Regulating transparency on human rights and modern slavery in corporate supply chains: the discrepancy between human rights due diligence and the social audit

ABSTRACT

This article examines some of the limits of reporting schemes as a tool for addressing business-related human rights risks and for engaging business in a collaborative effort to improve human rights. Australia’s Modern Slavery Act 2018 (Cth) (MSA) is the latest example globally of a legislative scheme intended to foster corporate action on such risks within businesses’ operations and supply chains. Some such schemes require firms to implement human rights due diligence (HRDD) measures, as envisaged by the 2011 UN Guiding Principles on Business and Human Rights. However, the MSA’s model is best described as a disclosure or reporting regime. Such regimes do not require businesses to take HRDD measures; rather, they only require businesses to report on any such measures that they have taken during the relevant reporting period. In this article, we analyse some of the assumptions underlying the design of reporting-based schemes. We then consider one practice used by firms facing supply chain scrutiny: social auditing. We caution against an over-reliance on this practice, which is not synonymous with HRDD. It does not necessarily promote fulsome, non-cosmetic reporting compliance or foster corporate action on underlying human rights risks. We finally offer some alternative approaches that could improve the effectiveness of measures to address human rights risks in supply chains.

KEYWORDS:

• business and human rights
• human rights due diligence
• modern slavery
• social auditing

Notes

1. Law No 2017-399 of 27 March 2017 on the corporate duty of vigilance for parent and instructing companies [Loi n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre] (France); Law of 24 October 2019 introducing a duty to prevent the supply of goods and services created by means of child labour [Wet van 24 oktober 2019 houdende de invoering van een zorgplicht ter voorkoming van de levering van goederen en diensten die met behulp van kinderarbeid tot stand zijn gekomen] (the Netherlands).

2. Tariff Act of 1930, 19 USC § 1654 (US); Federal Acquisitions Regulation 48 CFR Subpart 1, 22.17 (US); Modern Slavery Act 2015 (UK), s 54; Dodd-Frank Wall Street Reform and Consumer Protection Act 12 USC § 1502 (US); Transparency in Supply Chains Act of 2010, Cal Civil Code § 1714.43 (US); Regulation (EU) 2017/821 of the European Parliament and of the Council of 17 May 2017).

Additional information

Notes on contributors

Jolyon Ford

Jolyon Ford is an Associate Professor in the School of Law at the Australian National University. His research covers various aspects of the regulation of responsible business activity, including in fragile, conflict-affected and transitional situations. He is the author of Regulating Business for Peace (Cambridge, 2015). In addition to Torts and International Arbitration, he teaches the LLM subject Business, Human Rights and Corporate Responsibility.

Justine Nolan

Justine Nolan is a Professor in the Faculty of Law at UNSW Sydney. She is a Visiting Professorial Scholar at NYU’s Stern Center for Business and Human Rights. Justine’s research focuses on the intersection of business and human rights. Prior to joining UNSW in 2004, she worked as the Director of the Business and Human Rights program at the Lawyers Committee for International Human Rights (now Human Rights First) in the USA. She has held various expert advisory roles, including as a member of the Australian Government’s Multi-Stakeholder Advisory Group on Business and Human Rights (2017) and as an adviser to the Australian Department of Foreign Affairs and Trade and AusAID’s Human Rights Grants Scheme Expert Panel (2009–2013). Her 2019 co-authored book Addressing Modern Slavery examines how consumers, business and government are part of both the problem and the solution in curbing modern slavery in global supply chains.