Large companies ‘lacking’ in modern slavery disclosure statements

Monash Centre for Financial Studies at Monash Business School associate professor Nga Pham, lead author of new research on the modern slavery disclosure statements of Australia’s largest companies, told Accounting Times that there are grievance mechanism gaps among the country’s largest companies, according to the new research.

The research, Grievance Mechanisms and Remediation, found that these companies addressed only 14.28 of the 40 questions in its “8R” Modern Slavery disclosure statement framework (about 36 per cent).

“Of the 39 material and financial companies that are in the ASX 100, we found that the modern slavery statements of many of these companies provide very limited information about whether grievance mechanisms are accessible, trusted, and whether these mechanisms are capable of delivering effective remedy,” Pham told the brand.

“[The 8R research is] based on that criteria. The OECD guidelines from multinational enterprises, the International Labour Organisation guidance, and also our own Modern Slavery Act was the theoretical foundation,” she said.

Grievance mechanisms allow remediation to redress harm and prevent modern slavery risk from recurring.

“My co-authors and I scanned the international standards and guidance, including the United Nations Guiding Principles on Business and Human Rights, which have a set of criteria for effective grievance mechanisms,” she said.

“From the theoretical foundations, we developed this set of questions. This set of questions was designed to address the criteria required under these various standards.”

Serving vulnerable stakeholders

Pham stressed that although companies may have grievance channels to report modern slavery, she said that it is important for companies to review the operation of these tools.

“There were a lot of discrepancies in the way companies disclose information. If we want companies to be providing this information, we should have stronger guidance and perhaps make this a requirement in modern slavery statements. This will mean the information would have more transparency and accountability,” Pham said.

The findings revealed that while companies “have a policy, and then they have the governance structure around it, which is the responsibility under a committee or the board. But where it is lacking is in the disclosure of the outcome.”

“It is more about, ‘we understand that you have a channel, but how was that designed? How does it operate? When a company receives a grievance, how is it managed? How is it resolved?” Pham said.

“It's not just the workers in companies’ operations, but also many other potentially affected stakeholders that should know about these channels and know that they can access these channels safely to report a situation, such as workers in the supply chain.”

“If the companies do not proactively promote these channels to the workers in the supply chains, then how can they know about the existence of these channels? How can they trust that they will be protected when they report an issue?”

She said that the research reveals the importance of proactive disclosure.

“That is the level of disclosure that we would really hope to see; but this is the area that is currently lacking,” she said.

“This research will provide the government [with] the empirical evidence from these very large companies. If the disclosures are not required, the companies have a lot of discretion in terms of what they want to report and what they want to disclose.”