Modern Slavery Statement 2022/23
This statement covers the following topics:
1. Message from our GESB Chair and CEO
Modern slavery can affect people in any country. It can occur in any sector or industry, at any point in a supply chain. According to the latest Global Estimates of Modern Slavery, there were more than 50 million victims of modern slavery worldwide in 2021, an increase of around 10 million people compared to 2016 estimates1.
With around 245,000 members and over $36 billion in funds under management (as at 30 June 2023), we are the largest superannuation fund in Western Australia. We have investments across a range of industries, both in Australia and globally, and we engaged more than 40 service providers in 2022/23.
We believe we have a responsibility to our members, stakeholders and the broader community to address the risks of modern slavery, a significant global human rights issue. To achieve this aim, we established a modern slavery working group in 2021 with representatives from all key functions across the business.
We have voluntarily prepared this Modern Slavery Statement, which relates to the 2022/23 financial year. Our statement outlines the steps we have taken to identify, assess and address the risks of modern slavery in our supply chains and operations, including our investments.
In our second year, we continued to expand our understanding and refine how we are managing our exposure to modern slavery risks. Some of our initiatives included:
- Working with our asset consultant to expand our modern slavery risk assessment to include our Shares investment portfolio
- Establishing a framework for identifying higher risk suppliers in relation to modern slavery and committing to annual risk assessments of these companies
- Conducting training to increase staff awareness of the issue of modern slavery and encourage their involvement in the working group's actions and initiatives
There is always more work to be done to address the issue of modern slavery. We are committed to continuous improvement and will share more details as our work progresses.
Jo Gaines - Chair
Ben Palmer - Chief Executive Officer
2. Introduction
About GESB
The Government Employees Superannuation Board (GESB) is a statutory authority established by the Government of Western Australia in accordance with the State Superannuation Act 2000 (SSA). As a Western Australian statutory authority, GESB is regulated by the State Government, rather than the Australian Government like most other superannuation funds.
Our office is located in Perth and employed 74 staff as at 30 June 2023. We do not own or control other entities.
Our purpose is to help members achieve a quality retirement. In carrying out our functions, we are required to act in the best interests of our members, and ensure that members and employers are fully informed of their rights and obligations under the SSA.
Learn more about our purpose, values and history as an organisation.
Our schemes are consistent with superannuation national standards where practicable
Western Australia is a signatory to the ‘National Superannuation Standards’ Heads of Government Agreement (HoGA) with the Commonwealth. Under this agreement, the State Government is committed to conform to the Commonwealth’s Retirement Incomes Policy to the best of its endeavours.
Broadly, this means that the governance and superannuation benefits we provide through our schemes are consistent with national standards. These standards include rules around preservation and protection of benefits, vesting of benefits, member disclosures and adequate prudential and supervisory arrangements.
This is our second Modern Slavery Statement
This statement outlines the work we have completed so far in identifying modern slavery risks in our operations, supply chains and investments.
Although we're not a 'reporting entity' under the Australian Modern Slavery Act 2018 (Cth), we have voluntarily prepared this statement in line with our responsibility to members and stakeholders to manage modern slavery risks. We are committed to identifying modern slavery risks within our operations and supply chains, to avoid directly or indirectly contributing to modern slavery.
Our Board acknowledges the need to maintain high standards of ethical conduct for our Directors, management and staff. The decision to prepare this voluntary statement also aligns with two of our core values, ‘sustainable performance’ and ‘act with integrity’, and our overall social responsibility goals.
We are committed to regularly reviewing and updating our Modern Slavery Statement to share our continued work in this area.
What is ‘modern slavery’?
Modern slavery is defined in the Modern Slavery Act 2018 (Cth) as a group of practices which are considered major violations of human rights and serious crimes. These include people-trafficking, slavery, slavery-like practices (including forced labour and forced marriage) and the worst forms of child labour (including using children for prostitution or in hazardous work).
Modern slavery can affect any country, and can occur in any industry and at any point in a supply chain.
