Why Brazil needs new legislation for transparency in supply chains and due diligence on human rights

Article by Caio Borges, Coordinator of Development and Socioenvironmental Rights

Article originally published in CORE Coalition.

Brazil is losing ground in the eradication of modern forms of slave labour in its supply chains. Lessons learned with the implementation of the United Kingdom Modern Slavery Act could provide the starting point for future legislative advances in the largest South American country.

Brazil’s fight against modern slavery

Brazil, the world’s 8th largest economy, plays an important role in the global commodities trade. The country is the principal supplier of beef in the world, followed by India and Australia. It is also the main exporter of coffee in the world. According to the International Coffee Organisation (ICO), the country produced over 54 million bags of coffee in 2018. Brazil is also a significant exporter of orange juice, chicken, iron, soya beans and sugar cane.

Brazil is an important supplier of raw materials and manufactured products to consumer markets in developed and developing countries. Those who intend to trade with Brazilian counterparts should be aware of the risks concerning human rights and labour violations in its supply chains, risks that are on the rise due to changes in the political and institutional climate in Brazil.

Changes have been put forward that, if approved, will dilute the concept of “slave-like conditions” (Brazilian legal concept of modern slavery), with the removal of the current legal definition of degrading conditions and exhausting working hours. This situation has drawn the attention of UN human rights specialists, who have urged the Brazilian government to take urgent measures to suspend any action that may reduce people’s protection against modern slavery or undermine corporate regulations.

The Brazilian inspection system is currently under-financed and under-staffed, to the point where the number of operations has reached a historical low. In 2017, only 341 workers were rescued and 88 operations carried out, the lowest number since the early 2000s, when current policies were introduced.

The main mechanism in the country for transparency in cases of slave labour – the so called ‘dirty list’ – is vulnerable to legal attacks originating in sectors that are historically problematic in terms of exploiting workers, most notably agriculture and civil construction.

Immediately after being sworn in, President Jair Bolsonaro abolished the Labour Ministry and redistributed its responsibilities and resources to another two ministries (Economy and Human Rights, Family and Women). This initiative raised concerns about the continuity and coherence of policies against modern slavery, but so far publication of the ‘dirty list’ has not been affected.

Learning from the UK Modern Slavery Act

In order to maintain leadership in the global struggle against modern slavery and to strengthen standards of protection, Brazil must adopt new legislation on transparency in supply chains.

Based on recent experience of legislation for transparency of measures to combat modern slavery in countries like the United Kingdom and Australia, Brazil could enact new legislation that would simultaneously fill the gaps in its legal and political structure and would also address important factors that impede the full reach of the objectives of existing legislation on the publication of reports.

In the United Kingdom, approval of the Modern Slavery Act in 2015 was an advance that resulted from more than a decade of steady mobilisation and campaigns by civil society organisations and their allies in parliament, in the private sector and in research institutes.

The act has been in force for four years and the principal interested parties in the United Kingdom are now assessing achievements and intensely debating where to go from here. The perception among the main organisations that endorse the act and monitor its implementation is that it has succeeded in making British businesses aware of human rights conditions in global supply chains, but that more needs to be done in bringing about a change in corporate culture.

In September the UK Home Secretary commissioned an independent review of the act. The interim report on the review of the clause Transparency in Supply Chains, reflecting many of civil society’s pleas, stated that there were significant weaknesses in effectively applying the legislation.

His recommendations include stricter inspection mechanisms, including sanctions on companies that do not comply with the law and a central public record to facilitate external monitoring of the quality of companies’ reports. Responsibility for collecting, disseminating and analysing reports currently lies with independent organisations, like the Business and Human Rights Resource Centre.

A further fundamental issue is the need to set up criteria for publishing reports. The publication of significant information on identified risks and impacts and the measures taken to handle them is crucial in guaranteeing that the report is not merely a form-filling exercise.

Furthermore, guaranteeing consistency across different sectors presents a challenge. Experience shows that companies focused on consumers tend to provide more substantial information in their reports, meaning that mechanisms to recalibrate costs to reputation (and legal) for non-compliance with the law are essential in standardising the application of legislation.

Implications for future legislation in Brazil

These and other spiny problems must be properly handled in future public and legislative debates on the adoption of new legislation on transparency in the Brazilian supply chain. Brazil has good credentials for its innovative history of policies and mechanisms to combat modern slavery and could be even more ambitious than the United Kingdom in drafting its own legislation.

Areas where improvement would be very welcome include publication of a full list of suppliers, if not by all companies, at least by the most critical sectors, as defined in accordance with robust methodology and criteria. This requirement could be progressive and coordinated, in a way that alleviates concerns over trade secrets and safeguarding competitive advantages.

A critical, independent analysis of existing legislation on the publication of reports revealed that excessively limited regulations contributed very little to actually improving working conditions, or to changing corporate policy and practice. In order to avoid a legislative failure, Brazil could consider linking a transparency law to a requirement to carry out due diligence on human rights. Now would be a suitable moment as there is a growing worldwide trend towards adopting legislation making due diligence in human rights obligatory.

This is an opportune moment for the Brazilian government, civil society and the business and academic communities to come together creatively to develop new legislation to improve corporate responsibility for workers’ rights in supply chains and to pave the way for inclusive, sustainable development, in line with human rights.

Caio Borges is the Coordinator of Development and Socioenvironmental Human Rights at Conectas Human Rights, in Brazil. He attained a Master’s degree in Law and Development at the Getúlio Vargas Foundation and a Doctorate at the University of São Paulo.