Regulating transparency on human rights and modern slavery in corporate supply chains

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.