Hidden in plain sight: What Modern Slavery Reporting Requirements will mean for your business

Part 1 – Introduction to the Australian Modern Slavery in Supply Chains Reporting Requirements

In late 2017 the Commonwealth Government announced that it proposed to enact Australian Modern Slavery in Supply Chain Reporting Requirements (Reporting Requirements). 

The announcement came amid an increasing international and domestic focus on addressing modern slavery in the business community, including throughout the extended supply and transport chains. Similar legislative schemes have been implemented or proposed in the United Kingdom, United States of America, France, Netherlands and European Union. Further to that, New South Wales passed its Modern Slavery Bill 2018, now the Modern Slavery Act 2018 (not yet in force). 

The Chartered Institute of Procurement and Supply recently conducted an ‘Australian Modern Slavery Survey’. It showed that:

• one per cent of respondents did not think they will be able to comply with the Reporting Requirements based on current management practices
• 20 per cent did not have measures to ensure supply chains were free from modern slavery
• 80 per cent indicated that reputational risk of identifying modern slavery in supply chains was the central concern of businesses. 

On 28 June 2018 the Commonwealth Government introduced a Modern Slavery Bill (Bill) of its own, providing indication of what the national Reporting Requirements will look like. 

In sum, the Bill provides that the Reporting Requirements will: 

• require certain entities to provide Modern Slavery Statements 
• provide for an administrative and compliance framework around the Reporting Requirements, to promote awareness of, and transparency in relation to, modern slavery in supply chains. 

This article takes a closer look at the expected Reporting Requirements and considers the implications for businesses with supply chains and supply chain businesses. 

A closer look at the expected Reporting Requirements:

What is modern slavery? 

Modern slavery includes: 

• modern slavery crimes already recognised by our legal system, such as servitude, forced labour, deceptive recruiting for labour, forced marriage and debt bondage
• the worst forms of child labour, including the forced labour, child trafficking and work which by its nature or circumstance is likely to harm the health, safety or morals of children 
• trafficking in persons for the purpose of exploitation, including forced labour, slavery or practices similar to slavery. Slavery-like practices, include practices that do not meet the threshold for ‘slavery’ (i.e. the exercise of ownership rights over another person) but nonetheless involve serious exploitation. The inclusion of this broad sub-category of modern slavery indicates flexibility in the proposed terms of the Reporting Requirements to recognise the range of exploitative practices in modern supply chains.

Who will the Reporting Requirements apply to?

Section 6 of the Bill outlines who the Reporting Requirements will apply to. They include the Commonwealth and corporate Commonwealth entities as well as the following businesses and organisations: 

What information must be reported and how? 

Reporting will come in the form of a Single Modern Slavery Statement or Joint Modern Slavery Statement (referred to collectively as Modern Slavery Statements). According to section 16 of the Commonwealth Bill, Modern Slavery Statements will: 

• identify the reporting entity
• describe its structure, its business and its supply chains
• describe risks of modern slavery practices in the entity’s business and supply chains 
• describe actions taken by the entity to assess and address risks of modern slavery including due diligence and remediation processes 
• describe the effectiveness of such actions 
• identify any other information the entity considers relevant to its Modern Slavery Statement.

They will then be signed-off by reporting entities’ ‘responsible members’, such as company boards.  

How often will reports be required? 

Entities will be required to submit their Modern Slavery Statements to the Department of Home Affairs within six months after the end of each financial year or annual accounting period applicable to the reporting entity.

What happens with the Modern Slavery Statement? 

Modern Slavery Statements will be registered on a Modern Slavery Statement’s Register established under the scheme. This means that the public will be able to identify reporting entity’s policies and practices in relation to the risks of Modern Slavery in its supply chain. Entities will also have the discretion to publish their own statements on their websites or in their annual reports. 

What happens if my business does not provide a compliant Modern Slavery Statement? 

The Explanatory Memorandum for the Bill states that the Australian Government will not introduce punitive measures for non-compliance. This is a significant distinction between the Commonwealth scheme and the New South Wales scheme, which imposes a maximum penalty of 10,000 penalty units or $1.1 million for failing to prepare a modern slavery statement. 

Nonetheless, the requirement for the Commonwealth and corporate Commonwealth entities to submit Modern Slavery Statements means that there will be a push for larger companies to submit their Modern Slavery Statements to avoid:

• risking negative publicity, as their non-compliance will be listed on the central repository
• missing out on procurement opportunities with the Australian Government (on the basis that Government agencies may introduce requirements to procure only from entities that complete a Modern Slavery Statement)
• missing out on supply opportunities with other business who determine that they will only deal with modern slavery compliant businesses.

Who does my business report to?  

The Minister for Home Affairs and the Department will administer reporting under the scheme and the Modern Slavery Statements Register. 

Part 2 of our introduction to the Australian modern slavery reporting and compliance requirements considers in detail some practical and commercial implications that will arise from the new scheme.

Authors: Nathan Cecil 

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. 

Published by:

Nathan Cecil

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