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UNSW Master of Human Rights Law and Policy LAWS 8173 Internship Program

Collaborative University Procurement: best-practice opportunities for addressing modern slavery risks in university supply chains

By Sonja Duncan

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Sonja Duncan

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Contents 1.

Introduction .................................................................................................................................... 3

University Procurement in Australia ............................................................................................... 5

International collaborative public procurement models .............................................................. 13 Non-university collaborative procurement models .......................................................................... 15

Benefits of Collaboration for Australian Universities ................................................................... 17 Best practice Collaboration - Electronics Watch............................................................................... 19

How UK Universities are responding to modern slavery legislation............................................. 20

Developing a University Procurement Spend Category Risk Taxonomy ...................................... 23

Concluding Comments .................................................................................................................. 26

*Sonja Duncan is the Director of SD Strategies Pty Ltd, a Sydney-based sustainability consultancy company that has been actively working on sustainability and human rights issues for 20 years. She is currently completing a Master of Laws, Human Rights Law & Policy at UNSW. www.sdstrategies.com.au | sonja@sdstrategies.com.au

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1. Introduction It is estimated that 40.3 million people live in modern slavery1. Over 30 million are in the Asia Pacific region forced to work in the supply chains of many of the goods procured by Australian businesses, including those procured by Australian universities. However, modern slavery risks are not confined to work undertaken in international operations and workers in Australian-based supply chains may also be vulnerable to exploitation and slavery. The introduction of the Modern Slavery Act 2018 (Cth) has brought businesses into the efforts to address modern slavery.2 For the first time, Australian businesses are required to not only understand their supply chains, but identify, manage and mitigate potential modern slavery risks. The Act requires organisations operating in Australia with annual consolidated revenue of $100 million or more, including businesses, charitable institutions, universities, Australian government and corporate entities to publish a Modern Slavery Statement. These Statements (or reports) must include information about an entity’s: • • • • •

structure, operations and supply chains risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls actions taken to assess and address those risks, including due diligence and remediation processes, how the reporting entity assesses the effectiveness of such actions, and process of consultation with entities included in the Statement.3

According to Segrave and Moore4, the intention of the Act is to move away from relying on reactive, criminal justice mechanisms to identify exploitation, towards encouraging Australian businesses [including universities] to adopt practices that prevent exploitation from occurring within their supply chains. For universities driven by integrity and corporate social responsibility, the Act provides an opportunity to demonstrate leadership in reducing and over time, eliminating, modern slavery. However, individual universities cannot achieve this alone. A collaborative, multi-stakeholder approach will be needed to ensure that university operational procedures as well as procurement systems and processes can effectively assess and address the risks of modern slavery across the Australian university sector and throughout its complex global supply chains. According to a report prepared by law firm, MinterEllison, risk factors for university supply chains, include where supply chains involve: 1. Vulnerable populations, including migrant and base-skilled workers. 2. Business models structured around high risk work practices, such as third-party labour arrangements. 3. High risk product and service categories, such as raw materials and services procurement.

Global Slavery Index (2018) <https://www.globalslaveryindex.org/> Mary Segrave and Heather Moore, ‘Australia’s Modern Slavery Act: what does it mean’ (2018) <https://lens.monash.edu/2018/12/06/1366783/australias-modern-slavery-act-an-explainer> 3 Modern Slavery Act 2019 (Cth) s 16 (1) 4 Above n 2 2

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4. High risk geographies, including countries with conflict-affected zones or weak rule of law.5 A more detailed review of potentially high-risk products and services relevant to universities is included in Section 7 below. This report provides an overview of university procurement in Australia and draws on the experiences of UK universities to propose a collaborative framework for assessing and addressing sector-wide supply chain modern slavery risks. The following key recommendations are made: 1. Encourage networking/collaboration and development of resources through existing frameworks such as the Australian Universities Procurement Network (AUPN). 2. Develop a consistent/standardised procurement risk taxonomy for use by all Australian universities. 3. Identify and implement supplier evaluation and review processes. 4. Build institution-specific capacity to manage modern slavery risks and meet reporting requirements. The following opportunities identified for each recommendation should be explored either collaborative or by individual institutions to better identify, manage and mitigate supply chain modern slavery risks. The green highlight indicates the recommended approach. Table 1: Opportunities and Approaches Recommendation

Potential opportunity

Develop capacity building and training resources (webinars, fact sheets etc) Hold modern slavery conferences and networking events Develop and share model policies, contract clauses, codes of conduct and guidelines Develop an effectiveness framework and KPIs for the higher education sector that meet reporting requirements Review and modify existing procurement category risk taxonomies Pilot taxonomy with select group of universities representing metro and regional areas (perhaps through AUPN) Develop model supplier engagement strategy and communication tools

Collaborative Approach

Individual Entity Approach

Identify opportunities to join existing MSIâ€™s (as a university consortium) such as Electronics Watch, Cleaning Accountability Framework, Fair Labour Association Evaluate supplier risk assessment databases (eg Sedex, FRDM, SAP Ariba) for applicability to higher education sector

Julie Whitehead, Jordan Phillips and Hazel Gacka (2019) â€˜Modern Slavery Reporting for Universitiesâ€™ <https://www.minterellison.com/articles/modern-slavery-reporting-for-universities>

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Recommendation

Potential opportunity

Collaborative Approach

Form institutional modern slavery working group

Individual Entity Approach

Identify roles, responsibilities, accountabilities Undertake internal systems and processes gap analysis and develop modern slavery action plan Identify and engage high risk suppliers (based on university-wide risk taxonomy)

