ESG研究：供應(yīng)鏈彈性是COVID-19時代的競爭優(yōu)勢

1、Equity ResearchAsia Pacific | Australia101 Primer: Modern Slavery ActSupply chain resilience as a competitive advantage in a time of COVID-19Investment Strategy | Environmental, Social and Governance (ESG) ResearchEnvironmental, Social and Governance (ESG) ResearchIn the current environment where CO

2、VID-19 developments are driving company valuations for the foreseeable, we turn to a new 101 Primer report series on emerging themes, summarizing key drivers and developing tools for identifying risks and opportunities. We anticipate that the COVID-19 crisis puts a brighter spotlight on social polic

3、ies towards key stakeholders, including employees, suppliers and customers. We initiate with a 101 on Modern Slavery (MS), as a companys exposure to this theme touches all three of these critical stakeholders, in our view. Management resilience: with reporting requirements fast approaching under the

4、 newly minted Australian MS Act, we develop a bespoke methodology for assessing current policy and management system resilience, encompassing a Supply Chain Engagement score and a Human Rights Framework score as part of an overall MS Resilience Score. While the eventual MS reporting will likely see

5、a sharp increase in disclosure, current preparedness is low across the ASX300; over half do not have a single supply chain or overarching human rights policy. If we disaggregate purely for supply chain engagement, 62% of companies have zero policies, suggesting a low level of supply chain risk mappi

6、ng and potentially lacking in continuity plans. Clear leaders included: WOW; CBA, TLS, DXS, SGP, OZL, S32, SYD, BXB, BLD, ORA, AMC, WOR, CQR, CHC, COL, FPH, FMG, BHP, and BSL. Business model risk: to determine exposure we then map the independently assessed products at high risk of MS imported to Au

7、stralia in the supply chain to company revenue- dependencies. Revenue dependency includes the direct exposure to the sale of products, but also where the product or service intrinsically relies on the product. The combination of resilience and exposure informs our assessment of business model risk.

8、Retailers of electronics and apparel, have the highest revenue dependency for products with the highest risk of MS, yet have the lowest overall policy resilience. HVN, KGN and JBH have the highest business model risk under CS coverage, followed by apparel retailers PMV and MYR. Among food retailers,

9、 we estimate MTS has greater exposure than COL or WOW but substantially lower management resilience, and therefore higher business model risk. Ansell at risk: finally, we flag ANN as having particularly material business-model risk. While revenue-dependency exposures are estimates, applying this on

10、a like-for-like basis results in very high exposure. It is a concern that, in combination with this, it scores so low on Supply Chain Engagement. So while a clear beneficiary of the current heightened demand for medical gloves we are experiencing through the COVID-19 crisis, in the same context, we

11、expect increasing accountability on Social Factors, which paradoxically increases risk for ANN. Our exposure scores are higher-level estimates, and so a more granular review of supply chain operations would be justified in this case, in our view. The exploitation continuum: experts are increasingly

12、viewing MS as on a continuum that extends beyond defined crimes to exploitation and abuse of vulnerability. These latter definitions of MS are more open to interpretation and will be an area of increasing focus, in our view. We flag the plasma supply industry as an activity at risk of falling into t

13、his evolving continuum, amid increasing focus on so-called poverty donors, with potential risk for CSL.Credit Suisse Environmental, Social and Governance (ESG) research seeks to focus on sustainability and accountability factors that are then integrated into the investment process.Research AnalystsP

14、hineas Glover61 2 8205 4448 HYPERLINK mailto:phineas.glover phineas.gloverApril Lowis61 2 8205 4228 HYPERLINK mailto:april.lowis april.lowisDISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.

15、 US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that couldModern slavery 101The emergence of the modern slaveWhile definitions are evolving, modern slavery

16、 is an umbrella term different forms of human rights abuses, ranging from form of precarious work and exploitation all the way to direct servitude and slavery. At its broadest, the term modern slavery refers to any situations of exploitation where a person cannot refuse or leave work because of thre

17、ats, violence, and coercion, abuse of power or deception.While the word “slavery” conjures up images from the past of shackled workers, more people are enslaved today than at any other time in history (in absolute terms, not population-adjusted). Roughly 13 million people were captured and sold as s

18、laves between the 15th and 19th centuries; today, an estimated 40.3 million people more than three times the figure are living in some form of modern slavery, according to the latest figures published by the UNs International Labour Organization (ILO) and the Walk Free Foundation.The Australian regi

19、me defines modern slavery to incorporate conduct that would constitute an offence under existing human trafficking, slavery and slavery-like offence provisions set out in Divisions 270 and 271 of the Commonwealth Criminal Code. Modern slavery therefore encompasses slavery, servitude, the worst forms

20、 of child labour, forced labour, human trafficking, debt bondage, slavery like practices, forced marriage, severe exploitation and deceptive recruiting for labour or services.Selected indicators of modern slavery, according to the International Labour Organisation, include: Coercive recruitment;Dece

