Human Rights in the Supply Chain: An Australian Business Guide

Global supply chains have enabled unprecedented prosperity, but they’ve also created opportunities for exploitation. Workers in developing countries—manufacturing products for Australian consumers—often face wage theft, unsafe conditions, excessive hours, discrimination, and denial of freedom of association. For Australian businesses, protecting human rights across supply chains isn’t just ethical; it’s a legal, reputational, and operational imperative.

This guide provides practical strategies for identifying human rights risks in your supply chain and implementing effective remediation. For context on broader supply chain governance, see our guide to Modern Slavery Act compliance.

Understanding Human Rights in a Supply Chain Context

The Universal Declaration of Human Rights

The starting point is the Universal Declaration of Human Rights (UDHR) and related international instruments:

• Right to life, liberty, and security
• Freedom from slavery, forced labour, and trafficking
• Right to fair wages and reasonable working hours
• Right to a safe, healthy working environment
• Right to freedom of association and collective bargaining
• Right to non-discrimination
• Right to privacy and family life
• Children’s rights, including protection from child labour

Salient Human Rights Issues in Global Supply Chains

The most common supply chain human rights violations include:

• Wage theft and underpayment: Workers paid below minimum wage or not receiving full wages owed
• Excessive working hours: Forced overtime without consent or compensation
• Unsafe conditions: Inadequate safety equipment, hazardous materials exposure, poor ventilation
• Forced labour: Workers coerced into employment through debt bondage or confiscation of documents
• Child labour: Children engaged in work that harms their development and education
• Discrimination: Based on gender, ethnicity, disability, or caste
• Denial of voice: Suppression of unions, worker grievances, and collective bargaining
• Reproductive rights violations: Forced pregnancy testing or contraceptive use as employment conditions

Why Human Rights Management Matters for Australian Businesses

Legal Obligations

The Modern Slavery Act 2018 requires large organisations to assess and report on human rights risks in supply chains. Beyond this, Australian common law recognises duty of care. If your organisation knows about supply chain human rights abuses and fails to act, you may face legal liability.

Investor Expectations

Major Australian and global investors increasingly screen supply chain human rights practices. Poor performance affects your access to capital and cost of funds.

Customer and Brand Risk

Consumers—especially younger Australians—increasingly expect brands to take supply chain human rights seriously. Supply chain scandals damage reputation and customer loyalty.

Operational Risk

Supply chain human rights problems create operational risks: labour unrest, production disruptions, quality problems, and reputational crises.

Talent Acquisition and Retention

Skilled employees want to work for organisations they respect. Supply chain exploitation damages employer brand and makes recruitment harder.

Building a Human Rights Due Diligence Program

1. Establish Human Rights Policy

Start with a clear, board-endorsed human rights policy that:

• Commits your organisation to respecting internationally recognised human rights
• Extends to employees, contractors, suppliers, and business partners
• Applies across all jurisdictions where you operate
• Specifies accountability and governance mechanisms
• Commits to remedy for human rights impacts you’ve caused or contributed to

Ensure the policy is accessible, translated, and communicated to all stakeholders. Make it clear this isn’t optional corporate niceness—it’s core to how you operate.

2. Map Your Supply Chain

Create a comprehensive understanding of your supply chain:

• Primary suppliers and their locations
• Secondary suppliers (suppliers to your suppliers)
• Labour types and volumes at each tier
• Key commodities and raw materials sourced
• Geographic concentration of sourcing (single-source vs. diversified)

This is an ongoing process. Supply chains are complex and constantly changing. You’ll continually discover new tiers.