2. University Procurement in Australia Universities are increasingly documenting their commitments to social responsibility and sustainability including in areas such as fair trade and sustainable procurement, equality and diversity, and social sustainability.6 By combining academic and legal expertise on business and human rights with professional procurement practices, universities are well placed to take the lead on tackling modern slavery in their supply chains, as well as across university operations and campuses.7 As Gilboy points out, ‘universities campuses themselves are not invulnerable to modern slavery risks’8 and as such it is essential for universities to undertake risk assessments of their own recruitment and labour hire practices, as well as the practices of sub-contractors or service providers operating on campus. This research project has not assessed the potential modern slavery risks associated with international campuses, offices, and/or partnerships with overseas universities and institutions. This is an area requiring further scrutiny, particularly for campuses located in countries or regions with high modern slavery risk indicators (such as China and India). Gilboy highlights the potential risks posed by international partnership arrangements: …through differing legal labour standards, labour law enforcement, labour practices, and in judicial or legal recourse for victims of exploitation, international campuses and overseas partnerships in particular, especially when located in high-risk countries, present UK universities with increased susceptibility to slavery in the supply chain.9 Importantly, this is an issue that will require further assessment by Australian universities operating internationally. Preliminary research undertaken as part of this project suggests that universities across Australia largely procure goods and services autonomously. The higher education procurement landscape (and perhaps the wider public sector procurement landscape) is fragmented with no overall governance structure. Universities (and public sector entities) operate framework agreements for similar goods and services, however do not follow a standardised (if any) procurement spend category risk taxonomy.10 Only two collaborative procurement consortia operate in Australia, the University Procurement Hub (UPH) and the Council of Australasian University Directors of Information Technology’s (CAUDIT) collaborative procurement model (which focuses specifically on IT hardware,

Jemma Gilboy, ‘How can universities contribute to tackling modern slavery?’ (2016) <https://www.ed.ac.uk/files/atoms/files/uoe_modern_slavery_and_universities_briefing_oct_2016.pdf> 7 Ibid, 9 8 Ibid 9 Ibid, 11 10 Personal communications with AUPN, CAUDIT, ACU, DPIE (2019)

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software and services). Both consortia focus primarily on cost savings and provide some capacity building opportunities to member institutions, as discussed further below. Universities establish long term, sustainable relationships with a wide range of suppliers and as stated on the University of Sydney website, are “committed to establishing an equitable and competitive business environment for suppliers and the University”.11 A number of university procurement policies reviewed reference ethical, social and legal requirements, including that suppliers comply with the requirements of modern slavery legislation.12 A number of policies also include value for money as the key principle, although definitions of ‘value’ are not always included in policies.13 A blog posted on the University of Adelaide’s website on June 17, 2019 indicates that the university is preparing its response to the modern slavery legislative requirements by conducting an audit of its supply chain; reviewing and updating policy, procedure, and contract documents; and considering the best methods of continuous risk assessment and improvement.14 There was no indication in the blog how this is being undertaken, or whether it is being undertaken through existing collaborative procurement networks. It should be noted, however that the Chair of the Australian Universities Procurement Network (AUPN), Mike Tylor is the Associated Director of Procurement Services at the University of Adelaide and as such the approaches taken by Adelaide University may both reflect and influence the ideas of the AUPN. The University of Adelaide’s Strategic Procurement Business Analyst is also a member of the AUPN’s recently formed Modern Slavery Working Group. It remains to be seen how Adelaide University’s policies and procedures are reflected in a more collaborative effort to manage modern slavery risks across AUPN members and the broader high education sector. Figure 1 provides an overview of the various University networks/organisations that currently exist in Australia. All of these entities will have input into determining a best-practice collaborative approach to assessing and addressing modern slavery risks and identifying opportunities for extending the scope of modern slavery engagement beyond a compliance and risk-based focus.

University of Sydney Procurement Services website <http://sydney.edu.au/procurement_services/supplying/index.shtml> For example University of Sydney, University of QLD, University of Newcastle (references Fair Trade and tackling poverty), University of Tasmania (references human rights, ethical production process and Fair Trade), UTS (although only broad social responsibility referred to) 13 For example ANU, University of Wollongong, University of Western Sydney, Monash University (based on website statement but policy not sighted) 14 University of Adelaide website <https://blogs.adelaide.edu.au/finance/2019/06/17/modern-slavery-responding-and-reporting/> 12

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Figure 1 Australian University Networks

Universities Australia

Higher Ed Services Pty Ltd

AUSFOG

Oversees

Established

AUPN

CAUDIT (ICT)

UPH

Independent

Australasian Campuses Towards Sustainability (ACTS) AUSFOG = Australian University Senior Finance Officer Group UPH = Universities Procurement Hub AUPN = Australian Universities Procurement Network CAUDIT = Council of Australasian University Directors of Information Technology (independent incorporated Not For Profit entity)

A summary of each entity and their anticipated/suggested role in identifying and managing modern slavery risk is outlined in Table 1 below.