21、ption about the nature of work;Confiscation of identity papers or travel documents; Physical or sexual violence;Forced overtime;Limited freedom of movement or communication; Withholding or delay of wages;Denunciation to authorities; andNo freedom to resign in accordance with legal requirements.Figur

22、e 1: Estimated number of people living in slavery worldwide (2015)India China Pakistan Bangladesh Uzebekistan North KoreaRussia Nigeria IndonesiaEgypt80.740.57Number of people living in slavery (millions)18.4Source: Statista, Walk Free FoundationThe Modern Slavery ActFollowing a 2

23、017 parliamentary inquiry and landmark report “Hidden in Plain Sight,” a Modern Slavery Bill was passed on 1 January 2019. The Modern Slavery Act 2018 (Cth) commenced, heralding a new statutory modern slavery reporting requirement for larger companies operating in Australia. Reporting obligations re

24、late to the steps taken to respond to the risk of modern slavery in the operations and supply chains of the reporting entity and its controlled entities. Unlike other jurisdictions, the reporting criteria are mandatory. See Figure 2, for all reporting requirements. Timing: For Australian corporation

25、s, the first reporting year will be 1 July 2019 - 30 June 2020 with the reports due by 31 December 2020. Entities will need to report under the Commonwealth Act if they carry on business in Australia with a minimum annual consolidated revenue of $100 million. Entities in New South Wales will be obli

26、ged to report under the NSW Act if they have a turnover of $50 million. Oversight: A dedicated Business Engagement Unit in the Department of Home Affairs will promote best practices, provide training and support for companies, and administer a central repository of the Modern Slavery statements that

27、 will be made publicly available (see key features and requirements here). The general consensus has been that the central repository will facilitate the direct comparison of statements. Amendments passed with the Bill empower the responsible Minister to publish details of non-compliant entities. Go

28、vernment contracts exposed: Importantly, government entities will also be required to report under the Act, meaning that companies in sectors that significantly contract with government will be required to provide such information to government department, potentially subject to audit. Penalties may

29、 follow: While there have been calls for the bill to introduce penalties for non-compliance with reporting obligations and establish a compensation fund for victims, the legislation is a significant step forward, and we expect it to be strengthened over time.Figure 2: Modern Slavery Act reporting re

30、quirementsNo.Description1Identify the reporting entity. 2The entitys structure, operations and supply chain.3Risks of modern slavery practices in the entitys operations and supply chain and any entities owned or controlled by the reporting entity. 4Actions taken to assess and address modern slavery

31、risks, including due diligence and remediation processes.5How the entity assesses the effectiveness of its actions. 6The process of consultation with entities owned and/or controlled by the entity.7Any other information considered relevant.Source: KPMG, Risks, Rights and Responsibilities, A guide fo

32、r companies and investorsAustralias legal and policy frameworks reflect its international obligations to address human trafficking and slavery. The Australian Government uses the term human trafficking and slavery rather than modern slavery to describe the range of exploitative crimes criminalised u

33、nder Australian legislation. Australia has ratified a number of international instruments that form part of the international legal framework to combat human trafficking and slavery. Therefore the Modern Slavery Act is an umbrella legislation that institutes a reporting requirement for existing law

34、that addresses exploitative crimes, including the: Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery, ratified 1958; Convention against Transnational Organized Crime, ratified 2004; Protocol to Prevent, Suppress and Punish Traffi

35、cking in Persons, Especially Women and Children, ratified 2005; andWorst Forms of Child Labour Convention, ratified 2006.Inquiry in the NSW Modern Slavery ActWhile the Commonwealth legislation was being finalised, NSW pushed forward with its own efforts to regulate modern slavery. The New South Wale

36、s Modern Slavery Act 2018, passed on 21 June 2018, establishes an Anti-Slavery Commissioner for the state and introduces reporting requirements for companies with an annual turnover between $50 million and $100 million. The Act also imposes criminal penalties on commercial organisations, which fail

37、to meet their reporting requirements or which provide false or misleading information in their modern slavery statements.A committee, tasked with examining consultation drafts prepared by the NSW Government of the Modern Slavery Amendment Bill 2019 and Modern Slavery Regulation 2019, released their

38、report including recommendations on 25 March 2019. We provide a brief summary of this report below. Need for a national framework: The Inquiry found that a comprehensive modern slavery legislation enacted by the Commonwealth that addresses modern slavery across all Australian states and territories

39、within a single uniform framework, would be preferable over state-based legislation, including the NSW Modern Slavery Act. Review the effectiveness of state and national legislation: The committee believes a statutory review should be incorporated into the Act, to be conducted in conjunction with th

40、e Federal Governments statutory review of the Modern Slavery Act 2018 (Cth). Harmonise the reporting threshold: The committee recommended that the NSW Government work with the Australian Government to seek harmonisation of the reporting threshold, ideally at $50 million consolidated revenue. Repeali

