Money: Coles under pressure over potential worker exploitation in supply chains - PressFrom - Australia
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MoneyColes under pressure over potential worker exploitation in supply chains

07:50  11 september  2019
07:50  11 september  2019 Source:   watoday.com.au

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Coles under pressure over potential worker exploitation in supply chains© James Alcock Activist shareholders are calling for better worker representation in Coles' supply chains.

Supermarket giant Coles is under pressure from activist shareholders to change its policies covering potential modern slavery in its supply chains.

A shareholder resolution filed on Tuesday called on the retailer to take "active steps" against potential worker exploitation, pushing for Coles to embed union and worker representation in its supply chains. Woolworths faced similar calls last year.

Modern slavery includes situations were workers are unable to leave their jobs due to employer coercion, violence, or threats. Last year, the government passed legislation which requires entities with over $100 million in revenue to report on modern slavery in their supply chains.

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Preventing worker exploitation and forced labor has come into the spotlight, as many companies move away from a low-cost-at-all-cost model. "The scope of the impact on millions of workers in supply chains built specifically to service the brand will raise alarm bells," the report said.

Workers typically raise the cash by taking on debts that tie them to employers—a modern-day version of the ancient practice of bonded labour. Last month the British Retail Consortium, a trade group, published guidelines for supply chains , including recommendations on working conditions.

Coles has been approached for comment.

Research from mining magnate and philanthropist Andrew Forrest's Minderoo Foundation in 2016 showed there are an estimated 15,000 people living in conditions of modern slavery in Australia.

The resolution has been proposed by the Australasian Centre for Corporate Responsibility (ACCR) and is co-filed with industry super fund LUCRF Super, US-based asset manager Mercy Investment Services and Catholic society St Columban’s Mission.

It targets Coles' Ethical Sourcing Policy which requires the company's suppliers to complete self-assessments through supply chain auditor Sedex, which rates them as low, medium or high risk.

Low-risk suppliers are certified and approved by Coles for the next two years, and medium-to-high risk suppliers are required to undertake an independent third-party audit. The ACCR claims 30 to 40 per cent of Coles suppliers are rated low risk.

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Other workers were hired by family-run Akers Farm, which supplies sweet potatoes to Woolworths and Coles , and rejected suggestions its workers were Ms Webster said under the Fair Work Act, an individual or corporate entity who "is involved in a contravention can be treated the same as the

The ACCR argues Coles has an "over-reliance" on third-party audits, pointing to research from the International Labour Organisation and the World Bank which shows them to be ineffective in identifying labour violations.

Instead, the organisation is pushing for worker rights and a union voice to be baked-in to the Ethical Sourcing Policy, which would include union-led complaint resolution and labour rights education for workers.

It's also asking for supplier accreditation and compliance to be determined by multiple parties rather than just third-party auditors.

The ACCR wants Coles to bring its policy closer to Woolworths', which faced a similar shareholder resolution last year to ensure trade union involvement in supply chain compliance.

Woolworths' also primarily relies on third-parties to audit its suppliers, including Sedex which audited 34 per cent of its moderate-to-priority risk suppliers and 60 per cent of its highest risk horticultural suppliers last financial year.

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In business and finance, supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.

However, while Woolworths did not agree to embed a union voice and shareholders voted the proposal down, it has signed an agreement with the National Union of Workers (NUW) to engage in quarterly meetings and provide the union with an avenue to raise worker grievances. The ACCR is not proposing any resolution against Woolworths this year.

"Coles continues to advocate for policies that have repeatedly been shown to be not fit-for-purpose and unable to identify, let alone resolve, the types of labour rights risks and illegality evidenced in Australian fresh food supply chains," Katie Hepworth, director of workers rights at the ACCR said.

Jenn Morris, chief executive of Minderoo's Walk Free initiative against modern slavery, said while it welcomed shareholders putting focus on ethics within supply chains, it remains a complex issue to fix within large organisations.

"Walk Free encourages companies to identify risks in their industries, commission independent audits to identify any issues, and work with their suppliers and employees to drive changes that prevent exploitation and protect human rights," she said.

If the resolution is accepted by Coles, it will be heard at the company's Annual General Meeting on November 13, however due to a quirk in Australian legislation, the group will first have to pass a resolution to amend the company's constitution before the second resolution can be voted on.

Constitution changes require 75 per cent shareholder approval and therefore are rarely passed.

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