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Table 2: Overview of University Networks and Potential Role in Managing Modern Slavery Risk15

Name Universities Australia

Outline of Key Role and Purpose • • • • • • • •

Higher Ed Services Pty Ltd

• • • •

•

Potential Role in Managing Modern Slavery Risks “Voice” of Australia’s universities (39 member universities) • Provide high level policy and advice for collaborative Provide expert policy advice and analysis approach Develop policy across the sector • Political advocacy Represent Australia’s universities in government and industry-appointed • Lead potential broader global bodies collaborations across the sector Partner with university sectors for global collaboration Build capacity through conferences and policy workshops Funded by annual contributions from member universities Key functions include: o Policy development and political advocacy - focuses on solutions and practical implementation o Positioning and profile-raising - media commentary, social media, public awareness campaigns, events and member engagement o Coordination of collective sector effort - ensuring initiatives are in the best interest of multiple members’ impact, reputation and efficiency Does not provide vendor sourcing or negotiation services Not-for-profit company owned by Universities Australia • Support AUPN Undertakes commercial work for Universities Australia • Provide leadership Runs a series of collaborative networks to leverage economies of scale and • Assist with capacity building drive good practice in the core business areas of finance, human (through AUPN) resources, procurement (AUPN), student services, technology • Identification of potential management and quality in learning and teaching collaborative procurement Builds capacity, professionalism and quality in both business practices and contracts education (events and conferences)

Information largely obtained from entity websites and in some instances personal communications with senior managers of each entity.

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Name

Outline of Key Role and Purpose • • • • • •

AUSFOG

• •

UPH

• • • • • • • • •

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Potential Role in Managing Modern Slavery Risks

Provides support and leadership services Established ‘communities of practice’ to share best practice and knowledge Program management services to facilitate complex sector initiatives Governed by a Board of Directors Team members located in Melbourne, Sydney and Brisbane Remit includes Technology Contract Management functions such as contract and vendor management Collaborative association of senior finance officers representing 39 Universities across all states and territories Established and oversees the Universities Procurement Hub (see below)

Commercial initiative driven by cost savings (2018 report states $279M of spend identified $26.2M in savings across 14 categories) Run by Accenture (global consulting company with procurement expertise) Provides a platform for universities across Australia to source goods and services Aggregates the purchasing power across participating universities and ensures process efficiency, spend visibility, spend analysis Heads of Agreement (defines codes of conduct and business principles) signed by all 17 participating universities Participating universities have a representative on the Executive Board of the Hub Category Councils (with Category Experts) meet on ad-hoc basis to guide the Sourcing Working Groups (subset of universities) Key categories include ICT, facilities management, corporate services, travel services, labs Universities can join Hub for one or more categories Sonja Duncan

• •

• • • • •

Identify best practice in collaborative procurement Align processes with requirements of modern slavery legislation Supplier relationship management Supplier communication and engagement Execute Supplier Code of Conduct Ensure Modern Slavery Clauses incorporated into contracts Execute pre-qualification questionnaires to include modern slavery/human rights issues

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Name

Outline of Key Role and Purpose •

•

AUPN

• • • • • • • •

• • •

• • FINAL

Potential Role in Managing Modern Slavery Risks

Supported by Accenture Services Team (participating universities are supported by a Client Delivery Lead / procurement category subject matter expert) Contracts are negotiated and secured though Accenture but once awarded the university’s point of contact will receive an implementation plan for the duration of the contract Contracts are between the university and the supplier and managed by the university The Hub manages master agreements for the life of the contract Available to all universities in Australia and New Zealand 33-member institutions Focuses on procurement excellence, best practice and collaboration among procurement leaders Not about aggregated purchasing Active in sustainable procurement – have considered ISO 20400 framework Work together to “improve excellence in procurement practice” Promote collaborative approach for information sharing, aggregated purchasing and contracts, efficiencies in process, professional development Upskill procurement professionals in the higher education sector Taxonomy design (4 level flexible University taxonomy) which draws on UPH for consistency (same people on AUPN are also in UPH) Procurement Excellence Framework and ‘Maturity Self-Assessment Model’ (developed by ArcBlue on behalf of CiPS) which does not include modern slavery Currently investigating tools to support universities manage supplier engagement and supply chain risk assessments Anti-slavery Working Group formed following workshop on 29th May. Chaired by Paul Holland, Director of Commercial Services at University of Sonja Duncan

• • •

•

• •

Capacity Building Sharing of ideas and resources Develop university-wide modern slavery policies, procedures, codes Integrate modern slavery into Procurement Excellence Framework Develop procurement categories risk taxonomy for modern slavery (jointly with UPH) Pilot CAF model with 6-8 members universities Promote other collaborative opportunities for assessing effectiveness (eg. Fair Labour Association)

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Name

Outline of Key Role and Purpose

• • CAUDIT

• • • • • • •

• • •

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Potential Role in Managing Modern Slavery Risks

Melbourne, the Working Party will focus on how to meet legislative requirements, what good practice looks like, how to look beyond Tier 1 suppliers, how to deep dive into supply chains? ▪ Working Group ToR Working Party will inform work of the University Procurement Hub Members List included in Attachment A Established in 1966 to collaborate and share information on good practice IT initiatives and promote cost savings through joint procurement Independent incorporated Not-For-Profit entity funded by Member contributions 64 Member universities and research organisations across Australia, NZ, Fiji, PNG, Timor Leste Negotiates with ICT vendors on sector-wide basis Member institutions spend approximately $300 – 400 million annually on ICT hardware, software and services Predominant spend is on software (with 75 key vendors) Benefits include improved value for money due to economies of scale, greater leverage in the marketplace to influence product development and direction, and sector savings in procurement staff resources Has received formal approval from the ACCC to carry out procurement negotiations Does not take a share of any procurement offer to Members Professional development opportunities

Sonja Duncan

• •

• • • •

Capacity building Use collaborative leverage / influence over suppliers to change current systems Execute modern slavery contract clauses Execute supplier codes of conduct Affiliate with Electronics Watch on behalf of Members Opportunity to influence global network of university IT procurement groups through CHEITA (Coalition of Higher Education IT Associations)

