The Australian Modern Slavery Act has passed Parliament and will come into force in early 2019. Affecting about 3,000 companies, organisations with a turnover of $100 million or more are now required to publish a Modern Slavery Statement disclosing what they’re doing to stop modern slavery in their supply chains. The first period for reporting with be in FY19.
Company’s statements will need to report on the organisation’s:
- structure, operations and supply chains
- potential modern slavery risks in operations and supply chains
- any actions taken to assess and address the risks including due diligence and remediation processes
- the effectiveness of those actions.
Key elements of the act are:
- The reporting threshold captures companies, partnerships, trusts, universities and charities doing business in Australia (regardless of where they are incorporated) with an annual revenue of $100 million.
- Modern Slavery Statements are to be approved at the Board level and signed by a director of the entity (or equivalent) creating accountability for senior management.
- A list of companies that are required to report will be created and there will be an annual report to Parliament on how companies are tracking and the level of compliance with the Act. This includes failure to comply and those in best practice.
- The Bill does notinclude penalties for non-compliance however the legislation will be reviewed after three years where it is expected that this will be re-considered.
Differences to the UK Act are:
- Commonwealth corporations and companies are included in the annual reporting requirements extending the scope to public procurement activity. This strengthens the legislation in light of the UK Act which excluded government.
- The government will run a publicly accessible online repository of modern slavery statements. This means the comparison and scrutiny of Modern Statements will be high, increasing the incentive for companies to report.
- For companies that fail to comply, the responsible Minister will have additional powers to request an explanation within 28 days and ask for remedial action. Information on companies failing to comply, including their identity, may be published.
What about the NSW Act?
- The NSW Modern Slavery Act was passed in June 2018 and the NSW Regulations will likely be released around the same time as the Commonwealth legislation. NSW’s legislation has a lower turnover threshold of $50 million, but otherwise is expected to align with the Commonwealth Act’s obligations.
What does this mean for consumers:
This legislation will mean a new age of supply chain transparency for consumers and new level of compliance risk for businesses.
- Expect to see a range of services and comparison websites pop up that draw on the key data within the Modern Slavery Statements to enable quick and easy comparison between businesses, potentially converting actions into a simple scoring system.
- The implications will extend beyond businesses, with consumers now also being held to account. Websites such as slaveryfootprint.org will enable consumers to better understand how their consumption habits might be impacting on modern slavery.
The future of supply chains is in transparency and accountability and the opportunity is there to be seized to go beyond compliance and lead with best practice. Organisations should start as soon as possible to investigate their supply chains and record the actions that they’re taking to manage the risks that they find. Those that are on the front foot will gain reputational benefits and potentially see an advantage in their dealings with Government and the private sector alike.
The key thing to remember is that there is no requirement under either Act to jump from zero to hero overnight. The development of the legislation is just the start of a journey on which we all need to start taking our first steps. To find out more about how we can help you go beyond compliance check out our services here. Not sure where to start? Read our four steps on how to do a risk assessment.