WA's clean energy plan & modern slavery risk
Fiona David, Principal and Founder of Fair Futures, and Shannon Hobbs
The Western Australian (WA) Government has allocated $2.8 billion in the 2023-2024 budget to spend on transitioning its energy system. This represents a critical investment in the clean energy transition, the achievement of which needs to be facilitated. However, in the race to rapidly transition to renewable energy sources, we cannot ignore the reality that some of the critical minerals and materials involved in manufacturing renewable energy technologies are sourced from, or processed in, markets where child labour and modern slavery are prevalent.
In our report, Modern slavery risk and WA's clean energy plan, we examine the intersections between WA’s energy transition and risk of modern slavery in the supply chains that sit behind the renewables we rely on.
What are the issues?
As we note in this report, polysilicon is the primary material in 95% of solar modules, of which 35% of the global supply comes from the Uyghur Region of Western China. It has been reported that state-sponsored forced labour of Uyghur people is being widely used in the mining and production of polysilicon in this region. Several major solar panel suppliers in the Australian market have been identified as having high exposure to risk of reliance on Uyghur forced labour.
Furthermore, there are modern slavery risks associated with the production of batteries, a key component of which is cobalt. The Democratic Republic of Congo (DRC) produced 74% of the world’s cobalt supply in 2021. There is evidence of widespread child labour in DRC cobalt mines, as well as hazardous working conditions and pay below the living wage. In response to these risks, batteries with less, or no, cobalt have been developed. However, these batteries still contain lithium, a growing proportion of which is also being produced in the Uyghur Region.
Policy landscape
The risk of modern slavery in renewable supply chains needs to be understood and managed by governments and businesses involved in the energy transition.
While the Modern Slavery Act 2018 (Cth) requires large corporations and the Commonwealth to report on steps they are undertaking to manage modern slavery risk, the Act does not apply to the State and Territory governments. In the WA context, there have been only very limited efforts made to address modern slavery risk in relation to procurement. As a result, WA government procurement of renewables may be progressing with limited or even no due diligence being undertaken on modern slavery risk.
Government agencies play a critical role in ensuring government funds are spent in line with community expectations on value for money but also values. This has been recognised in NSW where the Government has introduced specific laws requiring “reasonable efforts” to be undertaken to manage modern slavery risk in public procurement. Other State and Territory governments are yet to follow.
What are the solutions?
In our paper, we recommend the following short term actions from the WA Government:
1. Direct WA Government agencies to voluntarily report under the Federal Modern Slavery Act. This simple step would help to bring focus to the issues at hand quickly, and help align Federal and WA Government procurement.
2. Ensure decisions around expenditure of public funds on renewable energy are subjected to human rights risk management. Key decisions include major government procurement but also include investment decisions, loans, grants, procurement and household subsidies that are supporting the energy transition.
3. Promote a collaborative approach to managing these risks. Shared efforts on modern slavery, should be a pre-competitive issue. Regulators could support industry by making this clear. Shared efforts on risk management will cut valuable time and cost right across the economy. Key steps that the WA government could take include:
a. Engaging with the NSW Government to learn from its experience of implementing modern slavery risk management in public sector procurement.
b. Seeking to leverage the existing Intergovernmental Network on Modern Slavery in Public Procurement, to identify and promote good practice in modern slavery risk management.
c. Engaging with the Federal government to create a forum where industry, government and civil society organisations can work together
to identify known human rights risks that
are being experienced across key industries, prioritise the different challenges, and problem solve issues as they arise.
In the longer term, Australian governments will need to respond to global regulatory trends that increasingly require human rights and environmental due diligence on business, but also government procurement. Without this, WA and Australia risk becoming a dumping ground for high risk products that will increasingly be excluded from major global markets through business and human rights requirements.