3. Our structure, operations and supply chain
By examining our structure, operations and supply chain, we aim to understand our exposure to modern slavery risks. With an enhanced understanding, we can then determine appropriate action to help address this significant global human rights issue.
GESB's risk of modern slavery practices
We consider modern slavery risks across the following areas of our operations and supply chain:
Procurement and outsourcing
- Administration services
- IT services
- Member insurance
Our procurement and outsourcing activity complies with the Western Australian Procurement Rules.
Investments
- Supply chain – investment managers
- Operations – custodian and asset consultant
Our investment approach adheres to the Prudential Guidelines for Investments issued by the Treasurer of Western Australia.
Internal operations
- Supply chain – business services suppliers
- Supply chain - professional services
- Employees
Our employment and remuneration policies comply with the Western Australian Public Sector General Agreement and our governing legislation.
3.1 Our structure
As a Western Australian statutory authority, we operate within the State Government’s policy framework. The WA Treasurer as our responsible minister administers the legislation which underpins our operations.
Our statutory framework is largely derived from the State Superannuation Act 2000 (SSA) and the State Superannuation Regulations 2001. Our functions under the SSA are to:
- Manage the Government Employees Superannuation Fund
- Administer our members’ super schemes
- Provide information, advice and assistance to the WA Treasurer on matters relating to super
- Provide or facilitate the provision of products and services to members of super schemes administered under the SSA or any other relevant law and employers in the WA public sector
- Perform any other functions required under relevant law
Our Board is accountable to the WA Treasurer for all matters relating to our operations. The Board comprises a Chair, three Employer Directors and three Member Directors.
The Chair is appointed by the Governor of Western Australia on the Treasurer's nomination after consultation with representative unions. The Employer Directors are also appointed by the Governor. Member Directors are appointed through elections conducted by UnionsWA.
Our Board operates within a corporate governance policy framework that incorporates legislative and regulatory requirements aligned to industry best practice and the Australian Securities Exchange governance principles.
3.2 Our operations
Our business comprises four main functions:
- Investments
- Finance and Business Services
- Superannuation Services
- Strategy and Member Experience
Our main areas of operation include providing superannuation and retirement products and services, and making financial investments on behalf of our members.
We manage superannuation accounts and investments for over 245,000 current and former WA public sector employees. We deliver cost-effective and trusted products, including insurance, and services to our members, employers and the state of WA.
We manage an investment portfolio of $36 billion. Of this, 91.5% ($33 billion) is managed for members in market-linked schemes, where members bear the investment risk, and $3 billion is managed for the state to support its defined benefit liabilities (information as at 30 June 2023).
Our people
As at 30 June 2023, GESB employed 74 staff, almost all of whom are based in Western Australia. As a Western Australian statutory authority, our staff are engaged under the Public Sector Management Act 1994 (WA) or the SSA, with most employed under the Western Australian Public Sector General Agreement (PSGA). Our remuneration policy complies with the PSGA and our governing legislation.
Our schemes
We administer the defined contribution and defined benefit superannuation schemes that form part of the established under the SSA and other defined benefit schemes for the State, and provide information and assistance to the Treasurer on superannuation matters.
Our Board also formulates and gives effect to an investment strategy for the fund to achieve prudent diversification and deliver returns that meet investment objectives. Our investment framework operates in accordance with the WA Treasurer's Prudential Guidelines for Investments.
We are primarily a self-funded agency, though we recover the operational costs of administering the State’s defined benefit schemes and other Government related activity, including the cost of government services, from the Consolidated Account.
3.3 Our supply chain
3.3.1 Service providers (other than investment managers)
To help us deliver high-quality, efficient and effective services to members, we use third party service providers for most of our key activities. We expect our service providers to operate ethically and responsibly. We achieve oversight and governance through formal contractual agreements and independent external reviews.
Our procurement processes
As a State Government agency, we comply with the SSA and the Western Australian Procurement Rules 2021 (WA Procurement Rules).
