How Whistleblowing Supports Compliance with Integrity Regulations - Part 1: Modern Slavery and Supply Chain Risk.

According to the latest report from the Association of Certified Fraud Examiners (ACFE), in cases of fraud and financial crime, tip offs are three times more likely to detect unethical behaviour than an internal audit. It suggests human observation can more easily identify problems than other governance mechanisms which assess through risk assessments, audits and policy frameworks. One such area of evolving regulation – and the focus of this article - is the issue of modern slavery. 

Addressing modern slavery is an increasing concern for organisations, especially for those operating in countries with robust legislation to combat forced labour, human trafficking and exploitation. While specific requirements vary by jurisdiction, examples of country-specific regulations include: 

Modern Slavery Legislation: Key Global Regulations

• UK Modern Slavery Act (2015): Requires larger businesses (above GBP36 million) to publish annual statements outlining actions taken to prevent modern slavery in their operations and supply chains.
• Australian Modern Slavery Act (2018): Imposes similar reporting requirements relating to Australian entities and businesses operating in Australia and with revenue over AUD100 million.
• California Transparency in Supply Chains Act: Mandates disclosures from companies doing business in California (USA) regarding efforts to eradicate human trafficking and forced labour.
• EU Corporate Sustainability Due Diligence Directive (in progress): Sets obligations on human rights and environmental due diligence.

There are several commercial reasons why businesses should carefully consider supply chain and modern slavery risk and while smaller businesses may not be legally required to meet these thresholds, many choose to voluntarily align with ethical practices. In doing so, they meet stakeholder expectations and maintain partnerships with larger corporations requiring supply chain transparency.

As well as these primary regulations, many other laws exist across the UK, Australia, Singapore and the Philippines which broadly address supply chain integrity risks. These include - but are not limited to - modern slavery, ethical sourcing, corruption and environmental sustainability.

Here's an overview:

United Kingdom

1. UK Modern Slavery Act (2015)
   
   • Focus: Requires companies to report on steps to ensure supply chains are free from forced labour and human trafficking.
   • Key Provisions: Mandatory Annual Modern Slavery Statements for businesses with a turnover of over GBP36 million.
   • Scope: Applies to entire supply chains, domestically and internationally.
2. Bribery Act (2010)
   
   • Focus: Prevents bribery and corruption within businesses, including third-party suppliers.
   • Key Provisions: Requires businesses to have adequate procedures to prevent bribery in their operations and supply chains.
   • Scope: Applies to any UK-based organisation or foreign company conducting business in the UK.
3. Environment Act (2021)
   
   • Focus: Addresses environmental risks in supply chains, such as deforestation and the illegal sourcing of materials.
   • Key Provisions: Businesses must conduct due diligence on imported commodities (eg. soy, palm oil, timber) to ensure sustainability and environmental integrity within supply chains.

Australia

1. Modern Slavery Act (2018)
   
   • Focus: Requires Australian entities and foreign entities operating within Australia with an annual revenue of AUD100 million+ to report on actions to assess and address modern slavery risks.
   • Key Provisions: Mandatory submission of Modern Slavery Statements to the Australian Border Force.
2. Criminal Code Act (1995) - Anti-Bribery and Corruption
   
   • Focus: Prohibits bribery of foreign and domestic officials, including corrupt practices in supply chains.
3. Commonwealth Procurement Rules (CPRs)
   
   • Focus: Ensures that government suppliers demonstrate integrity in their labour practices, avoid modern slavery or human rights violations and meet ethical and sustainability standards. 

Singapore

1. Prevention of Corruption Act (PCA)
   
   • Focus: Companies are responsible for third-party actions in their supply chains and must have anti-bribery and anti-corruption policies in place.
2. Employment Act and Foreign Employee Protections
   
   • Focus: Employers must ensure fair treatment, wages, and proper working conditions for employees, including foreign workers who may be part of the supply chain.
3. Environmental Protection and Management Act (EPMA)
   
   • Focus: Addresses environmental risks in supply chains, particularly for industries dealing with hazardous materials or waste.
4. Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP)
   
   • Focus: Promotes ethical labour practices in Singapore-based companies and their supply chains.
   • Key Provisions: Encourages companies to adopt fair employment practices for workers across supply chains.

Philippines

1. Anti-Human Trafficking in Persons Act (RA 9208, as amended by RA 10364)
   
   • Focus: Combats human trafficking, forced labour, and exploitation in business operations and supply chains.
   • Key Provisions: Imposes penalties on individuals and entities involved in trafficking or exploitation within their supply chains.
2. Anti-Child Labour Law (RA 9231)
   
   • Focus: Eliminates child labour and ensures ethical labour practices in supply chains.
   • Key Provisions: Businesses must ensure they do not engage suppliers who employ child labour.
3. Philippine Competition Act (RA 10667)
   
   • Focus: Promotes fair competition, which indirectly impacts supply chain integrity by discouraging anti-competitive practices such as collusion or price-fixing.
4. Environmental Laws (RA 9003, RA 8749, RA 9275)
   
   • Focus: Promotes sustainable waste, air and water management practices in business operations and supply chains.

Whistleblowing, Modern Slavery and Supply Chain Risk 

Transparency and Reporting

One common theme across the above legislation is increased government scrutiny which requires businesses to report publicly on integrity, risks and mitigation strategies within their supply chains. This level of inspection is designed to ensure compliance.

A well-designed whistleblower solution should enable suppliers and contractors to report (anonymously if they wish) into the program, allowing them to capture and report concerns and provide more effective and insightful management and company reporting on this area of risk.  Not only does a well-designed whistleblower program help them to adhere to the above regulations, but it also – as proven by the ACFE’s global survey – one of the most effective corporate governance tools for detecting and addressing unethical practices, including modern slavery.

Evolving Whistleblower Protections
In many countries, whistleblower laws are being expanded to give workers greater protection within supply chains. For example, Australia's recently updated Corporations Act (2019) now offers greater protection for former and current contractors and suppliers when reporting alleged wrongdoing. This is important in cases involving highly sensitive issues, such as child exploitation.

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The team at Veremark Whistleblower Technology Solutions have designed global compliance-driven programs tailored to modern slavery regulations and a wide range of integrity risks. If you would like further information on how we can support your organisation, please contact us here. 

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