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Name ACTS

Outline of Key Role and Purpose • • • • •

• • • •

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Aims to inspire, promote and support change towards best practice sustainability across all types of campuses Builds cross-sector partnerships (sustainability educators, practitioners and change-makers) Builds capacity around sustainability issues (conferences, webinars, member portal access to resources) Provides resources and guidance on sustainability issues Through Green Impact (which runs across 200 locations globally) ACTS develops and executes change and engagement programs (empowers staff and students) Manages Australasian ‘Green Gowns Awards’ Supports and promotes other sustainability education, engagement and monitoring/tracking tools (eg LiFE, STARS etc) Supports campuses to help achieve SDGs through teaching, research and operational practices Provides Continuing Professional Development (CPD) on sustainability – eg Leadership in Sustainability Summit (LiSS)

Sonja Duncan

Potential Role in Managing Modern Slavery Risks • Capacity building, engagement and communication • Aligning modern slavery risk management with SDG 8.7 • CPD links with modern slavery education?

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3. International collaborative public procurement models This section provides a brief overview of collaborative university procurement models operating across the UK and provides preliminary recommendations on how the collaborative procurement framework established for Australian universities may help to address modern slavery risks. UK Model Six Higher Education Purchasing Consortia have been established throughout the UK to deliver and manage a wide range of supplier agreements designed to maximise costs savings and efficiencies. Of these, the London Universities Purchasing Consortium (LUPC) and the Advanced Procurement for Universities and Colleges (APUC) in Scotland are the most advanced in their approach to managing modern slavery risks and provde a good model for collaborative processes in Australia. London Universities Purchasing Consortium (LUPC)16 LUPC is a not-for-profit professional buying organisation established in 1968 which aim to enhance value for members in procurement of goods and services, without causing harm to others. Some 50% of membership is universities and colleges in and around London and the remaining membership is comprised of other not for profits in arts, sciences and education. LUPC is member owned and led and promotes responsible procurement values of its membership. One objective of LUPC is to become a leader in making ethical trading and sustainability available to its members and in March 2017, the organisation established the Responsible Procurement Advisory Group. The following approaches are used to understand, manage and mitigate modern slavery risks in the supply chains of member organisations: • • • • • • •

Developed a Responsible Procurement Policy (June 2017) Launched a new corporate strategy 2018-21, Adding Value through Responsible Procurement in September 2018 Provided an eLearning suite on Protecting Human Rights in the Supply Chain for procurement practitioners. Actively promotes a human rights in supply chain guideline: Protecting human rights in the supply chain: A guide for public procurement practitioners Actively promotes a Policy Paper published by the School of Law, University of Greenwich: Promoting responsible electronics supply chains through public procurement Affiliated with Electronics Watch in April 2018 on behalf of its 81 members Published a Slavery and Human Trafficking Statement 2018

Advanced Procurement for Universities and Colleges (APUC)17 APUC was established in 2007 as a procurement centre of expertise for all of Scotland universities and colleges. It is a private limited company owned by client institutions and aims to be a leader in the sustainable procurement agenda. APUC was the first full consortium member of Electronics Watch so all 42 members could benefit from the services provided and collectively push for improved labour standards.

16 17

London University Procurement Consortium (2019) <https://www.lupc.ac.uk> Advanced Procurement for Universities and Colleges (2019) <http://www.apuc-scot.ac.uk/#&home>

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In 2012, APUC formed a working group to better understand and develop the sustainability practises of its supply chain. The working group, which consists of procurement and sustainability professionals from across the sector together with student representatives, developed a Supply Chain Code of Conduct to address key values and concerns. The following approaches are used to understand, manage and mitigate modern slavery risks in the supply chains of member organisations: • • • •

• • •

Developed APUC Supply Chain Code of Conduct Launched a Supply Chain Sustainability Policy (social, environmental, ethical and economic impacts) Actively promotes a human rights in supply chain guideline: Protecting human rights in the supply chain: A guide for public procurement practitioners Developed a supply chain sustainability web portal APUC Sustain with the following features: o Free for suppliers o Confidential o Suppliers undergo one site assessment o Understand supply chain geography o Provides buyers with data on audited suppliers o Prioritised assessments based on spend, risk and strategic positioning o Benchmarking Published a Modern Slavery and Human Trafficking Statement 2017 Delivers internal training on Procurement legislation (Procurement Reform Act) Actively promotes Scottish Government Resources to support Procurement Reform Act: o Flexible Framework Assessment Tool (Gap Analysis?) o Procurement Prioritisation Tool (addresses requirements of Procurement Reform (Scotland) Act 2014 – hugely complex o Procurement and Sustainability Test (designed to help embed sustainability requirements in the development of contracts and frameworks – linked to prioritisation tool)

The following UK Purchasing Consortia do not provide information on their modern slavery risk management approaches: Southern Universities Purchasing Consortium18 - SUPC works closely with both regional and national bodies to ensure members have access to the most diverse range of agreements for products and services possible. Also collaborates with sector bodies to ensure that SUPC members’ needs are represented at the national level. North Western Universities Purchasing Consortium19 – develops framework agreements across different categories (eg building cleaning) and includes list of suppliers under each agreement Agreements are linked to EU Procurement Regulations. North Eastern Universities Purchasing Consortium20 – The online portal is a joint project between the universities of Bradford, Derby, Huddersfield, Leeds, Leeds Beckett, Leeds Trinity, Northumbria, Teesside, York St John, along with the Royal Armouries and the North Eastern Universities Purchasing Consortium. The portal is used to publish details of upcoming contract opportunities.