The WA Procurement rules streamline the State’s approach to procurement and:
- Promote the delivery of added sustainable economic, social and environmental benefits for Western Australians
- Reduce barriers to small and medium business participation
- Strengthen integrity measures to promote ethical and accountable practices
- Allow for coordinated whole-of-government procurement leadership, with localised accountability and decision making
Under these procurement rules, any service provider which fails to meet their obligations under the Australian Modern Slavery Act 2018 (Cth) will be barred from access to the Western Australian Government’s procurement contracts on goods, services and public works.
Our service providers in 2022/23
During 2022/23, we sourced goods and services from 40 service providers.
All of these service providers have offices located in Australia, with a small number of providers having headquarters located outside Australia.
Our service providers operate mainly in the information technology and industrial sectors which includes businesses such as professional services. Other service providers supply selected consumer staples and consumer discretionary services such as stationery, training and newspapers.
3.3.2 Investment managers
We invest our funds across a wide range of local and international investment markets, asset classes and strategies. This includes investments in cash, fixed income, public and private equity, property, infrastructure and hedge fund strategies.
This means we invest across a range of industries and businesses that operate all over the world, which can include exposure to the risks of modern slavery.
How we work with investment managers
Our investment managers buy and sell assets on our behalf. For example, our investment managers for Australian Shares work within our risk guidelines to decide which companies to buy and sell Shares in, and then place orders for those Shares.
This approach means we can use the skills of a range of investment managers from around the world and benefit from diversification in investment style. It allows us to maintain a balance of assets across a range of investment managers, which helps us to achieve our investment goals over the long term.
Engagement with investee companies is carried out by our investment managers. This is a key avenue for understanding the environmental, social and governance (ESG) risks in our investments, including the risk of modern slavery.
The appointment of investment managers
We appoint a diversified group of external investment managers to invest our funds. To avoid a concentrated exposure to a particular investment manager or a particular investment style, we typically appoint multiple investment managers in each asset class. Learn more about our investment managers.
The Western Australian Treasurer is responsible for approving investment managers in accordance with the Treasurer’s Prudential Guidelines for Investments. These guidelines also detail the kinds of investments permitted.
We regularly review our choice of investment managers. We understand their risk and return profiles and make sure that they meet our expectations.
4. Examining the risks of modern slavery practices
Modern slavery risk is primarily about risk to people. Regardless of the size, scale, location or industry, the operations and supply chain of any business can contribute to modern slavery practices.
Modern slavery conditions could be maintained directly through a business's operations or employment conditions, or indirectly through its actions or inactions which could facilitate or incentivise modern slavery. A business's operations, products or services could be also connected to modern slavery through the activities carried out by their service providers.
For this reason, we are committed to understanding the modern slavery risks which may exist within our operations, supply chains and investments – and how we can address these risks.
4.1 The risks of modern slavery in our internal operations
Our workforce allows us to deliver on our purpose to help our members achieve a quality retirement and our mission to responsibly manage our members’ retirement savings, deliver strong long-term investment returns and offer relevant support so members can make informed decisions.
Our staff have a range of specialised financial services, public sector and administrative skills. Most of our staff work in our Perth office in the Perth central business district, or remotely within reasonable proximity to the Perth metropolitan region.
One of our strategic objectives is to create positive and supportive organisation. This creates an environment where our staff approach every aspect of work ethically and adopt policies which allow us to operate transparently.
Although we hold investments in 38 countries through our investment managers, we do not operate in any foreign countries, and we directly engage a relatively small number of overseas institutions in relation to providing our designated services.
Based on our assessment of the above, we consider the risk of modern slavery within our internal operations to be low.
4.2 The risks of modern slavery in our supply chain and procurement processes
We have contractual and subscription relationships with a range of businesses who offer different products or services to support staff development and our delivery of superannuation products and investments on behalf of our members.
While we engage several service providers, our risk assessment focused on a subset of providers, most of whom are within professional and administrative services and supplies, including legal, consulting and accounting services.
This year, we expanded our initial high-level assessment of modern slavery risks in our supply chain to include a detailed evaluation using information from suppliers, as well as guidance from government agencies, global action tasks groups and research bodies.
