The nature of the construction industry makes it very vulnerable to modern slavery. Addressing the problem will take more than just legislation.
Issues seen with the construction of stadiums in Qatar for the FIFA Men’s World Cup has highlighted the industry’s vulnerability to modern slavery.
But it’s not just Qatar. Countries all over the world — including Australia — are grappling with systemic exploitation in the supply chain.
Due to a reliance on low-skilled labour and raw materials (such as bricks) that are produced in countries notorious for human rights violations, 18 percent of all reported modern slavery cases occur in the building industry. Modern slavery breaches the human right of freedom and is a fundamental risk for organisations worldwide. Almost 50 million people worldwide are in modern slavery, including 27.6 million in forced labour conditions.
It is a highly profitable crime and the risk to building companies is in their supply chains. The transparency and traceability of these chains become opaque as the number of tiers increases, making it difficult for many organisations to identify where violations are taking place.
To reduce that risk, several G20 nations have introduced legislation. Australia passed the Modern Slavery Act 2018, which requires large businesses (with turnover above AUD$100 million) to assess and report the risk of modern slavery.
Given opposition from large companies to the legislation, it’s unsurprising reporting from organisations has been uneven, with many not even meeting minimum disclosure expectations. The government is currently reviewing the legislation and may impose tighter controls on organisations operating in Australia.
However, even before regulation, all organisations should consider whether modern slavery risks apply to them. Because large and small organisations are exposed.
Research by a team from Macquarie University and the University of Adelaide examined a small non-government organisation in Australia’s social housing sector to show how exposure to modern slavery risks can be reduced.
Social housing includes organisations that construct and rent accommodation to people who would otherwise be excluded from the private housing market due to their income or social status, such as people with disabilities.
As a not-for-profit NGO, this organisation would be appalled if it were unwittingly supporting modern slavery. But it operates in a competitive building and construction market where the practice is rampant.
The organisation worked with suppliers to develop audits to identify and reduce modern slavery risks. But audits are not a silver bullet. The organisation’s culture needed to change from audit compliance to one of compassion.
Employees and contractors were trained to understand what modern slavery is and how to identify subtle signs that it might be in the supply chain, such as employees being escorted to work by others (a van dropping multiple employees to the worksite), guards on site that appear to monitor employees, employees reporting limited access to external communication (no mobile phones), and employees showing reluctance to ask for first aid if injured. It also encouraged and empowered staff to report the signs to management so they could act to remediate the risk.
Through this case and ongoing research, it has become clear that greater action and cooperation is needed to eliminate modern slavery. Australia’s legislation focuses on organisations to reduce modern slavey risks in the supply chain but to have a better chance of success that onus should be shared across all pillars of the community.
Tracey Dodd is a Senior Lecturer in the Adelaide Business School, University of Adelaide, and Honorary Senior Research Fellow, University of Exeter. Her research interests intersect responsible management and environmental, social, and governance (ESG). She actively engages with industry regarding strategies to manage ESG risks, including modern slavery.
James Guthrie AM is an Emeritus Professor in the Department of Accounting and Corporate Governance, Macquarie University. James has held positions at various Australian and Italian universities, in a career in accounting education that spans more than 35 years. He is editor of the highly regarded interdisciplinary accounting journal, Accounting, Auditing and Accountability.
John Dumay is a Professor of Accounting and Finance at Macquarie University Business School in Sydney, Australia, who researches modern slavery, sustainability, intellectual capital, and corporate disclosure. He is an Associate Editor of Accounting, Auditing and Accountability Journal, Meditari Accountancy Research, and a Deputy Editor of Accounting & Finance.