3. Assess Human Rights Risks

Identify where human rights violations are most likely:

Industry Risk

Some sectors are inherently higher-risk:

• Garments and textiles
• Agriculture and food production
• Electronics and technology
• Construction and infrastructure
• Mining and extraction
• Retail and consumer goods

Geographic Risk

Countries with weak governance, low wages, high poverty, and limited labour law enforcement are higher-risk:

• Bangladesh, Vietnam, Cambodia in garments manufacturing
• India, Thailand, Indonesia in agriculture
• Democratic Republic of Congo in mining
• Philippines in electronics assembly

Supplier-Specific Risk

• Large, labour-intensive suppliers are higher-risk than small operations or automated facilities
• Suppliers with history of labour issues are higher-risk
• Suppliers reliant on migrant workers are higher-risk
• Suppliers with high turnover are higher-risk (suggests poor conditions)

4. Conduct Human Rights Due Diligence Assessments

For high-risk suppliers, conduct detailed assessments:

Desktop Assessment

Before any site visit, research:

• Supplier history and track record
• Regulatory compliance records
• Media reports and NGO investigations
• Labour standards certifications (Fair Trade, SA8000, etc.)
• Worker and community feedback

On-Site Audit

Conduct in-person assessments examining:

• Employment records and contracts (are they documented? in workers’ languages?)
• Wage records and payslips (are workers paid on time? Are deductions excessive?)
• Working hours and overtime (are hours reasonable? Is overtime voluntary and compensated?)
• Safety conditions (protective equipment, hazard controls, incident records)
• Freedom of movement (are workers free to come and go?)
• Access to grievance mechanisms (can workers safely report problems?)
• Diversity and inclusion (are all workers treated fairly regardless of demographic characteristics?)
• Child labour and youth employment protections

Worker Interviews

Conduct confidential interviews with workers (not just management-selected representatives):

• Work environment and conditions
• Wage adequacy and payment practices
• Safety concerns and incidents
• Freedom to speak up and report concerns
• Discrimination and harassment experiences

5. Engage Suppliers on Remediation

When you identify human rights risks or violations:

Communicate concerns clearly: Specific, evidence-based feedback about what needs to improve.

Provide support for improvement: Don’t just demand change. Offer technical assistance, connect suppliers to resources, and allow reasonable timelines for remediation.

Build capability: Many suppliers lack expertise in human rights management. Provide training on labour law, worker rights, safe practices.

Follow up relentlessly: Verify improvements through repeat audits and worker feedback. Make clear that persistent violations will trigger supplier disengagement.

6. Establish Grievance Mechanisms

Create safe channels for workers to report human rights concerns:

• Hotline or digital platform for anonymous reporting
• On-site grievance officers at supplier facilities
• Access to union representatives or NGOs
• Protection from retaliation for raising concerns
• Clear investigation and resolution processes

7. Implement Remediation for Identified Harms

If human rights violations are substantiated:

• Work with affected workers to provide direct remedy (wage recovery, medical treatment, etc.)
• Collaborate with NGOs and labour organisations that specialise in worker support
• Ensure the supplier takes corrective action to prevent recurrence
• Consider whether the supplier relationship should continue if remediation is inadequate

Managing Human Rights Across Different Supply Chain Tiers

Tier 1 (Direct Suppliers)

You have the most control here. Conduct regular, detailed due diligence. Require contractual commitments to human rights standards. Conduct announced and unannounced audits.

Tier 2 and Beyond

You have less direct visibility. Strategies include:

• Require Tier 1 suppliers to conduct due diligence on their suppliers
• Develop incentives for transparency (e.g., preferred supplier status for those with verified Tier 2 audits)
• Conduct spot audits of Tier 2 suppliers in high-risk areas
• Join industry initiatives that pool intelligence on supply chain risks

Human Rights Due Diligence and AASB Compliance

If you’re subject to AASB S1/S2 disclosure requirements, human rights management is a key pillar of your social governance. Your due diligence processes, identified risks, remediation actions, and outcomes should be documented and disclosed. Transparency signals credibility and demonstrates systematic management.

Frequently Asked Questions

Human Rights as Competitive Advantage

Organisations that excel at supply chain human rights due diligence build genuine competitive advantages. They attract conscientious customers and investors, experience fewer supply chain disruptions, and develop reputations as responsible employers of choice. Supply chain human rights management isn’t a compliance burden—it’s foundational to sustainable, resilient business.

Ready to Strengthen Your Supply Chain Human Rights Program?