Modern Slavery

Modern slavery refers to a range of serious human rights violations, which are also crimes in Australia. The term is used to describe situations where coercion, threats or deception are used to exploit people and deprive them of their freedom.

Modern slavery includes:

> Trafficking in persons
> Slavery
> Servitude
> Forced marriage
> Forced labour
> Debt bondage
> The worst forms of child labour
> Deceptive recruiting for labour or services

Modern slavery does not include substandard working conditions or underpayment of workers, however these practices are also harmful and may be warning indicators for wider modern slavery practices.

Modern slavery distorts global markets, undercuts responsible business and can pose significant legal and reputational risks to entities.

Entities have a responsibility to respect human rights in their operations and supply chains, as outlined in the United Nations Guiding Principles on Business and Human Rights. This includes taking steps to assess and address modern slavery risks.

Taking action to combat modern slavery also makes good business sense. Entities that take action to combat modern slavery in their operations and supply chains can protect against possible business harm and improve the integrity and quality of their supply chains.

They can also increase profitability, investor confidence and access to financing opportunities.

Modern slavery can occur in every industry and sector and has severe consequences for victims.

In construction

Globally, around 7% of the workforce is employed in the property and construction industries. Building materials sourced from geographies with poor working conditions and locally with outsourcing / multi-layered subcontracting are both risk areas for our industry.

Key impacts in construction:

> Using products / materials sourced from countries where slavery is prevalent
> Increase in construction activities as a result of COVID-19 adding demand for base-skill workers who are more vulnerable to exploitative practices
> Complex multi-layer outsourcing which decreases visibility of labour risks and impacts on workers
> Short-term engagements across multiple sites
> Low margins and significant pressure on delivery timeframes

As consumers

We could also be unknowingly supporting modern slavery when we buy products that have been made with slavery in the supply chain.

Knowing who makes your clothes, where the cocoa in your chocolate comes from, who sources materials for the manufacture of your mobile phone and the working conditions of the people who provide you services are ways we can make better consumer choices that are modern slavery free.

Common modern slavery practices in construction:

> Forced or unpaid work
> Unsafe conditions
> Bonded and child labour
> Inadequate accommodation
> Passport confiscation
> Human trafficking

High risk construction practices

> Multi-layered subcontracting arrangements (ie sub-sub-subcontractors)
> Particular employment areas of concern include cleaning, part time / casual > workers, people who do not have the right working visa in Australia
> Sham contracting is illegal under the Fair Work Act and can be a sign of other > potential illegal conditions
> Fee for hire (where workers pay to gain employment)
> Coercion (poor conditions / excessive work hours with threat of deportation etc)

Examples

On the false promise of long-term work or permanent residency, foreign workers and students have borrowed and paid significant amounts of money for skilled worker visas to come to work in Australia. Instead, they have found themselves in temporary work with little or no pay, forced into debt bondage to pay off the debts. The workers sometimes have their passports seized so they cannot leave and are threatened if they join a union or report their circumstances to authorities.

Korean workers in debt bondage have been found in Australian construction sites, building offices and residential blocks.

The workers had no employment contracts and no agreement on rates of pay or conditions. Hired through contractors and subcontractors, the workers did not receive appropriate training or protective equipment. They were told to use each other’s safety induction cards as subcontractors turned a blind eye to reduce costs.

To repay the loans to recruitment and migration agents, the workers’ salaries were deducted with exorbitant interest rates, along with rent, food and other expenses. They were crowded into small rooms with seven or eight people for accommodation.

In one case in Sydney, a Korean tiler died from severe respiratory illness, most likely due to his tiling work. He was

Many raw materials commonly used in the construction industry may be sourced from geographies with a high risk of modern slavery, exacerbated by conflict, poverty, displacement, weak rule of law, corruption and state failure to protect human rights.

High risk construction products and materials

It is important to conduct additional scrutiny on specific high risk products / materials when importing into Australia. These particular products / materials are known to have elevated risk of modern slavery practices in their supply chains.

Products of particular concern include:

> Bricks
> Clay
> Lime
> Cement
> Textiles
> Natural rubber
> Timber

Examples

There are many real life examples of modern slavery practices occurring in construction supply chains. The Property, Construction and Modern Slavery Publication (2020) details situations where common raw materials and products may be contributing to forced and bonded labour in foreign countries.

Blood bricks

Forced labour and child labour have been found in brick kilns in countries such as India, Pakistan, Bangladesh and Cambodia. Dubbed 'blood bricks', men, women and children work in hazardous and physically dangerous conditions, moulding and lifting bricks into brick mounds outside Hyderabad, India.

Tens of thousands of Indian families travel to the brick kilns for the six-month season where workers work 12 to 18 hours a day, suffering abuse, withheld wages, exploitation and poor health conditions from smoking bricks. The bricks are used to build offices, factories and other buildings for multinational companies around the world.

Bonded farmers

In Cambodia, the impacts of climate change on crop yields have forced farmers and their families into bonded labour in brickmaking to pay off debts from loan sharks. As a last resort, the families turn to brick factory owners who buy their debts, but few families and their children will ever pay off the loans.

Many have been exposed to serious health impacts, including amputated limbs from operating dangerous machinery, lack of safety equipment and noxious gases that cause life-threatening respiratory diseases.

Every business in Australia faces exposure around human rights risks in four domains: regulatory reporting requirements and standards, reputational damage and eroded public trust, investor scrutiny of social impact credentials, and values alignment for employees.