Southern Universities Purchasing Consortium (2019) <https://www.supc.ac.uk/> North Western Universities Purchasing Consortium (2019) <https://www.nwupc.ac.uk/> 20 North Eastern Universities Purchasing Consortium (2019) <https://neupc.delta-esourcing.com/> 19

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Crescent Purchasing Consortium21 - Established in 1999 as an arm of the purchasing team at The University of Salford. The consortium was developed to fill a gap in the provision of reliable and bestvalue frameworks for the further education sector. The consortium has established EU compliant purchasing frameworks for ICT, utilities, cleaning, catering, office supplies, furniture, travel and accommodation.

Non-university collaborative procurement models Swedish County Council Network on Sustainable Public Procurement Twenty-one country councils in Sweden have worked collaboratively between 2007 and 2010 to ensure the products and services they procure, specifically across the healthcare sector, do not involve human trafficking or violation of human rights. Together, the 21 councils procure goods and services worth approximately Euro 13 billion per year. The collaboration was extended to an additional 18 Swedish county councils in 2010 to extend the scale of the work being undertaken.22 Fees paid by each county council are calculated based on inhabitants. The fee was increased from €25 cents/inhabitant in 2010 to €40 cents/inhabitant in 2015 increasing the collaborations annual budget to €$400,000. A national sustainability strategist was employed to oversee the program in the same year. The model adopted by Sweden’s county councils provides a powerful case study for collaborative public procurement and should inform the approach ultimately adopted by Australian universities. The approach involves “standardising human rights requirements; establishing a division of responsibility for operationalising human rights due diligence in the procurement process, as well as follow-up measures; and sharing the costs of resources, for example staff time, capacity development and financial resources for conducting third-party audits.”23 While the process has matured over the past 11 years, its foundation lies in corporate social responsibility and initiatives such as the UN Global Compact, ISO 26000 and the OECD Guidelines for Multinational Enterprises. It was also driven to some extent by European Union procurement law. The following summarises the evolving processes of the Network from 2007 to 201824: •

•

2007: Developed supplier code of conduct which referred to ILO conventions, the UN Convention on Rights of the Child, Article 32, WHS rules, social insurance rules, environmental protection laws an applicable labour laws, including rules on pay.25 2010: Implemented a common method to evaluate whether the requirements of the Code were being fulfilled by contractors (included self-assessment questionnaires for suppliers and the possibility of third-party on-site audits). o Appointed Steering Committee and eight-member Working Group o Established contact points in each County Council and information campaign implemented 2013: Revised Code of Conduct to incorporate reference to the Universal Declaration of Human Rights, UN Convention against Corruption, UN Global Compact’s ten Principles, UNGPs. Suppliers involved in process to update Code.

Crescent Purchasing Consortium (2019) <https://www.thecpc.ac.uk/> Pauline Gothberg, ‘Public Procurement and human rights in the healthcare sector: the Swedish county councils’ collaborative model’, in Public Procurement and Human Rights Opportunities, Risks and Dilemmas for the State as Buyer, Edited by Olga Martin-Ortega and Claire Methven O'Brien, Elgar Elgin, 165 – 179. 23 Ibid, 168. 24 Ibid, 169 – 177. 25 Ibid, 169. 22

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o o

• •

•

Updated contract clauses to reflect new Code of Conduct. Developed template for supplier evaluation and implemented training of Working Group on evaluating supplier compliance. 2014: Further steps taken to address follow-ups and concerns raised by trade organisations. 2015: Expanded network to other public buyers in Sweden and beyond (letter of intent signed to harmonise demands on suppliers, jointly inform suppliers about the Code of Conduct and share results and follow-ups. 2016: Increased revenue and appointed National Sustainability Strategist. o Delegated responsibility for designated high-risk procurement categories to eight ‘care regions’. Each region to conduct annual risk analysis, develop three-year action plans for suppliers, identify key suppliers for audits and engage in dialogue with trade organisations. o Each region allocated with a fixed budget for follow-ups 2017: Revised contract performance clauses and developed guidance materials for suppliers with direct reference to the UNGPs

Gothberg highlights that the model “did not appear overnight, but rather emerged through an incremental process in parallel to which human rights, though initially outside the procurement function’s zone of competence, over time became an area of appropriate practice.”26 Section 4 builds on this and other approaches discussed in this section and proposes opportunities for collaborative procurement and capacity building models for the Australian higher education sector.

Above n22, 178.

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4. Benefits of Collaboration for Australian Universities Collaborative procurement provides an opportunity to achieve sustainable long-term outcomes that benefit individual institutions, a broader industry sector, the natural environment and the people working within complex, global supply chains. Collaborative procurement can result in improved efficiencies, better working practices and cost savings for both the procurer and the supply chain.27 Benefits will be realised around people, process, product and price as illustrated below. Collaborative Procurement Benefits Model28 People Roles & Responsibilities

Price

Process

What we pay

How we buy

Product What we buy

The following table highlights some of the anticipated benefits of greater collaborative procurement to manage modern slavery risks across the Australian Higher Education sector. Table 3: Benefits of Collaborative Procurement for Managing Modern Slavery Risks29 People Shared knowledge Greater networking Improved relationships Enhanced training opportunities Increased morale

Process Improved efficiencies & outcomes Model policies, codes of conduct, procedures Standardised KPIs and supplier questionnaires Consistent approach to market Enhanced Tier 1 supplier engagement

Product Model spend category risk taxonomy Common risk definitions Common product specification/frameworks Enhanced understanding of product & service risks Increased likelihood of compliance with UNGPs and legislation

Price/Value Economies of scale Greater value for money across product lifecycle Greater leverage across value chain Reinvestment of savings into education programs

As stated previously, two collaborative procurement models have been established for Australian universities – UPH and CAUDIT (for IT procurement only). These models should be reviewed and built

Constructing Excellence (2009) ‘Collaborative Procurement’ <http://constructingexcellence.org.uk/wpcontent/uploads/2015/01/Collaborative_Procurement_Guide.pdf> 28 Ibid, 13 (information included in this report is based on approach used in the guide) 29 Ibid, 14 – 16.

