Growing Due Diligence requirements . What importers need ... · • identifying and subsequently...
18
Growing Due Diligence requirements . What importers need to do. Copyright 3DL and corporate partners - not to be reproduced or used without prior written consent of 3DL.
Transcript of Growing Due Diligence requirements . What importers need ... · • identifying and subsequently...
Growing Due Diligence requirements .
What importers need to do.
Copyright 3DL and corporate partners - not to be reproduced or used without prior written consent of 3DL.
•Globally, we have seen a progression from soft law to hard regulation in the area of responsible business•Action required – Due diligence• The devil in the detail. •Now could be a good time to get used to the Due Diligence approach
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
The situation in Australia
Already in law in Australia :
• The Illegal Logging Prohibition Act 2012 and Regulations.
• CUSTOMS (PROHIBITED IMPORTS) REGULATIONS 1956 - REG 4C Importation of asbestos
Coming down the track sooner rather than later.
• Modern Slavery Bill anticipated in 2018, NSW legislation already passed.
• Conflict mineral legislation similar to current US legislation
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
The role of Due diligence
• The legislation understands that the importer has no real control over the manufacturer or their sourcing.
• The legislation uses a burden of Due Diligence on the importer as a basis of a customs declaration as an alternative to prohibition or expensive destructive testing.
• Due diligence is this context is: “The action that is considered reasonable for importers to take in order to …..”
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
The Illegal Logging Prohibition Act 2012
• The Illegal Logging Prohibition Act 2012 makes it a criminal offence to intentionally, knowingly or recklessly import illegally logged timber products into Australia or to process Australian grown logs that have been illegally logged.
• From 1 January 2018 companies must have a documented due diligence system to meet the requirements the Act.
• The Department of Agriculture and Water Resources has published it “Illegal Logging Compliance Plan 2017”
• This SxxT is real!Copyrite 3DL and corporate partners - not to be reproduced or
used without proir written consent of 3DL.
What do you need to do?
•The Importer needs a documented and updated Due Diligence system that conforms to the expectations of the Regulations.•No documented systems = Non compliance. •If non compliance is considered deliberate or opportunist = Prosecution
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
Steps for Due diligence - Gather data• a) Type of product and trade name.
• b) Common name, genus and scientific name of tree species in the product
• c) Country, region and forest harvesting unit – is this on the Departments Country Specific Guidelines?
• d) Country where the product is manufactured
• e) Supplier details
• f) Quantity
• g) Any documentation
• h) Legality Framework Certificates / Licenses including FSC or PEFC Forest Management certification numbers and/or FLEGT licence numbers. FSC and/or PEFC Chain of Custody certification
• i) Documents specified in Country Specific Guidelines (Government document).
• j) Evidence that timber in product hasn’t been illegally logged :
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
What happens if low risk cannot be determined?
•My advice - Don’t go there
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
Update of the system
• Annual update of the system is required.
• Changes in source, country, region, need to be considered.
• Changes in products and species need to be considered.
• Changes in suppliers need to be considered.
• Documentation needs to reflect the processes or review and change.
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
CUSTOMS (PROHIBITED IMPORTS) REGULATIONS 1956 - REG 4C Importation of Asbestos
• It is the responsibility of importers and exporters to ensure they do not import or export prohibited goods where Asbestos is present at the time of import or export.
• There are factors that increase the risk of importing goods that contain asbestos. Definitive enquiries should be made with suppliers
• Contractual obligations with their suppliers that specify nil asbestos content• Regular risk assessment and quality assurance processes, that take into account:
• what raw materials are used in the manufacture of the goods• where manufacturers outside Australia source their raw materials• identifying and subsequently minimising asbestos-risk activities at the point of manufacture.• supply chain declarations, established quality assurance requirements and risk management reports, may be
considered for assurance of no asbestos content.Copyrite 3DL and corporate partners - not to be reproduced or
used without proir written consent of 3DL.
CUSTOMS (PROHIBITED IMPORTS) REGULATIONS 1956 - REG 4C Importation of Asbestos
Importers need to “obtain sufficient information, prior to shipment, when unsure of any asbestos content. If they’re unable to produce this evidence, then testing may be needed.
Prior to importing goods Importers can import samples into Australia (with prior Ministerial permission) for testing, or undertake testing overseas.
For testing in Australia, the ABF will only accept certification from a laboratory, that is accredited by NATA to undertake asbestos testing, that confirms asbestos was not detected.
For testing undertaken overseas, the ABF will only accept certification confirming no asbestos was detected in samples from a laboratory accredited to undertake asbestos testing by a NATA-recognised equivalent through a Mutual Recognition Arrangement (MRA). The report must indicate that no levels of asbestos were detected, regardless of the testing standard of that economy.
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
Modern Slavery
In December 2017 the report by the Joint Standing Committee on Foreign Affairs, Defence and Trade concluded that Australia needs a comprehensive suite of new Federal laws to stamp out modern slavery. A Bill for an Australian Modern Slavery Act to Parliament was introduced in June 30, 2018.
https://www.homeaffairs.gov.au/about/consultations/modern-slavery-supply-chains-reporting-requirement
Australian law is likely to be modelled on the current UK Modern Slavery Act 2015
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
Modern Slavery what is likely to be required?
Company above a certain turn over ($100 M) must a commitment to reduce modern slavery. They will also need to produce a Modern Slavery statement. This must be reviewed and updated every financial year.
Proofs to back up your statement.
1) What are your due diligence processes in relation to slavery and human trafficking in your business and supply chains?
2) Can you identify the parts of your business and supply chains where there is a risk of slavery and human trafficking taking place?
3) What steps have you taken to assess and manage that risk?
You will then be required to produce an annual assessment of how effective your efforts have been.
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
Modern Slavery NSW
This is already passed into law.
It follows the same pattern as predicted for the commonwealth Legislation. Statement, Due diligence, annual review etc.
$1.1 M fines for not complying.
Lower company threshold of $50M
Copyright 3DL and corporate partners - not to be reproduced or used without prior written consent of 3DL.
Conflict minerals
If the income derived from the trading of these minerals is used to finance armed conflict they are classified as “Conflict Minerals”.
The term Conflict Minerals describes 4 elements – Tin, Tantalum, Tungsten and Gold, called 3TG. But is extendable to any mineral shown to finance armed conflict
Australian Mining companies have called for US style legislation.
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
Conflict minerals
The US "Dodd-Frank Act" includes a requirement that companies using Gold, Tin, Tungsten and Tantalum make efforts to determine if those materials came from Conflict areas and if so, to carry out a "due diligence" review of their supply chain to determine whether their mineral purchases are funding arms.
The key focus is Democratic Republic of Congo (DRC) and surrounding countries (DRC region),
Due Diligence is a Third party exercise.
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
Where to from here? Key points
• For all of the legislation, even if you think you don’t have an issue you need to document a due diligence system showing why you don’t have an issue.
• If you don’t know for sure ask your supplier for the information.
• If you need help interpreting the information and developing the due diligence system, we are here to assist you and your clients ensure responsibilities are being met.
CONTACT USCopyrite 3DL and corporate partners - not to be reproduced or
used without proir written consent of 3DL.
What we are offering• Our experts will put together the due diligence system based on
information from your suppliers. For a simple system the cost is as low as $800+gst.
• We can provide and annual update and review service.
• We can add new items to your system as your business grows.
Write down these contacts!
• E: [email protected] M: 0404 09 1170
• E: [email protected] M: 0428 570 762
Copyrite 3DL and corporate partners - not to be reproduced or used without proir written consent of 3DL.