Our risk evaluation considers four categories:
- Sector and industry
- Product and services
- Geography
- Supply chains
These categories align with the risk screening tool developed by the Australian Government to assess the risks of existing or new procurement contracts. All new suppliers are risk assessed before a contract is entered into. We have developed risk assessment criteria to determine the frequency of future risk reviews for all suppliers.
We also extended our risk assessment beyond our key providers to include 80% of our total suppliers.
As a result of our reviews, we concluded that:
- All suppliers were procured under the WA Procurement Rules, either through a State Common Use Arrangement or an agency-led Standing Offer
- The majority of the suppliers and contractors we procure goods and services from are based in Australia
- Where goods and services are procured from suppliers outside of Australia, we have taken steps to factor geographical modern slavery risk in our assessment of these suppliers
Based on our assessment above, we have determined a low to medium risk rating for our suppliers, with approximately 80% of the 108 risk elements rated low and the remaining 20% rated medium.
The medium risk rated elements were mostly attributed to the global footprint of the supply chain or the global span of our service providers.
No elements were rated high risk, and no country or companies are sanctioned or have beneficial owners listed as excluded individuals.
The suppliers that could not be rated for this statement will be considered in future modern slavery risk assessments.
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4.3 The risks of modern slavery in our investment activities
Our investment managers and underlying investments are an important part of our supply chain:
- We invest members’ super across a range of different asset classes and sectors, both within Australia and internationally
- We invest across 38 countries, with assets in a number of sectors including energy, information technology, materials, financial services and healthcare
- Our external investment managers are appointed for specific mandates to implement investment strategies and select underlying investments within asset classes
- As at 30 June 2023, our assets were managed under 44 different mandates by 34 investment managers
- Our external investment managers are located both within Australia and overseas and have their own operations and supply chains
We recognise that the scope of our investment allocation has the potential for exposure to the risks of modern slavery.
Industries and countries most affected by modern slavery
One way to determine our exposure is to identify the sectors and countries where modern slavery conditions are more likely.
According to Walk Free’s Global Slavery Index (GSI), countries that have the highest rates of modern slavery and are most vulnerable to modern slavery risk are often conflict-affected, with state-imposed forced labour and weak governance. In the latest edition of the GSI, Saudi Arabia, United Arab Emirates and Russia were among the top ten countries where modern slavery is most prevalent. Our exposure to investments listed in these countries comprised less than 0.1% of our portfolio as at 30 June 2023.
Sectors with increased risk of modern slavery practices typically involve unskilled or temporary labour, poor employee health and safety and/or material issues in supply chain management. Examples of high-risk sectors include hospitality, agriculture, cleaning and construction. Given our investment approach considers the broader share market, we will have exposure to companies within these sectors.
Within our unlisted property portfolio for example, we have exposure to property assets including retail (such as shopping centres), industrial (such as warehouses) and office properties. Essential to the property management of these assets is cleaning and security services, both which are identified as high-risk industries for modern slavery given the use of temporary or unskilled labour.
While the above helps to identify the risk and prioritise our efforts, we acknowledge that modern slavery exists in every country and across many sectors in which we invest.
The importance of environmental, social and governance (ESG) factors
As part of our due diligence, we review each investment manager’s investment approach to understand how they integrate ESG considerations into their investment decisions. This is carried out in conjunction with our asset consultant.
Some issues our investment managers consider as part of their investment approach include human rights, modern slavery, child labour and supply chain management.
The growing importance of ESG means it is now an integral part of our operational due diligence process. We aim to understand the ability of our investment managers to deliver the necessary operational standard and capabilities.
ESG is broader than what we invest in. It covers culture and workplace behaviour and should be considered alongside a review of our investment managers’ operational functions.
Determining the risks associated with investments made on our behalf
Where useful for our assessment, we will circulate a due diligence questionnaire prepared by the Financial Services Council to our external investment managers.
