NZ announces a modern slavery disclosure law, but where's due diligence?

Tearfund is striving for a world where everyone can work safely, is treated with dignity and is compensated fairly, and on July 28, we made progress! The New Zealand Government announced they’ll begin drafting a modern slavery law. We’re really encouraged by this process and seeing the advocacy efforts of thousands of Kiwis come to fruition. With 28 million people living and working under conditions of forced labour around the world, including here in New Zealand, this law is a powerful step forward. But we also know this law needs some work.

Thousands of Kiwis have advocated for a modern slavery law over the last few years,and finally
the government have announced that they’ll begin drafting one. (source: unsplash)

What did our government announce?

The law will require all businesses that operate in New Zealand and have an annual revenue of $20 million or more, to publicly report on the risks related to modern slavery in their operations and supply chains, and any actions they are taking to address these risks.

This means that nearly 4000 New Zealand businesses will be required to publish a modern slavery statement annually. If businesses do not submit this statement, or publish false information, they will face financial penalties and risk their names being made public.

The law will require nearly 4000 businesses to report on the risks related
to modern slavery in their supply chains. (source: unsplash)

What are its strengths?

Firstly, this law includes medium-sized enterprises, which means more businesses will be reporting!
Compared to international legislation, the revenue threshold for inclusion in this law is lower than most, which means not only will large businesses be required to report, but medium-sized ones too. We know New Zealand’s market largely consists of small and medium businesses, and so this is a step in a really great direction.

Secondly, this law includes financial penalties for businesses that fail to comply, which means businesses will do this!
Learnings from international legislation point to the need for financial penalties so that businesses are motivated to comply. The penalty for non-compliance with Australia’s Modern Slavery Act is the potential of a business’ name being made public. However, an analysis of 102 of the companies included in Australia’s Modern Slavery Act found 77% failed to fully address the mandatory reporting criteria, suggesting that this penalty is not enough. Therefore, we’re encouraged by the stronger penalty approach that New Zealand is taking.

Thirdly, this law will use a public register, which means more transparency for consumers and more accountability for businesses!
By making the register public, everyone can access these businesses’ modern slavery statements. This will enable us to have greater transparency about the goods and services we consume and to hold those that are not taking significant steps to account.

We believe the law should require businesses to take action to reduce the risk
of slavery in their supply chains. (source: adobe)

But the law doesn’t go far enough to stop exploitation

We’re really encouraged by this progress, but this law is missing a crucial element. Whilst companies will have to disclose their modern slavery risks and actions taken to address these, they’re not required to take action to reduce the risk of slavery in their supply chain. This is called due diligence, and it refers to actions taken to prevent and address modern slavery. So, what are some actions a business can take to reduce the risk they find exploitation in their supply chains? They could change their purchasing practices to reduce pressure on their suppliers, and remediation procedures if cases of modern slavery are discovered. If due diligence was a requirement of the law, businesses would need to prove what they are doing to protect their workers and prevent harm right across their supply chain.

Recent reviews of both the UK and Australian legislation have proved that public reporting alone does not result in the changes needed to make a meaningful difference for people trapped in slavery.

“Reporting in and of itself, even if properly enforced, is unlikely to result in the transformative changes to corporate practices needed to eliminate modern slavery”.
A review of Australia’s Modern Slavery Act

Both reporting and due diligence are needed if New Zealand’s legislation is to make a meaningful difference. Tearfund is not alone in calling for the inclusion of due diligence. In fact, 94% of those that made a submission on the government’s proposed law last year agreed large businesses should be required to undertake due diligence to prevent and mitigate modern slavery in their international operations and supply chains.

Tearfund will continue advocating for more robust legislation that will make
a meaningful difference for people trapped in slavery. (source: unsplash)

Whilst the New Zealand Government has committed to addressing due diligence sometime in the future, it hasn’t given a clear timeframe. As this legislation gets drafted and goes through Parliamentary processes, you’ll see Tearfund continue to advocate for robust legislation that includes due diligence.