Looking through the human rights lens

A proposed Modern Slavery Act may be focused on human rights abuse in supply chains, but it will drive a much broader conversation throughout Australia’s property industry, says KPMG’s Richard Boele.

Twelve months ago, the phrase “modern slavery” may have met with blank stares, but not anymore. A flurry of activity over 2017 has elevated human rights issues to boardrooms around Australia.

Boele (pictured), who leads KPMG’s specialist human rights and social impact group, and who will be speaking at Green Cities 2018 in March, says supply chain sustainability is “definitely on the up”.

And he points to his own career trajectory as evidence that business is now taking corporate and social responsibility seriously.

“A few years back, I was running a specialist boutique on human rights, Banarra, in Sydney’s leafy north shore. Now I’m a partner in human rights and social impact at KPMG.”

Board directors have reputational risks front of mind, and are increasingly considering their companies’ social license to operate, he says. And this has been driven by a range of factors.

Terrible tragedies like the Rana Plaza factory fire in Bangladesh and the Grenfell tower blaze in London have been huge wake-up calls for entire industries.

“There has been a steady and growing number of product quality challenges – cladding, asbestos, wiring – that are having really harmful impacts on people,” Boele says.

There are also broader structural shifts at play.

The United Nations Guiding Principles on Business and Human Rights, published in 2011, was a “seminal moment” that drove a “rapid rise in society’s expectations of the global business community”, Boele explains.

“Soon after, human rights were incorporated into the Dow Jones Sustainability Index – and that’s touched the property industry,” Boele adds.

 

Lessons from the leaders

Sustainability indices are increasingly valued as institutional investors demand transparency and accountability before they splash their cash. These include DJSI, GRESB, which assesses the environmental, social and governance performance of real estate assets, and the new Corporate Human Rights Benchmark.

In October, DJSI named Mirvac the world’s top real estate group. Investment specialist RobecoSAM, which compiles the rankings, singled out Mirvac’s “climate strategy and approach to biodiversity” as “particularly laudable”.

Mirvac’s top ranking was underpinned by strengths in corporate governance, impact measurement and valuation, environmental reporting, and social reporting, RobecoSAM said.

Sarah Clarke, Mirvac’s group general manager for sustainability and reputation, says her company is “alert to the influence we can have on building a positive community legacy”.

“We’re working across Mirvac on supply chain integrity, from systematic modern slavery identification and eradication, to materials integrity, and social procurement,” she explains.

“And we see that our substantial purchasing power is a great opportunity to build the capacity of the social business sector.”

Mirvac’s ‘profit-for-purpose’ café at 200 George Street, for example, raised more than $100,000 in its first 12 months for YWCA’s domestic violence support services.

Other companies also understand the role that social procurement plays in delivering positive outcomes for people.

Lendlease has spent more than $26 million of its procurement budget with Indigenous businesses in the 2017 financial year, building on its long-held philosophy that engaging and partnering with its value chain creates strong environmental and social outcomes.

The Gymea program, a key commitment of Lendlease’s Reconciliation Action Plan, has been developed to support the emerging voice of Indigenous businesses and to drive a business culture that promotes equality, flexibility, wellness and respect of land and environment. Lendlease works with selected suppliers beyond project to project contract relationships, to develop longer-term partnerships that drive social and economic outcomes for them and the wider community.

Cath Brokenborough, Lendlease’s group executive responsible for Indigenous engagement, says her team has been “discussing the development of this program with Supply Nation for a couple of years, recognising that the Indigenous business sector is still emerging and needs hands-on support to increase the number and scale of suppliers.

“By working with the selected suppliers in this way we can more meaningfully support their growth and the growth of the sector in general.”

 

Big business gets on board

These examples send important signals to the industry: big business is getting on board.

“From where I’m sitting, I see all these pointers towards increasing expectations in society for how businesses should behave when it comes to human rights,” Boele adds.

In February, the Australian Government commenced an inquiry into modern slavery in supply chains, and is currently investigating whether to establish a Modern Slavery Act.

The word ‘slavery’ evokes shackles, but modern slavery covers a range of practices, from forced labour and debt bondage through to withholding wages. The Global Slavery Index estimates that 45.8 million people in 167 countries are in some form of modern slavery.

Most instances of modern slavery are found in Asia – in the same markets that Australia’s property and construction industry relies on for its materials.

Boele says he is “very confident” that legislation will be passed in 2018, which will require companies over a certain size to disclose the steps they are taking to eliminate slavery and trafficking from their supply chains and their own businesses.

“Companies will need to examine the hotspots for modern slavery within their supply chains, and disclose what they are doing to manage those hotspots,” he says.

Boardrooms around Australia will be engaging in “conversations about risk”, he says, and “asking themselves if they’ve done enough”.

“It will be really challenging for many companies.”

It’s still “early days” but Boele’s advice is to “get ready”.

“The more complex your supply chain, the more time you want to give yourself.”

Francesca Muskovic, the Property Council’s policy manager for sustainability and regulatory affairs says there has been a real “collaborative dialogue” around the issue, and the industry supports the introduction of reporting requirements.

But it also wants to see “strong commitment” from government to report on its own supply chains.

“We would like to see public procurement included in reporting requirements,” she says.

“And we want to see support for industry to develop a joint approach to supplier engagement, as well as an anti-slavery commissioner to raise public awareness and act as a ‘friend to business'”.

The opportunity to drive positive change within the property and construction industry is immense, and it starts with “applying a powerful people-centric lens” to company activities, Boele advises.

“We are already seeing companies embrace social procurement to drive positive outcomes, and we will see a lot more of that.

“A human rights lens can help you understand the impact that your business has on people at each stage of the built environment lifecycle – whether that is the people who produce the raw materials, live or work in buildings, or must deal with the consequences of demolition waste.

“It’s an extraordinary lens for the property industry to embrace, and will provide fresh insights and opportunities to build better businesses.”

Richard Boele will be speaking at Green Cities 2018, from 13-15 March in Melbourne, in the session exploring how to drive ethical investment beyond the boardroom. Book your Early Bird ticket before it closes this Friday.