Governance is a term commonly used to refer to how public institutions and private companies conduct their affairs and manage resources. It covers the process of decision-making as well as the processes by which decisions are implemented. ICMM believes that mining companies can enhance the mainstreaming of sustainable development by supporting national polices and government regulations that address the issues of corruption, human rights abuses, bribery, tax evasion and conflict.
South32 has joined a small but growing number of mining companies that are taking steps to end modern slavery. In addition to encouraging the Australian Government to introduce a Modern Slavery Act in Australia, South32 is taking steps to work with its employees and suppliers throughout its supply chain to raise awareness of this issue. The company’s goal is to ensure that those with whom it does business abide by its strict human rights and anti-slavery policies.
Slavery in the mining supply chain in the 21st Century
More than 200 years after slavery was abolished in the British Empire, modern slavery has emerged as a growing problem affecting an estimated 40.3 million people worldwide, 10 million of whom are children.
There is widespread recognition that corporations often play an unwitting role in enabling modern slavery, and therefore have a responsibility to tackle it. In the UK, this responsibility has recently been codified in law with the introduction of the Modern Slavery Act 2015. The Act requires all corporations to publish an annual ‘Modern Slavery Statement’ outlining the steps they are taking to combat slavery.
South32 recognises that as a large mining company with operations across Africa, South America and Australia, the existence of slavery in its large and complex supply chain is a significant risk. In line with its commitment to upholding international human rights standards, as well as SDG 16 on Peace, Justice and Strong Institutions, South32 it is taking a proactive role in tackle this serious problem.
What is modern slavery?
Modern slavery refers to situations in which a person’s freedom has been taken away so that they are exploited, often for financial gain. It entails the loss of a person’s freedom to control their own body and to choose or refuse to do certain kinds of work. It encompasses a wide range of exploitative practices, ranging from forced prostitution and forced labour, to forced marriage, debt bondage and forced organ removal.
Contrary to popular belief, it is not limited to developing countries. Anti-Slavery International estimates that around 1.5 million people are in slavery in developed countries, while the UK’s National Crime Agency believes there are tens of thousands of people in modern slavery in the UK alone. Nevertheless, the vast majority of people who are enslaved live in developing countries.
The mining sector has a high exposure to the risk of slavery. This is due to the fact that companies often have large supply chains with suppliers who may have little incentive or ability to tackle exploitation in the production and / or delivery of goods and services, including within their own supply chains.
Taking a proactive approach to tackling modern slavery
In April 2017 South 32 made a submission to the Australian Government’s Joint Standing Committee on Foreign Affairs, Defence and Trade, calling for an Australian Modern Slavery Act.
This commitment is supported by company-wide policies to manage human rights risks, including modern slavery, within its own operations and those of its suppliers and business partners. Policies include a Code of Business Conduct and Sustainability Policy. There is also a Supply Standard that outlines procedures such as tender management, supplier engagement and evaluation, and contract monitoring. The requirements include zero tolerance for forced or compulsory labour.
While the company retains the right to terminate suppliers for breaches of these policies, in line with best practice its approach is to work with them to resolve issues within a reasonable timeframe.
In addition, a vendor pre-qualification system requires all potential suppliers to confirm that they comply with South32’s human rights requirements. These are aligned with international frameworks, particularly the United Nations Principles on Business and Human Rights ‘Protect, Respect and Remedy framework, and the ILO’s eight main conventions.
Finally, the company’s ‘Ethics Point’ whistleblowing service enables employees, suppliers and other third parties to raise concerns anonymously. This worldwide service is multilingual and is designed to facilitate resolution of issues. The Ethics Point is supported by a grievance mechanism.
Developing a framework for identifying modern slavery risks
In 2017, the sustainability and supply teams worked together to identify 'high risk' direct suppliers by designing and applying a ‘high risk goods and services framework’. This resulted in a list of the highest risk categories.
South32 then hosted workshops with subject matter experts in its supply teams to identify which suppliers were most likely to be at risk of modern slavery within each high risk category.
In addition, to build both employees’ and contractors’ capacity to manage modern slavery and other human rights risks, South32 has introduced training on its business conduct and human rights requirements.
Finally, the company has established rigorous due diligence measures, including the requirement that human rights impact assessments are conducted for all operations that enable issues related to modern slavery to be identified. Any risks identified are logged into the company’s risk register for ongoing management and are subject to internal audits to ensure all operations adherence to company standards.
“Understanding the magnitude of modern slavery and the pivotal role supply plays was a key takeaway from the training. It has always been part of our vendor screening process, but now it is an active discussion point.” - Category Lead from the South32 supply team.
Gaining new insights into tackling modern slavery
As a result of its work during 2017, South32 has gained a number of important insights into how best to tackle modern slavery in its supply chain:
- It is important to spend as much time on the ‘why’ as on the ‘how’ – in other words, ensuring that all employees fully understand why South32 is working to eradicate modern slavery from its supply chains.
- Conducting ‘tick box’ compliance exercises and mandating contracting suppliers to disclose their supply chain practices is only a first step.
- The severity and likelihood of potential modern slavery risks and impacts are rarely occurring among direct suppliers of large global corporations. Instead issues are more likely to be several layers deeper in the supply chain.
To embed these processes in the company’s supply chain management, South32 needs to work in cross-functional teams, drawing on the expertise of the supply, legal, community and sustainability teams.
Plans going forward
South32 intends to roll out more specific modern slavery and human trafficking training. The company is considering undertaking compliance audits to address any modern slavery risks if it determines that supply chain due diligence has been insufficient.
At a strategic level, South32 will continue to build relationships and work together with other companies to address modern slavery risks across shared supply chains. One idea being discussed is to develop a shared modern slavery audit database between mining companies, who often use the same suppliers, thereby cutting out unnecessary duplication of due diligence efforts.