These questionnaires aim to help us better understand our investment managers’ modern slavery reporting obligations, governance and due diligence processes, operational and supply chain risk assessment outcomes and, importantly, the modern slavery risks associated with their investment activities.
We recognise that there is heightened risk of modern slavery in high-risk geographies and high-risk sectors, both of which we may have exposure through the investments our investment managers make on our behalf. This statement describes the initial steps taken to understand and assess the modern slavery risk of our Share portfolio.
Our ongoing commitment to addressing modern slavery risks
We continue to work with our external investment managers, ensuring that modern slavery risk is considered alongside other ESG risks when integrating ESG into investment decisions.
Our Investment team meets with our investment managers regularly, providing an opportunity to discuss ESG issues more broadly and/or to discuss any issues raised by the investment managers related to specific investments. Modern slavery forms part of these discussions.
Find out more about our approach to ESG, including human rights and labour related risks.
5. Our actions to assess and address the risks
In 2021, we established a dedicated working group to assess and implement modern slavery reporting requirements to help support better practices with respect to governance. Our working group includes representatives across all key functions of our business, including our Executive Management Group.
In the past year, our working group met five times to discuss and advance the actions listed in our previous statement, and to oversee this year's risk assessment. The outcomes of our work are summarised in the sections below.
Understanding the risks of modern slavery in our supply chain
In 2022/23, we continued to enhance our understanding of modern slavery risks in our supply chain by completing risk assessments for an increased number of our suppliers. We focused on incorporating modern slavery risk into our overall third-party risk management process, ensuring modern slavery will be considered alongside other risks for all new suppliers and existing contracts. In addition to modern slavery, other assessments undertaken on our suppliers include privacy, information security, anti-money laundering, critical supply chains, market risk and other elements of ethical conduct.
Our supplier risk assessments are carried out by our Risk and Compliance team in consultation with each contract owner. To gather information for these assessments, we use a range of sources, including the supplier’s Modern Slavery Statement or questionnaire responses and websites. Each supplier is rated either low, medium, or high risk on each of the 27 elements covered in our risk assessment to determine an overall score. The results of the assessments are recorded in our risk and compliance monitoring and reporting system, so any modern slavery risks can be managed, monitored and reported on.
As part of this process, we established criteria for identifying higher risk suppliers in relation on modern slavery. The criteria consider factors such as the procurement value, as well as the supplier’s annual revenue, relationships and location. Suppliers that meet any one of the five criteria will be subject to an annual modern slavery risk review.
Understanding the risks of modern slavery in our investment portfolio
At the start of 2023, we set out to gain a better understanding of the risks of modern slavery in our Share portfolio, which represents 46% of our total investment portfolio.
We engaged our asset consultant to carry out a high-level assessment of where modern slavery risks may exist across our Shares asset class. The assessment focused primarily on the risk to people by highlighting exposures to countries and industries where there may be elevated modern slavery risk. Examining each company’s supply chain was not part of the assessment.
The assessment used the latest version of the Global Slavery Index to determine the country risk, both in terms of prevalence and vulnerability. To assess the sub-industry risk, the Sustainability Accounting Standards Board (SASB) Standards were sourced, to help identify the Global Industry Classification Standard sub-industry group the company primarily operates in.
The assessment highlighted our exposure to, for example:
- Air freight and logistics companies, which were considered to have higher risk of modern slavery. This sector typically relies on contractors which presents opportunities for labour issues
- Food retailers, food distributors, and restaurants, which were also considered to have higher risk of modern slavery. Key issues within these sectors include pay, working hours and conditions
- Companies with operations in emerging markets, including India, South Africa, China and Thailand, which are more vulnerable to modern slavery practices due to issues such as inequality, disenfranchised groups, poverty and the effects of conflict
Overall, the initial assessment provided useful insight into where modern slavery risk may exist across our Share portfolio and will help inform ongoing discussions with our investment managers.
