The introduction of the Commonwealth Modern Slavery Bill 2018 on 28 June 2018 sets an imperative for businesses operating in Australia to know, and show, how they are identifying and addressing the risks of modern slavery.
At the centre of the Bill is the Modern Slavery Reporting Requirement: a mandatory requirement that entities based, or operating, in Australia, which have an annual consolidated revenue of more than AUD $100 million, report annually on the risks of modern slavery in their local and global operations and supply chains, and take actions to address those risks.
Any ‘reporting entity’ meeting the threshold—and any other entity that volunteers to comply with the legislation—will need to publish an annual statement, within six months of the end of their financial year, describing the risks and actions it has taken in relation to modern slavery: a term broadly defined to include all forms of trafficking in persons, slavery and slavery-like practices, and the worst forms of child labour.
Modern slavery statements, which must be approved by an entity’s principal governing body and submitted to a public, government-run register, will need to:
(a) identify the reporting entity;
(b) describe the structure, operations and supply chains of the reporting entity;
(c) describe the risks of modern slavery practices in the operations and supply chains of the reporting entity, and any entities that the reporting entity owns or controls;
(d) describe the actions taken by the reporting entity and any entity that the reporting entity owns or controls, to assess and address those risks, including due diligence and remediation processes;
(e) describe how the reporting entity assesses the effectiveness of such actions;
(f) describe the process of consultation with any entities that the reporting entity owns or controls, or entities with which it gives a joint modern slavery statement; and
(g) include any other information that the reporting entity, or the entity giving the statement, considers relevant.
Businesses should develop an action plan—guided by the legislative criteria, and in line with the UN Guiding Principles on Business and Human Rights—that establishes a comprehensive modern slavery and human rights due diligence process:
- Policy commitment: Formulate a high-level, public statement that outlines the business’s commitment to meeting its responsibility to respect human rights, including a rejection of any form of modern slavery in its operations and supply chains. This should be approved by the entity’s principal governing body, informed by expertise, and clearly communicate the organisation’s expectations as to how all personnel, business partners and other stakeholders should act.
- Risk assessment: Map out the business’s operations and supply chains in order to identify key areas of modern slavery risks by location, industry and supplier. In doing so, businesses should assess actual and potential modern slavery risks associated with their operations, supply chains and business relationships. This process may involve conducting human rights impact assessments, internal investigations, and ongoing engagement with affected stakeholders.
- Take action: Integrate findings from risk assessments into corporate governance strategy and core business decision-making.. Effective action requires that businesses embed their policy commitment across all relevant internal functions, create oversight processes, and take direct, informed action to prevent, mitigate and remediate any identified modern slavery risks and impacts.
- Provide training: Develop training programmes for management, staff, suppliers and other stakeholders in how to practically identify, assess and address modern slavery risks across the business’s operations, supply chains and relationships. Training should be informed by research and consultations, and can be further embedded through codes of conduct and contractual provisions.
- Track progress: Verify whether adverse modern slavery impacts are being addressed by using appropriate qualitative and quantitative indicators—including reviews, surveys, audits, and other data—and by drawing on internal and external feedback, particularly from affected stakeholders.
- Report: Communicate publicly how the business is addressing modern slavery risks and impacts, including via the criteria set out in the Modern Slavery Reporting Requirement.
There is a growing, global effort to eliminate the exploitative practices of modern slavery—one that is now likely to materialise into a formal legal requirement for businesses operating in Australia. By taking action, businesses can meet increasing investor, shareholder and social expectations; manage legal, reputational, financial and operational risks; and demonstrate corporate leadership on an urgent moral issue.
Establishing the Modern Slavery bill
This bill has been released following a consultative process, that included a report from the Joint Standing Committee on Foreign Affairs, Defence and Trade from its inquiry into establishing a Modern Slavery Act in Australia.
The broader international context
Australian’s approach fits into a growing body of international laws and norms requiring corporate reporting and due diligence on modern slavery and human rights issues – these include the UK Modern Slavery Act, the French Corporate Duty of Vigilance Law, the Swiss Responsible Business Initiative, and the California Transparency in Supply Chains Act. Legislatures in Canada and Hong Kong are also currently considering modern slavery laws. In addition, New South Wales has passed its own modern slavery legislation.
We are already working with our clients to ensure they comply with their modern slavery reporting obligations – contact us if you would like to know more.
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