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upon to ensure broader participation, enhanced understanding of supply chain risks, greater transparency of reporting and improved realisation of the benefits identified above. Based on the successful LUPC and APUC models, the following collaborative opportunities should be explored further: Governance & Due Diligence • • • •

Develop model Ethical Sourcing Policy (or Supply Chain Sustainability Policy which includes human rights issues) Develop new (or promote existing international) Protecting Human Rights in the Supply Chain Guideline Develop model Supplier Code of Conduct (and ensure it is understood and signed by all suppliers) Develop KPIs to assess process outcomes

Training & Capacity Building • • • •

Undertaken sector wide training needs analysis (for modern slavery training needs) Develop sector-wide modern slavery (general awareness) training or promote the use of existing online training tools and resources Develop specific training for higher education procurement professionals (covering Australian legislative requirements and best practice approaches) Deliver conferences and meetings and present best practice case studies

Procurement & Performance Management • • • • • • •

Implement sector wide procurement for high risk products and services Consider developing a supply chain sustainability portal (refer to APUC portal) Develop sector wide procurement spend category risk taxonomy (for modern slavery risks) Implement ongoing supplier engagement programs and get to know supplier practices well Invite open dialogue with suppliers and build mutual trust for enhanced end-to-end supply chain visibility Consider implementing standardised supplier pre-qualification questionnaires Develop a more detailed online supplier survey for high risk suppliers (or sign up to existing and tested supplier risk assessment databases such as SEDEX)

Verification and Reporting • • • • •

FINAL

Join Electronics Watch (through CAUDIT) Pilot a higher education project with the Cleaning Accountability Framework (CAF) Consider participating in other Multi-stakeholder Initiatives (MSIs) such as Fair Trade, Ethical Trading Initiative, Fair Labour Association Conduct annual supplier review processes for other high-risk sectors and suppliers Transparently and collaboratively report on outcomes

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Best practice Collaboration - Electronics Watch Electronics Watch provides an effective and proven collaborative method for addressing slavery in the electronics supply chain. The organisation’s extensive network independently monitors factories through permission and fee payment by affiliates.30 The mission of Electronics Watch is to “help public sector organisations work together and collaborate with civil society monitors in production regions to protect the rights of workers in their electronics supply chains.” 31 According to material provided by Electronics Watch in support of this research project, achieving the mission requires that all electronics supply chains connected to public procurement, from mining to manufacturing, include: • Public buyers exercising social responsibility and making tangible, measurable positive impact for workers that make the goods they buy; • Civil society organisations and democratic trade unions in production regions accessing industrial zones and workplaces to support workers in attaining their rights; • Employers complying fully with all applicable domestic and international labour rights and safety standards; and • Brand companies and resellers disclosing suppliers and compliance data to the fullest possible and taking effective action to remedy labour rights and safety breaches in their supply chains.32 In the UK, nine universities and two university purchasing and procurement consortia are currently affiliate members of Electronics Watch. According to Gilboy: Joining Electronics Watch and/or similar organisations furnish universities with reliable information on incidences and risks of modern slavery along their supply chains, and encourages collaborative engagements among universities and other public procurers.33 On recommendation from the researcher, CAUDIT is considering becoming an Electronics Watch affiliate (the first consortium in Australia to do so). This collaboration will help to ensure the rights of workers in the electronics supply chain of CAUDIT’s 64 member organisations in Australia, New Zealand, Papua New Guinea, Fiji and Timor Leste, are protected.

Electronics Watch 2019 <http://electronicswatch.org/en>. Ibid. 32 Electronics Watch flyer (2019) provided by author at a meeting with Julie Pettigrew (Australian Electronics Watch representative). 33 Above n 6, 16. 31

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5. How UK Universities are responding to modern slavery legislation With the implementation in 2015 of the UK Modern Slavery Act, universities, as commercial organisations, are required to report under the Act’s Transparency in Supply Chains Provision (TISC, s.54).34 Universities with annual revenue exceeding £36M pounds are obligated to prepare annual modern slavery statements outlining their actions to identify, prevent and mitigate modern slavery in their operations and supply chains. Seventy-three (73) universities (including three university hospitals) and six higher education purchasing consortia prepared modern slavery statements during the first reporting period (20152016) in the UK35. This number increased to 98 universities (including two university hospitals) in the 2016 – 2017 financial year.36 According to BHRE Research, the quality of reports increased in the second reporting period, as did the commitment expressed by universities to assess and address the risks of modern slavery in their operations and supply chains.37 A review of the BHRE research report conducted by law firm MinterEllison draws out the following positive and negative aspects of UK university modern slavery statements: Positives •

Using supplier engagement tools to engage, track progress and share best practice.

•

Establishing working groups to develop policy and due diligence procedures.

•

Integrating modern slavery requirements into existing policies and developing specific modern slavery policies where required.

•

Developing KPIs around supplier engagement, training and actions taken.

•

Utilising purchasing consortium, including the use of relevant frameworks and purchasing agreements that include modern slavery contract performance requirements.

Negatives •

Not providing information on organisational structure.

