By Claire Wild and Naz Jacobs
Now is the perfect time for organisations to prepare for possible modern slavery legislation in New Zealand.
The New Zealand Government is currently developing a legislative response to modern slavery and worker exploitation. This will create new responsibilities across the operations and supply chains of all organisations in Aotearoa. New Zealand’s proposed legislation reflects an international trend towards corporate accountability for modern slavery, with similar legislation and policy seen in the UK, Australia, California, and the US. These measures indicate growing pressure for organisations to identify and address modern slavery in their operations and supply chains – an atrocity that is estimated to be affecting 40 million people around the world.
The New Zealand government has released a proposal outlining possible components of the legislation, which closed for consultation in June 2022. This process is yet to result in a draft bill, meaning now is the perfect time for organisations in Aotearoa to prepare for incoming legislation. This means that if you operate or do business in New Zealand, you should be considering the efficacy of your modern slavery approach or developing one if you do not yet have one in place.
Here we discuss the requirements likely to be included in the upcoming legislation, and how your organisation can prepare for compliance.
What might the legislation look like?
It is likely that New Zealand’s legislation will differ from similar legislation, such as the UK and Australian Modern Slavery Acts, in two ways. Firstly, it will likely impose penalties for non-compliance with the requirements, which the other jurisdictions currently do not. Secondly, it will take a broader approach and require reporting on both modern slavery and worker exploitation, while the other jurisdictions focus only on modern slavery.
Modern slavery refers to severe exploitative practices that a person cannot escape from voluntarily, such as forced labour, debt bondage, slavery and human trafficking. Meanwhile, worker exploitation involves breaches to Aotearoa New Zealand’s employment standards. Under the proposed legislation, actions regarding modern slavery will apply to an organisation’s international and domestic operations and supply chains; whereas and actions regarding worker exploitation will only apply to domestic operations and supply chains.
The main requirements of organisations under the proposed legislation are currently:
- All organisations would be required to take reasonable and proportionate action if they become aware of modern slavery or worker exploitation
- Medium and large organisations would be required to disclose the steps they are taking to address modern slavery and worker exploitation
- Due diligence would be required of all large organisations, and all smaller organisations with significant control over another New Zealand entity.
How can organisations prepare for Aotearoa’s future legislation?
Based on our experience supporting organisations to comply with modern slavery legislation across the globe, we see two essential steps that will prepare New Zealand organisations for the incoming legislation:
- Embed due diligence across all business functions
- Couple grievance mechanisms with effective remediation processes.
1. Embed due diligence across all business functions
Due diligence lies at the core of the proposed legislation. It is defined by the UN Guiding Principles on Business and Human Rights (UNGPs) as a process to identify, prevent, mitigate and account for how a business addresses its impacts on human rights – and in this case, modern slavery. Although requirements to undertake due diligence will only apply to some organisations under the proposed legislation, organisations of all sizes must take action if they become aware of modern slavery or exploitation. It is therefore beneficial for all organisations to implement sound due diligence processes. In doing so, organisations are equipped to assess the risks of modern slavery and worker exploitation that they may be connected to, and therefore understand when and how to undertake further action.
Effective due diligence requires organisations to have various systems and controls in place, including for modern slavery risk assessment and management, that should be embedded across their business functions. At Point Advisory we have deep expertise in assisting organisations to develop and implement such processes, tailored to the specific context of each entity. We help clients to prioritise where best to invest time and resources.
2. Couple grievance mechanisms with effective remediation processes
Grievance mechanisms are another necessary process for organisations to implement in order to comply with the proposed legislation. Effective mechanisms allow both direct employees and workers throughout the supply chain to report complaints or concerns about modern slavery and exploitation. This is crucial for organisations to become aware of incidences they may be causing, contributing to, or linked to. The UNGPs advise that grievance mechanisms must be: transparent, legitimate (trusted and accountable), accessible (known to stakeholders and without barriers), predictable (having a clear and known procedure), equitable (allowing people to engage in fair and informed terms), and rights-compatible (ensuring outcomes accord with international human rights).
To assist in addressing modern slavery and exploitation, grievance mechanisms must be coupled with effective remediation. Remedy should take a people-centred approach and aim to restore the affected person to the situation they would be in if the adverse impact of modern slavery of exploitation had not occurred. Remediation is also a process that aims to promote prevention and embed lessons learned.
Extending to best practice modern slavery management
Alongside the essential processes of due diligence, grievance mechanisms and remediation, a leading approach requires embedding human rights management across your operations and supply chain. This includes developing policies with modern slavery and human rights considerations, undertaking risk assessments, and delivering modern slavery training to build capability across relevant personnel. It also requires setting up appropriate governance mechanisms for managing the complexity of social risk across your value chain, ensuring clear roles and accountabilities.
How is your organisation preparing for modern slavery legislative changes in Aotearoa New Zealand? Point Advisory is an ERM Group company, and we combine an intimate understanding of emerging international and national requirements with practical, ‘on the ground’ experience to support clients in understanding and fulfilling their human rights responsibilities. We’re here to help, so get in touch with Annabel Hart or Emily Dafter to learn more.