South Africa does not have any legislation which places direct cross-border on corporates to have regard to human rights concerns in their supply chain. Accordingly corporates are not required to identify, report or mitigate risks in this area. At present, there is not strong political appetite for the development of any modern slavery act equivalent in the country.
However, South Africa continues to have a strong and active civil society presence which routinely calls corporates to account for any failure to adhere to their obligations in respect of human rights and for any complacency towards abuses by role players in their supply chain. Class actions are becoming increasingly popular. Recently civil society organisations brought an action against large mining houses in South Africa on behalf of various underground gold mineworkers who contracted silicosis or tuberculosis as well as the dependants of such miners whose disease proved fatal. The parties reached an out of court settlement which required the mining houses to establish a significant compensation fund for affected miners and their families.
The country has a progressive Constitution which uniquely requires private individuals and companies to respect and promote human rights in certain circumstances. Various pieces of legislation translate these responsibilities into tangible obligations requiring corporates to proactively uphold human rights. By way of example:
- the Companies Act, 2008 which requires certain companies with a high public interest rating (based on turnover, number of employees and other factors) to establish a social and ethics committee which reports on issues related to, inter alia, social and economic development, good corporate citizenship and environment. This reporting should include human rights related concerns and risks relevant to the company.
- the Employment Equity Act, 1998, which requires companies to take active steps to eliminate discrimination and sexual harassment, and to promote employment equity in the workplace or to face financial consequences. A number of reporting obligations are imposed and penalties for non-compliance are substantial.
- the National Environmental Management Act,1998, which requires mining companies to report on the social, economic and cultural aspects of mining.
- The Basic Conditions of Employment Act, 1997 which outlaws child labour and forced labour.
We again note that these obligations are restricted to local operations.
Many corporate entities in South Africa and subject to foreign ownership or control and are thus indirectly responsible for reporting on and implementing BHR and modern slavery requirements.
As a result of civil society pressure, large scale consumer focused businesses are moving towards voluntarily evaluating their supply chains to identify any modern slavery and related risks and providing high level reporting of their actions. Aware of the reputational risk and developing international standards investors are increasingly placing more demands on corporates to be aware of human rights standards adopted throughout their value chain.
What do you predict for 2021?
We envisage that the pressure on corporates to consider their human rights and environmental risks will continue to rise. Given the increased participation of foreign companies within the South African market, it is likely that there will be increased pressure on local corporates to implement BHR and modern slavery concepts as part of best practice, even if there is no direct obligation on them to do so.
We anticipate that Parliament will begin to be lobbied to enact legislation including mandatory supply chain reporting requirements for companies with a high public interest score. It is anticipated that this will be driven by certain sectors where there is a strong incentive by larger corporates to avoid the erosion of their market share by entities that are able to market at lower prices as a consequence of questionable supply chains.