For our unlisted property portfolio, we understand the risk of modern slavery extends to the indirect workforce employed through their supply chain, particularly the cleaning industry. In an effort to monitor and manage this risk, three out of four of our Australian property investment managers are active members of the Cleaning Accountability Framework (CAF). The CAF is recognised globally and allows our investment managers to work collaboratively with industry to address exploitation in the cleaning industry and lift the labour standards across the supply chain.
Understanding the risks of modern slavery outside of our operations and supply chain
We acknowledge that our operations could be connected to modern slavery through the companies we have indirect relationships with outside of our direct suppliers.
For example, our Perth office is partly owned and managed by Mirvac. However, our tenancy agreement is with a third party, not Mirvac. In managing our building, Mirvac employs contract cleaning services, an industry which carries high risks of modern slavery in Australia due to its reliance on low-wage, temporary and migrant labour. In recognition of this exposure, we have taken steps to understand how Mirvac is addressing modern slavery risks.
In 2023, Mirvac became members of the Cleaning Accountability Framework, which will allow it to select properties to be assessed for ethical labour practices. This also provides an opportunity for Mirvac to be a part of ongoing discussions with all stakeholders (including union representing cleaners) to raise issues and contribute to the remediation each issue through action.
Our policies support our practices
In addition to the work carried out by our working group to date, we have a number of policies in place to ensure we adopt good governance and operate in a responsible manner, including addressing the risks of modern slavery.
These policies are covered as part of our induction of new staff and reinforced through regular training and information sessions:
Our Environmental, Social and Governance (ESG) and Responsible Investment Policy describes how we incorporate ESG factors into investment decisions. This includes climate change, human and labour rights, and modern slavery. Learn more about our responsible investing approach.
Our Whistleblowing Policy facilitates public interest disclosures by our staff, contractors or members of the public, which can be made anonymously to our Public Interest Disclosure Officer.
Our Governance Framework includes an outline of the structures, activities, instruments and monitoring arrangements that have been adopted to comply with legislation and other obligations.
Our Risk Management Strategy facilitates the management of all risks that may adversely impact our members, staff, assets, operations and outsourced service providers.
We have a Code of Conduct that sets standards for ethical and accountable behaviours in our workplace.
Our Dignity at Work Policy reinforces the expectation for all staff to model appropriate workplace behaviours and take care that their actions do not harm or exclude others.
Our Workplace Inclusion Network promotes and supports diversity and inclusion in our workforce, representative of the members and community we serve.
Further support for our modern slavery risk management practices
In support of our Risk management strategy, we have an established and independently reviewed Anti-money Laundering and Counter Terrorism Financing (AML/CTF) Program.
This program:
- Complies with the requirements of the Anti-Money Laundering and Counter Terrorism Financing (AML/CTF) Act 2006 as regulated by the Australian Government agency AUSTRAC
- Includes transaction monitoring, ongoing customer due diligence controls for members residing in foreign countries and reporting of suspicious matters, and cross border monetary movements
- Considers the risks we face in relation to money laundering and terrorism financing, which are critical in identifying and addressing ongoing modern slavery risks, given the nature, size and complexity of GESB, and our reliance on third party service providers
- Includes employee due diligence which involves activities associated with assessing and managing the integrity risk of our employees
This program is reported to our Board on a quarterly basis.
6. How we assess the effectiveness of our actions
Our working group tracks the effectiveness of the actions we have taken to manage the risks associated with modern slavery in both our internal operations and our supply chain.
During the previous 2021/22 financial year, we focussed on creating and implementing processes to assess modern slavery risks. In this first reporting period, we agreed on our actions to assess risks for the 2022/23 reporting period. The progress of these actions are as follows:
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The next focus for our working group will be on progressing our efforts to identify and address the risks of modern slavery in the following areas:
| Area of our organisation | Agreed actions for 2023/24 |
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We recognise that our review and assessment of our actions to identify and address our modern slavery risks in our operations and supply chain will be an ongoing and evolving process.
1 Walk Free Foundation, Global Estimates of Modern Slavery: Forced Labour and Forced Marriage, available at www.walkfree.org/reports/global-estimates-of-modern-slavery-2022.
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