Social or ‘S’ issues
gain momentum     

The Modern Slavery Act 2018 has mainstreamed human rights considerations as part of large company due diligence processes. Last year’s statutory review recommended the legislation go further and enshrine an affirmative obligation to implement and use a due diligence system. This would keep Australia on track with regulatory developments overseas, such as the European Union’s corporate sustainability due diligence laws.

About 71% of respondents say these developments are impacting how their business sources and manages supplies. “Modern slavery reporting was the catalyst for organisations to work to better understand risks, particularly beyond the first tier of their supply chain. However, businesses are now broadening their diligence and assessment of suppliers,” notes Herbert Smith Freehills Partner Jacqueline Wootton. Her practice is focused on investigations and compliance advice across many ‘S’ factors, including modern slavery and anti-bribery and corruption. She adds that stakeholders – including consumers – continue to expect greater levels of ‘S’ transparency and impact remediation. As a result, businesses are developing a better understanding of the profound financial and operational impact that human rights incidents deep in supply chains can have.

Issues related to First Nations engagement and local communities also figure prominently in our survey responses. This is particularly across sectors such as energy, oil and gas, mining, infrastructure and property, where social licence is vital to project success. “Principles of free, prior and informed consent, while not currently an explicit feature of regulation in Australia, are certainly embedded within the First Nations engagement policies of many organisations. They underpin what 'good’ looks like in practice. There has been a tangible shift in this regard in a fairly short timeframe, and its unlikely to be a static space into the future,” observes Debenham.