Kmart Faces Legal Action Over Alleged Supply Chain Links to Forced Labor

The Australian Uyghur Tangritagh Women's Association (AUTWA) has initiated legal proceedings against Kmart Australia, seeking greater transparency regarding its supply chain and potential connections to forced labor in China. The action, filed in the Federal Court, aims to compel Kmart to disclose documents pertaining to its clothing suppliers, which are alleged to be involved in forced Uyghur labor in the Xinjiang region.

Kmart has publicly refuted these allegations, stating its commitment to an Ethical Sourcing Program that has been in place for over 15 years to address modern slavery risks. The company asserts that this program includes regular monitoring through site visits and audits, and highlights its public disclosure of its factory list as a demonstration of transparency.

This legal challenge highlights a perceived gap in Australia's regulatory framework. Unlike regulations in the United States and European Union, Australia does not prohibit imports linked to forced labor, nor does it mandate companies to act on such risks beyond reporting. Australia's Modern Slavery Act 2018 requires certain large businesses to report on modern slavery risks in their supply chains but does not mandate action or prohibit imports linked to forced labor.

Professor Shelley Marshall, deputy dean at RMIT University's School of Law, noted that in the absence of robust mandatory disclosure laws or import bans on goods linked to forced labor, such legal actions are becoming a key mechanism for civil society to demand corporate transparency. The Human Rights Law Centre, supporting the AUTWA, views this case as a crucial step in holding Australian retailers accountable and ensuring their practices align with their ethical sourcing promises. Legal experts suggest this legislative landscape places the onus on advocacy groups to investigate and litigate, a process that is both costly and risky.

The AUTWA's claim centers on allegations that Kmart's factory lists for 2024 and 2025 include suppliers linked to the Xinjiang Uyghur Autonomous Region, an area documented for systemic state-sponsored forced labor and atrocities against Uyghur and other Turkic Muslim people. The case is testing whether Kmart has engaged in misleading or deceptive conduct under Australian Consumer Law, particularly concerning its public statements about ethical sourcing. The outcome of the Federal Court proceedings may influence future legal actions against retailers and enhance accountability for ethical sourcing practices.