Legal obligations

All have a duty to avoid legal and reputational risks.

An overview of national laws.

The Bali Process continues to advocate and act in strengthening legal frameworks and existing laws. As more organisations conduct business on an international platform, consideration must be given to the laws of the countries in which they operate.

United Kingdom & Australia: Modern Slavery Acts

The Australian Modern Slavery Act (2018) and the UK Modern Slavery Act (2015) requires businesses with high annual revenues (over £36 million in the UK and $100 million in Australia) to report on the actions they are taking to address modern slavery risks within their supply chains. Each business must submit an annual statement, to be made available on a public registry. Failure to comply could lead to reputational risk, and the damaging of investor and shareholder relations

California: Transparency in Supply Chains Act

The California Transparency in Supply Chains Act 2010 requires businesses to report on their efforts to ensure human trafficking and slavery is not present in their supply chains. Companies must make this information available to the public. The Attorney General has special permission to bring action to companies that do not comply. This legislation aims to reduce the demand for tainted goods produced by forced labour.

France: Duty of Vigilance legislation

French Duty of Vigilance Legislation applies to the largest companies in France and is legally binding. The law states that companies affected must assess their practises to ensure human rights are upheld and environmental impacts are addressed. Businesses that do not uphold human rights in their practises risk legal, financial and reputational costs.

The Netherlands: Child Labour Laws

The Netherlands’ Child Labour Laws apply to all businesses that sell products in the Netherlands, regardless of where they are based. The Dutch Government requires companies to assess whether child labour is used in their supply chains and to create a plan to prevent it. Companies that do not submit reports to the Dutch Government can be fined up to €8,200 and may be fined an additional 10% of their worldwide annual turnover if non-compliance continues.

European Union: Regulation of Due Diligence

The EU Regulation of Due Diligence requires Union importers of minerals or metals including tin, tantalum, tungsten or gold to document and record relevant supply chain information, including third-party audits, which will be checked by EU member states. If businesses do not properly report to the EU, action will be taken by the Union importer. The Regulation is designed to increase supply chain transparency of businesses and restrict armed forces from trading valuable minerals.

USA: Dodd-Frank Act

Section 1502 of the Dodd-Frank Act (p. 838) states that companies trading within the United States must disclose if their products are made with minerals including tin, tungsten, tantalum and gold sourced from conflict areas in central Africa. Trading in these minerals is seen to be financing the conflict in these areas, and the Act seeks to encourage greater transparency within business practices.

USA: Tariff Act

Section 307 of the U.S. Tariff Act of 1930 prohibits the import of goods that are mined, produced, or manufactured wholly or in part by forced labour. The U.S. Customs and Border Protection agency has the power to issue a Withhold Release Order to prohibit imports from entering the country if there are suspicions that forced labour was used in their production or processing.

Norway: Transparency Act

The Act Relating to Enterprises’ Transparency and Work on Fundamental Human Rights and Decent Working Conditions (Transparency Act) compels large companies in Norway to identify potential or actual adverse impacts on human rights and working conditions caused by the enterprise or directly linked with the enterprise’s operations or products via their supply chain. The enterprise must then implement policies which prevent the identified adverse impacts. Large enterprises must also annually publish an account of their implementation of these policies. Failure to comply could lead to prohibitions or financial penalty.

Germany: Supply Chain Act

The Act on Corporate Due Diligence Obligations for the Prevention of Human Rights Violations in Supply Chains (Supply Chain Act) comes into effect as of 2023 and mandates that companies with 3000 employees or more analyse, and take measures to prevent, human rights violations across their operations and entire supply chains. The Act further compels companies to establish complaint mechanisms, and to report annually on their implementation of the due diligence measures. Violations do not leave a company open to civil liability, although they attract fines of up to 2 per cent of average annual turnover.

Protect. Respect. Remedy.

In 2011 the United Nations produced Guiding Principles for Business and Human Rights to provide a global standard for preventing and addressing the risk of adverse human rights impacts linked to business activity.

“The role of business partners in combatting modern slavery is indispensable. Business partners can help us, the source countries, in preventing irregular migration by creating jobs and educational opportunities for people.”

H.E. Dr Nasir Andisha

Afghanistan (Deputy Foreign Minister)

Corporate liability: emerging case law.

Globally, companies are being placed under increasing levels of scrutiny with cases of labour violations being tried across a number of jurisdictions.

Araya v Nevsun Resources

Canadian company Nevsun Resources is currently (February 2020) being sued by three Eritrean workers on the grounds that Nevsun used forced labour to build the Bisha mine. Nevsun contracted the Eritrean government to build the mine, and the government subsequently recruited local labourers and subject them to slavery, imprisonment, and forced labour, amongst other crimes. Nevsun is accused of aiding, approving of, or failing to prevent these crimes within their supply chain.

Costco: Thai Seafood Lawsuit

US-based wholesaler Costco was accused of being aware of modern slavery crimes from their producers in Southeast Asia. Prawns in Costco’s supply chain were found to be from ships involved in labour exploitation and human trafficking which was not disclosed by Costco to consumers. The case was dismissed on the grounds that it was not proven that Costco could trace their product to the suppliers involved in modern slavery. Modern slavery in US supply chains has been made public by Associated Press. 

DJ Houghton Chicken Catching Services

Houghton and Judge of DJ Houghton Catching Services were ruled to be personally liable to 11 trafficked Lithuanian workers who faced labour exploitation on UK farms. The workers were forced to work long hours, denied food and toilet breaks, had their wages docked, and kept in poor housing conditions. Houghton and Judge were made to pay more than one million pounds in compensation, and are now facing criminal prosecution in Lithuania for the treatment of the victims.

International obligations.

Businesses operating in countries that are party to international treaties have the obligation to respect, protect and fulfil human rights and must consider their role in the international community.

The United Nations Guiding Principles on Business and Human Rights

The United Nations Guiding Principles on Business and Human Rights provides guidance for companies to meet responsibilities in  respect to human rights. According to the Principles, businesses are expected to protect vulnerable people and and remedy human rights abuses within their business at all levels. The United Nations Human Rights Council endorsed these principles in June of 2011.

OECD Guidelines for Multinational Enterprises

The Organisation for Economic Co-operation and Development’s Guidelines for Multinational Enterprises entail multilaterally agreed upon recommendations for responsible business conduct, including an approach to responsible supply chain management. According to the Guidelines, enterprises should seek ways to prevent negative impacts linked to business operations, products or services by a business relationship (including entities in a supply chain), such as violations of human rights.

Sustainable Development Goals

The United Nations’ 17 Sustainable Development Goals outline a plan which applies to all nations in order to end extreme poverty, combat inequality and injustice, and protect the planet.  Businesses must aim for responsible business and investment, including supply chain sustainability, in order to achieve these goals by 2030. Enterprises should be able to identify and manage the impacts of their business on people, and at a minimum avoid and address violations of human rights related to their business activity.