41、ng the section that allows for additional constraints for a person convicted of a modern slavery offence: S 29 of the Act provides for the making of modern slavery risk orders. These orders constrain the liberties of a person convicted of a modern slavery offence, on top of any sentence served, to r

42、educe or manage the risk of that person committing a further offence. The committee supports the proposal to repeal this section. Blood and blood products: One of the modern slavery offences listed the NSW Act is s 32 of the Human Tissue Act 1983, which makes it an offence for a person to enter into

43、 a contract or arrangement, for valuable consideration, relating to the sale or supply of human tissue. Any activity that occurs in another country that would be a breach of s 32, had the activity occurred in New South Wales, even if the activity is legal in the other country, is considered modern s

44、lavery under the NSW Act. The NSW Government advised that this may inadvertently impair the ability of NSW Health to source blood and other blood products from comparable overseas countries for NSW. The committee recommends making it clear that organ trafficking is a modern slavery offence, but that

45、 overseas activity in relation to the sale and supply of blood and non-organ tissue is not. This will aim to ensure the continuing supply of blood and blood produces from overseas countries.Figure 3: Summary of all recommendations from the inquiryNo.TopicDescription1Amendments and timeframeIntroduce

46、 amendments to the Act taking into consideration the comments and recommendations of the committees report, with the aim of the Act commencing on or before 1 January 2021.Statutory review with federal legislationReplacing turnover with consolidated revenueInclude a statutory review of the Act to be

47、conducted in conjunction with the Australian Governments statutory review of the Modern Slavery Act 2018 (Cth).Amend the reporting threshold terminology to replace the term turnover with consolidated revenue.Work with businessesContinue to work with businesses which meet the reporting threshold to e

48、nsure that reporting requirements are as simple as possible and clearly explained in the guidance material.5Harmonise with federal legislationWork with the Federal Government to seek harmonisation of the reporting threshold, ideally at $50 million consolidated revenue.24.Specify relevant authorityAm

49、end the Act to specify a relevant authority responsible for conducting prosecutions that involve breaches of sectionNon-profitsReassess the exemption for charities and not-for-profit organisations.Non-profitsDo not include an exemption for not-for-profit registered clubs.FranchisesAnti-Slavery Commi

50、ssioner examines and report on matters regarding the appropriateness of bringing franchisors, on behalf of franchisees not otherwise captured by the Modern Slavery Act 2018, under the state legislation.10Voluntary reporting under thresholdFinalise the development of a voluntary reporting mechanism f

51、or businesses falling under the $50 million reporting.Government agencies.Council procurementLegislate for modern slavery procurement and reporting obligations for local councils equivalent to those imposed onAct 1995 (Cth).Forced marriageBring section 93AC of the Crimes Act 1900 into line with the

52、current definition of forced marriage in the Criminal CodeChild abuseResolve the issues raised by Legal Aid NSW in relation to section 91G of the Crimes Act 1900 in relation to using a child for the production of child abuse material.Retain the reference to section 32 of the Human Tissue Act 1983 as

53、 a modern slavery offence but create an exemptionBlood productsto ensure that NSW Health and other relevant organisations can continue to source blood and other blood products from comparable overseas countries.Payments to victimsGive victims of acts of modern slavery access to recognition payments

54、under the Victims Rights and Support Act 2013.16Victims rightsEnsure that the amendments made to the Victims Rights and Support Act 2013 are based on the current version of that Act.17Forced marriage taskforceEstablish a working group to develop further amendments to the Crimes (Domestic and Persona

55、l Violence) Act 2007 to protect potential victims of forced marriage.Source: Final Report No.56 - Modern Slavery Act 2018 and associated matters - 25 March 2020, Credit Suisse estimatesRegional and international contextAccording to the International Labour Organization and the Global Slavery Index b

56、y the Walk Free Foundation, at any given time in 2016, an estimated 40.3 million people in the world were in modern slavery, their work worth the equivalent of USD 150 billion in annual profits more than the 2017 combined profits of Apple, Samsung, Toyota, Microsoft and Facebook. Key data points inc

57、lude: 24.9 million people experience forced labour and 15.4 million are in forced marriages; 16 million people are exploited in the private sector; One in four victims are children; Two-thirds of slaves, or about 25 million people, are in the Asia Pacific region; and An estimated 15,000 people in Au

58、stralia are in slavery.Subjecting a person to slavery or conditions akin to bondage, breaches fundamental human rights and is a crime under international law as well as most national jurisdictions, including Australia. Learn more about the legal framework from Anti-Slavery Australia. Other legislati

59、ve initiatives around the world addressing modern slavery include: The UK Modern Slavery Act (on which the Australian bill is modelled); Provisions of the US Tariff Act (banning import of forced labour goods) and US Dodd- Frank Act (conflict minerals reporting); The California Transparency in Supply

60、 Chains Act; European Union regulation on conflict minerals; and Human rights due-diligence laws in France and the Netherlands, and now under consideration in Germany and Switzerland. In the United States, the Federal Acquisition Regulation Rule on Combating Trafficking in Persons took effect during