Cleaning up their Act?: Modern Slavery Due Diligence in the Australian Property Sector

Executive Summary

This report reviews the first round of reporting by large, listed office and retail property owners under the Commonwealth’s Modern Slavery Act 2018 (MSA): Charter Hall (CHC), Dexus (DXS), GPT (GPT), Mirvac (MGR), Scentre Group (SCG), Stockland (SGP), Vicinity Centres (VCX). It focuses specifically on the due diligence policies and procedures that these companies have put in place to manage modern slavery and labour exploitation in one of their highest risk portfolios: commercial cleaning.^[1]

Non-compliance with labour laws is rife in the commercial cleaning sector. Cleaners often experience underpayment, withholding of wages and excessive working hours.^[2] Sexual harassment and even assault is common. The sector also has some of the highest rates of workplace injuries in Australia, due to the intensification of work over decades. 85% of the cleaning workforce in CBD office buildings and in the retail malls of major cities are international students or temporary workers.^[3] They report threats against immigration status and the confiscation of personal and travel documents.^[4]

COVID-19 has exacerbated these risks.^[5]

Key drivers of non-compliance in the sector include:

• Complex subcontracting arrangements;
• Low barriers to entry for contract service providers;
• A largely migrant workforce, often with precarious visa conditions; and
• 'Aggressive price competition'.^[6]

In analysing company reports, ACCR strove to distinguish between due diligence mechanisms that do little more than provide “cosmetic compliance” and those which deliver best practice protections against labour exploitation and modern slavery. Good disclosures do not always indicate good performance. As such, the first section of this report identifies key principles that underpin best practice supply chain due diligence, contrasting them with mechanisms that lack efficacy and consistently fail to identify non-conformances, with severe and tragic consequences.^[7]

ACCR identifies the following three principles as central to effective due diligence:

• Supplier accreditation and compliance is determined through a multi-stakeholder approach, involving workers and the representative organisation(s) of their own choosing.
• Workers receive peer-led labour rights education with the involvement of representative organisation(s) of their own choosing.
• Grievance procedures are led by workers, and involve the representative organisation(s) of workers’ own choosing in the resolution of complaints.

Responsibility for compliance is shared between lead companies and their suppliers. Due diligence mechanisms that focus solely on suppliers, without attention to the procurement practices of lead companies (e.g. property owners) will fail to address the structural drivers of non-compliance.

The Cleaning Accountability Framework (CAF) is currently the only mechanism in the Australian cleaning sector that fulfils these principles. Of the seven property owners analysed in this report, only Vicinity Centres is a current member of CAF.

ACCR has assessed the effectiveness of property owners’ due diligence approaches against six key themes:

1. Clear description of company, its structure and operations
2. Commitment and governance
3. Risk assessment
4. Responsible purchasing practices
5. Identifying and monitoring non-compliance
6. Corrective action plans and remedy

This report provides examples of basic, improving and leading performance against these themes. Only leading disclosures are deemed effective.

Key Findings

ACCR's review of reporting by the seven property owners finds that:

• All property owners are making commitments to eradicate modern slavery in their supply chains. However, these commitments are largely failing to translate into due diligence approaches that will successfully address modern slavery and labour exploitation.
• The only indicators where most property owners display “leading” disclosures and practices are those that: provide a description of the reporting entity and its operations (theme 1); refer to the establishment of policies and procedures (theme 2); and describe how companies identify and prioritise risks (theme 3). Property owners analysed performed poorly in identifying, mitigating and remedying modern slavery risks (themes 4, 5, 6).
• Investors are not being provided with the information that they need to assess the effectiveness of property owners’ current and proposed due diligence mechanisms, with only 2/7 owners providing any quantitative information on the number of allegations of labour non-conformances raised via their various grievance mechanisms.
• With the exception of individual buildings that have been certified by CAF in the portfolios of Vicinity Centres and Charter Hall, all property owners are failing to meaningfully engage workers in their supply chains. Instead, they are relying on due diligence mechanisms, such as audits and whistleblower hotlines, that are far less likely to pick up instances of modern slavery and labour abuse.
• The worst performing section for all property owners was on corrective action plans and remedy (theme 6). Only one company, Scentre Group (SCG), provided a case study of a specific allegation that was raised and how it was investigated and dealt with by the company. Only two property owners, Charter Hall (CHG) and Scentre Group (SCG) provided specific examples (e.g. a case study) of remedy that they had provided. No property owners specified typical actions that could be taken in cases of non-compliance, ahead of terminating a contract.