1 / Regulations and standards

International frameworks and domestic legislation with cross-jurisdiction reporting requirements are all advancing. Relevant developments include:

> Modern Slavery Act 2018 (Cth)
> Modern Slavery Act 2018 (NSW)

Similar legislation in other international jurisdictions, including the French Corporate Duty of Vigilance Law, Modern Slavery Act 2015 (UK), California Transparency in Supply Chains Act, and EU Directive on Non-Financial Disclosures

These legislative developments have been driven and informed by the 2011 UNGPs, which confirmed the corporate responsibility to respect human rights and a framework for addressing human rights risks. This framework requires businesses to address their adverse human rights impacts by taking measures to prevent, mitigate and where appropriate, remediate, human rights harm.

Along with increased regulatory requirements, the sector has seen deeper
incorporation of social issues into existing certification schemes, including Green Star and Infrastructure Sustainability Council of Australia (ISCA) IS rating tool.

2 / Reputation and relationships

Modern slavery reporting requirements are, at their core, transparency requirements aimed at increasing corporate responsiveness to modern slavery.

The reputational risk imposed by stakeholders, including the media, civil society and labour unions, calling out unaddressed modern slavery risk,
can be high.

There is increased emphasis placed on the benchmarking of corporate performance on human rights, such as the Corporate Human Rights Benchmark (CHRB)11 that is produced annually by an investor and civil society-run organisation.

In other jurisdictions, civil society groups have produced reports benchmarking published modern slavery statements and highlighting companies demonstrating leading and poor human rights practice.12 These are key market accountability mechanisms on which the transparency legislation relies to encourage good practice in managing t

Hutchies is a 'reporting entity' under the Modern Slavery Act 2018 (Cth). This means we must provide an annual Modern Slavery Statement to the Australian Government which is published publicly on the Modern Slavery Register.

In summary, we are committed to:

> Reporting annually by the end of financial year through our Modern Slavery Statement
> Maintaining and communicating our policies and requirements that set out expectations of compliance to all parties affected
> Better understanding our supply chains, including risk areas such as labour and raw materials sourced from regions where slavery is more prevalent
> Continuously improving our approach to tackling modern slavery in our operations and supply chains
> Working with our supply chain to educate, monitor and manage any potential instances of slavery
> Raising any potential illegal activity to the relevant authority in line with any applicable legislation

Reporting entity

Hutchies' annual turnover exceeds $100 million, which makes us by definition under the Modern Slavery Act 2018 (Cth), a 'reporting entity'. This means we must provide a transparency statement each year to the Australian Government outlining our approach to managing risks of modern slavery in our supply chains.

Socially conscious clients and financiers

Many of Hutchies' larger projects are being delivered or funded by big entities who are either also 'reporting entities' or may also be listed on the ASX or foreign stock markets with socially conscious shareholder expectations.

In order for Hutchies to continue constructing these rewarding projects for, we must be proactive in our awareness, monitoring and managing of modern slavery requirements to remain compliant with client requirements and the law.

We regularly complete surveys and questionnaires for clients and in tenders specifically on our efforts in the modern slavery space.

> Entities with less than $100 million of revenue

Because Hutchies is a 'reporting entity' under legislation, we must prioritise working with suppliers, subcontractors and consultants who demonstrate a shared commitment to modern slavery compliance.

This means that even smaller businesses who work with us need to share our commitment in taking practical steps towards minimising risks of modern slavery in the supply chains relating to Hutchies' projects and operations.

> Entities with a consolidated revenue of $100 million or more

The Modern Slavery Act 2018 (Cth) requires entities with a consolidated revenue of $100 million or more to submit an annual modern slavery statement on what they are doing to identify and manage modern slavery risk in their operations and supply chain. The statements will be published on a central government registry.

Modern slavery statements require approval of the Board (or equivalent) and the signature of a Director or a responsible member of the entity.

Entities that fall outside the threshold can demonstrate good practice by reporting through a voluntary ‘opt in’ mechanism.

> Mandatory reporting criteria

There are seven mandatory reporting criteria:

1 / Identify the reporting entity
2 / Detail the structure, operations and supply chains
3 / Identify the risks of modern slavery in your operations and supply chains and any entities owned or controlled by you
4 / The actions to assess and address those risks, including modern slavery due diligence and remediation processes
5 / How you assess the effectiveness of actions taken
6 / The process of consultation with entities owned / and or controlled by you
7 / Any other information that you consider relevant

Everyone who works with Hutchies (employees, subcontractors, suppliers, consultants and agents) must comply with the following requirements.

Policies & Contracts

> Code of Conduct Policy
> Procurement Policy
> Sustainability Policy
> Whistleblower Policy
> Specific contract clauses / requirements
> Annual Supplier Survey

To better understand our suppliers, their employment standards, and supply chains, Hutchies conducts an annual survey of our top supply partners around April / May. This survey is strictly confidential.

We expect our suppliers who receive this survey to:

Complete the questions promptly and by the indicated deadline
Answer each question truthfully to the best of their knowledge
Report any potential high risk areas / breaches immediately

Risk Management

Hutchies is committed to working closely with any parties who may have potential areas of risk or reported breaches. This is a complex issue with many sensitivities, particularly for people who may be at risk

Contractual Commitments

Hutchies' contracts have been updated to include clauses specifically to ensure compliance with modern slavery requirements.