•

Not providing insight into supply chains (tiers of suppliers/country of origin)

•

Not backing up statements with evidence of action.

•

Only addressing the topic of modern slavery within their institution, focusing on internal recruitment policies and temporary staff rather than broader supply chains.38

UK Modern Slavery Act 2015 (Cth) s 54. BHRE Research Series, Report no. 1 July 2017 <https://static1.squarespace.com/static/56e9723a40261dbb18ccd338/t/59aed94ae5dd5b20163009aa/1504631117796/UK+MSA+TiSC+T he+First+Year+of+Reportign+by+Universities+-Martin-Ortega+and+Islam+2017+v.1+corrected.pdf> 36 BHRE Research Series, Report no. 3 June 2018 <https://static1.squarespace.com/static/56e9723a40261dbb18ccd338/t/5b339aa88a922dee48df6681/1530108587735/Uni+report+15.6+ final+version+%281%29.pdf> 37 Ibid, 10 38 Above, n 5. 35

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These findings (particularly the negative findings) provide a useful indication of important focus areas for individual Australian universities obligated to report under the Modern Slavery Act 2018 (Cth). UK findings and suggested opportunities, linked to the specific reporting requirements of the Australian modern slavery legislation, are discussed further below (additional findings have been added based on a detailed review of the BHSR report). Modern Slavery Act 2018 (Cth) Reporting Requirement 2: Describe the reporting entity’s structure, operations and supply chain. • •

UK Finding: Not providing information on organisational structure UK Finding: Not providing insight into supply chains

Opportunities for Australian universities: •

•

Source information already contained in university annual reports about organisational structure (including legal classification, number of employees etc) and operations (including teaching & research, purchasing, marketing, sales etc including in Australia and overseas Engage procurement and finance personnel to source information about supply chains (the products and services, including labour, sourced in Australia and overseas beyond direct suppliers). Provide insight into number of active suppliers, categories of supply, procurement spend and supplier relationship management processes.

Modern Slavery Act 2018 (Cth) Reporting Requirement 3: Describe the risk of modern slavery practices in the operations and supply chains of the reporting entity and any entity it owns or controls. • • •

UK Finding: Assumptions made by universities that procuring goods and services locally (from UK suppliers) negates the risk of modern slavery. UK Finding: Only addressing the topic of modern slavery within their institution, focusing on internal recruitment policies and temporary staff rather than broader supply chains. UK Finding: Lack of a risk-based approach to supply chain analysis and management.

Opportunities for Australian universities: •

•

• •

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Start by reviewing the top 80% of spend and assign high level priority/risk ratings to suppliers (based on known modern slavery risks according to industry sector, geographic location and specific products or commodities sourced). Include Australian and international suppliers in risk review (particularly Australian service suppliers in high risk categories such as cleaning, maintenance, security and catering functions). Review entity’s operations and procurement practices that increase supplier risk, such putting pressure on suppliers to deliver goods and services at low cost with short turn-around times. Undertake gap analysis of internal policies, procedures, codes of conduct as well as organisational structure/roles and responsibilities to understand current capacity for assessing and addressing modern slavery risks.

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Modern Slavery Act 2018 (Cth) Reporting Requirement 4: describe the actions taken by the reporting entity and any entities it owns or controls to assess and address these risks, including due diligence and remediation processes • • • •

UK Finding: Not backing up statements with evidence of action UK Finding: Lack of supplier engagement UK Finding: Universities not using leverage to help change supplier practices and due diligence approaches. UK Finding: Training focuses on institutional processes rather than on modern slavery more broadly and is targeted primarily at procurement staff.

Opportunities for Australian universities: • • • •

•

Develop a modern slavery action plan or three-year roadmap to ensure gaps and risks are addressed. Assign roles, responsibilities and accountabilities for implementing actions and include KPIs and reporting mechanisms to keep project owners accountable. Develop and execute a supplier engagement plan, based on supplier risk levels. Undertake a modern slavery training needs analysis and develop and deliver general and more specific training to staff depending on roles and responsibilities for implementing modern slavery action plan (including undertaking supply chain risk reviews). Collaborate with other universities to use combined influence/leverage to change supplier practices and behaviour.

Modern Slavery Act 2018 (Cth) Reporting Requirement 5: describe how the reporting entity assesses the effectiveness of these actions • • • •

UK Finding: No effectiveness assessment UK Finding: Lack of monitoring and verification of supplier responses UK Finding: No supplier auditing processes and limited collaboration with external organisations UK Finding: Uncertainty around the effectiveness of whistleblowing policies to report on modern slavery issues

Opportunities for Australian universities: • • • • • •

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Establish process and outcomes KPIs linked to action plan and internal reporting mechanisms. Establish positive supplier relationships and engage with Tier 1 suppliers. Identify opportunities for collaboration to undertake desk-top assessment of common highrisk suppliers. Become an Electronics Watch Affiliate (recommended this be done collaboratively through CAUDIT). Explore opportunities for a collaborative membership (perhaps through the AUPN) with the Cleaning Accountability Framework and undertake pilot projects in select facilities/buildings. Partner with NGOs and unions to explore audit/review opportunities of other high- risk suppliers or supply categories (in Australia and internationally).

