'slavery' is not a term to be bandied about in the hope of larger reform to such conditions. It reflects the oldest, strongest-pedigree norm in international human rights law. It is not to be diluted, tempting as it is to recruit the rhetorical power of 'human rights' in service of all sorts of campaigns.

3. 'Government lead': any requirement that large firms address these risks in their supply chains should arguably also apply to at least large federal government procurement behaviours, if only because government must lead by example. This much is clear from Pillar I of the 2011 UN Guiding Principles on Business and Human Rights, unanimously adopted by UN member states on the Human Rights Council.

4. 'Compliance tunnel vision': we should aim at regulation that encourages and incentivises all stakeholders to work together to prevent and remedy these complex problems. Legislation that creates highly process-focused requirements has the risk of diverting attention to narrow procedural cultures of compliance, which become 'rituals' of their own (Charlesworth and Larking 2010-2015, developing John Braithwaite's work) and become the point of the exercise -- rather than solving the underlying problem.

5. 'Messaging': related to (3) above, it is cost-free for government simply to state its expectation that businesses will comply with human rights standards and remedy their breach where established. This does not sound like 'regulation', but such messaging may be the most importand and influential form of influencing corporate conduct, and signalling the possibility of intervention in future.

Jo

* I present also on behalf of Justine Nolan, co-author of our joint submission to the enquiry and a leading scholar in this field. That submission can be found on the Enquiry's website, here. For the Enquiry's Terms of Reference, see here.

PS: for a recent blog post I did on this issue in the Australian context (but making more general points), see here.


Friday, 9 June 2017

Modern slavery: consumers, regulators, companies

"... Debate continues over whether 21 or 40-plus million people live and work in slavery-like conditions. Either number is unacceptably high in the 21st century.

Yet addressing modern slavery is not only a job for government or bigger businesses: a critical mass of informed proactive consumers will surely be as significant as law-making..." 

So I argue in a blog-post on another forum, on Australia's moves towards a Modern Slavery Act, incorporating corporate transparency requirements of one form or another.

Here is a link to that blog-post.

https://www.policyforum.net/consumers-must-join-business-government-addressing-modern-slavery/

JF

ps -- see previous blog-post on this issue on this blog, that 'business and human rights' is about more than corporate supply-chains, modern slavery, and transparency legislation ... even tho these are big enough in themselves: here.

Thursday, 30 March 2017

Business and human rights: 'the field'

Does focusing on a singular high-profile issue advance or distort efforts to promote responsible business more generally?

Those who write and work on 'business and human rights' (BHR) tend to describe this as an 'emerging' field, although it is not self-evident what the field comprises or ought to comprise.

The question of the proper or ideal parameters of a field seems highly academic. I have argued elsewhere* that there are some downsides to the attempt to frame many wider challenges of sustainable and responsible business in the language and logic of 'human rights'. In an earlier post, for example, I questioned whether the BHR paradigm was an appropriate or useful one for addressing income inequality.**

The question of wide or narrow framing also has some very practical aspects.

In Australia, much of whatever BHR-related momentum exists in government and some business circles is increasingly coming to focus on human trafficking and 'modern slavery' issues (which are not the same thing), mainly relating to larger Australian-listed firms' overseas supply chains. For instance, a parliamentary sub-committee enquiry is afoot to assess the suitability for Australia of a legislative model based on the UK Modern Slavery Act, which includes some basic supply-chain disclosure obligations on bigger businesses.

This trafficking/forced labour focus is not the totality of the BHR conversation in Australia, but it seems to represent an increasingly and, one could argue, disproportionately big chunk of it.

To some extent, this may be true of the BHR phenomenon well beyond Australia, or at least in some circles in the United Kingdom (where many BHR conversations quickly become conversations about the Modern Slavery Act, which while an important development is merely one intervention in one set of problems in one jurisdiction.)

On one hand this elision between 'BHR' and 'trafficking/modern slavery' is to be welcomed:
  • trafficking and forced labour issues are objectively important in their own right;
  • 'focus' on them is not necessarily something narrow since even seen in isolation this is a big complex problem to face;
  • focus on these issues aligns with Australia's reputation for innovation and commitment in addressing human trafficking through criminal law provisions and policy work;
  • and a focus on this set of issues can conceivably act as a proxy for BHR issues more generally, including in sensitising business to wider BHR-related issues, increasing the scope for business to be receptive in future to initiatives that go well beyond supply chains and trafficking + forced labour issues.
This last factor is not unimportant: unless you subscribe to the overly-enthusiastic idea that the BHR paradigm has had a 'magic' effect in galvanising business engagement***, one can recognise the value of any initiative (such as one on corporate supply chains and trafficking / forced labour) that reassures yet challenges business to action even if this is action only on one aspect of BHR problems.

[In any event it may be inevitable that any Australian BHR attention focus on such overseas issues: without trivialising BHR issues arising here at home, objectively those prevalent in settings abroad are of far greater scale and seriousness. Trafficking and modern slavery issues abroad also happen to have an influential business leader, so again the special focus relative to other BHR issues may be inevitable. It may also be natural for advocacy, policy-making and business to be content to ride with one (objectively important and complex enough) set of issues: it gives advocates a sense of something happening; it gives policymakers an example of Australia's commitment to human rights; it gives big business a readily understandable and identifiable issue, target or problem-set (whereas acting on 'human rights' generally covers a very wide area of possible activity).]

Yet on the other hand, BHR is about a great deal more than human trafficking and forced or slavery-like labour. Even the sphere where 'labour rights' and internationally protected 'human rights' overlap comprises many more issues than is suggested by a focus just on corporate supply chain human rights dynamics, and then within that on human labour trafficking (etc) within supply chains.

If there is anything to this observation, it may create something of a dilemma for those interested in an overarching BHR advocacy strategy, as well as those (for example, within government agencies) interested in or required to give content to Australia's implementation of the UN Guiding Principles on BHR more generally: does one direct energies to an issue that is attracting at least some attention and interest, hoping that it will not displace other important BHR issues and themes?

'BHR' on one had comprises more than the 'modern slavery' agenda. Yet at the same time BHR (at least understood as a distinct set of claims grounded ultimately in international legal standards with, in that sense, relatively narrow application) is not necessarily equipped or suitable as the framework for tackling and resolving complex issues such as forced labour and associated human movement. 

Jo

* On the idea that some contributors sketch the field of BHR too broadly, see here, pp 6-7.
** On the income inequality question, see here.
*** On this supposed 'magic' transformation see the 'Alchemy of BHR' blogs.