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6. Developing a University Procurement Spend Category Risk Taxonomy One of key findings of the BHRE Research Report is that universities in the UK are not undertaking effective supply chain risk assessments. 39 The BHRE report states: Less than half [of the universities reporting against the Modern Slavery Act] have identified which of their procurement categories carry material risks of human rights violations such as modern slavery or human trafficking and very few classify risks into medium to high risks of modern slavery and human trafficking… It is important that Australian universities effectively collaborate to undertake supply chain risk assessments and identify potentially high-risk procurement spend categories and suppliers. The starting point for effective risk assessment is to develop a sector-wide procurement spend category risk taxonomy. This should draw on available information and research relating to potentially high-risk procurement categories. According to MinterEllison, potentially high-risk product and service categories relevant to universities, include: • • • • • • • • •

IT/ICT equipment Construction Cleaning Office supplies Security services Laboratory supplies (including laboratory goods) Catering/food supply Clothing (including health care and reception uniforms, sports clothing and gowning) Facilities management (including maintenance [and cleaning]).40

Other than security services and facilities management, these categories have also been identified as high risk by Norway’s Agency for Public Management and eGovernment (Difi) and Verite, an independent non-profit global labour rights organisation.

Olga Martin-Ortega and Patryja Krupinska, ‘UK Modern Slavery Act Transparency in Supply Chains: The Second Year of Reporting by Universities’ BHRE Research Group June 2018, 7. <https://static1.squarespace.com/static/56e9723a40261dbb18ccd338/t/5b339aa88a922dee48df6681/1530108587735/Uni+report+15.6+ final+version+%281%29.pdf> 40 Above, n 5.

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Table 4: High risk products and services High risk products41 Coffee, cocoa, and tea Construction materials Cut flowers Electronics Furniture Medical consumables/supplies Office supplies Play and sports equipment Textiles, workwear and footwear Tropical fruits

High risk sectors42 Agriculture Construction Electronics and electrical products manufacturing Fishing and aquaculture Forestry Healthcare Hospitality Housekeeping/Facilities operation Textile and apparel manufacturing Transportation and warehousing

According to Gilboy, priority categories for modern slavery risks in university supply chains include electronics, construction and buildings, facilities, food and catering supplies, laboratory suppliers and travel (which includes hospitality in the destination locations).43 UNSW procurement personnel have identified cleaning, catering, construction and clothing as potential high-risk categories for modern slavery.44 The risks increase where these services are provided by external contractors whose recruitment practices are unknown.45 Extensive work has been undertaken by the University of Leeds to identify high risk procurement categories. By reviewing and adapting a wide cross-section of existing tools and resources for assessing procurement risk (including CiPS, ETI, Difi, IFC, UNGC, CORE Coalition, ISO20400, SA 8000, Business Social Compliance Initiative and others), the University of Leeds developed a comprehensive risk identification and assessment method to analyse high risk categories and commodities against labour rights issues.46 The risk framework adopted by the University of Leeds is based on a dynamic six-step process: 1. 2. 3. 4. 5. 6.

Spot red flag categories. Establish relevance of commodities within red flag categories. Prioritise relevant commodity areas within the red flag categories. Understand the risk in priority commodity supply chains. Obtain input from questionnaires. Map the risk in the supply chain.47

Difi (2019) The Difi High Risk List, online <https://www.anskaffelser.no/public-procurement/socially-responsible-publicprocurement/information-about-high-risk-products/coffee-tea-cocoa> 42 Verite (2017) ‘Strengthening protections against trafficking in persons in federal and corporate supply chains.’ Online <https://www.verite.org/wp-content/uploads/2017/04/EO-and-Commodity-Reports-Combined-FINAL-2017.pdf> 43 Jemma Gilboy, ‘How can universities contribute to tackling modern slavery?’ (2016) online <https://www.ed.ac.uk/files/atoms/files/uoe_modern_slavery_and_universities_briefing_oct_2016.pdf> 44 Personal communication, Justine Nolan/Paul Royds August 2019 45 Above, n53 46 Saul Diez Lozano, ‘Development of a Process for Identifying and Managing Labour Risks in the University of Leeds Supply Chain’, online <http://2ej3yy3dhmmm499wwc3l4n36.wpengine.netdna-cdn.com/wp-content/uploads/2018/03/SPS-Project-report.pdf> 47 Ibid, 37

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The process uses the ISO 20400 ‘category vs issues matrix’ to compare procurement categories and labour issues. The comparative matrix includes the following human and labour rights issues: • • • • • •

Human trafficking Bonded/forced/exploitative labour Child labour Unsafe working environment Lack of freedom of association and of collective bargaining Inadequate compensation.48

The categories included in the assessment framework are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Agricultural; Fisheries; Forestry; Horticultural; Oceanographic Supplies & Services Catering Supplies & Services Computer Supplies & Services Estates & Buildings Furniture; Furnishings & Textiles Janitorial & Domestic Supplies & Services Laboratory/Animal House Supplies & Services Library & Publications Medical; Surgical; Nursing Supplies & Services Miscellaneous/Unclassified Printing Professional & Bought-in Services Safety & Security Stationery & Office Supplies Telecommunications; Postal & Mail Room Services The Arts; Audio-Visual & Multimedia Supplies & Services Travel & Transport (incl. Vehicle hire & Subsistence) Utilities Vehicles (Purchase; Lease; Contract Hire) Workshop & Maintenance Supplies (Lab & Estates)

The Leeds framework assigns a risk score to each of these categories based on information obtained from various sources (including Difi, Verite, US TIP Report and the Global Slavery Index). All categories rated High Risk for more than one issue or Very High Risk in any number of issues are to be further evaluated in order to identify salient issues in specific commodity groups.49 The University of Leeds has identified 12 procurement spend categories to present a very high or high risk of labour rights /modern slavery violations.50

Above n 56, 38. Ibid, 39 50 Ibid, 40-42 49

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Table 5: Very high and high risk spend categories for universities (based on labour rights risk) Overall Risk