On 1 January 2019, the Modern Slavery Act 2018 came into effect, heralding a new mandatory modern slavery reporting requirement for companies operating in Australia with a minimum annual consolidated revenue of $100 million.
The Act directly impacts over 3,000 Australian companies who are now legally required to report on their supply chains and submit their first annual report in 2020. Through a knock-on effect, the Act will also have a wide-reaching impact across businesses of all sizes who are connected with one another via their supply chains.
So what do Australian businesses need to know?
Australia and Modern Slavery
The term “modern slavery” refers to any situation of exploitation where a person cannot refuse or leave work because of threats, violence, coercion, abuse of power or deception. It encompasses slavery, servitude, the worst forms of child labour, forced labour, human trafficking, debt bondage, slavery like practices, forced marriage and deceptive recruiting for labour or services.
As of September 2017, the Walk Free Foundation’s Global Slavery Index estimated that:
- In excess of 40 million people globally were subject to some form of modern slavery and collectively approximately US$150 billion per year is generated in the global private economy from forced labour alone;
- 30,435,300 people in Asia-Pacific Region were ‘enslaved’ (66.4 per cent of all people enslaved); and
- 4,300 people in Australia were enslaved.
On the surface, the incidence of modern slavery within Australia appears to be relatively low, but arguably this could merely be a reflection of a low level of awareness of the issues, and the actual incidence may be much higher, both domestically and overseas due to the complexity of supply chains. Most finished products pass through a very long chain of producers, manufacturers, distributors and retailers who have all participated in their production, delivery and sale. It can be incredibly difficult to track a component of an end product back to a particular producer. In general, most of corporate Australia is still quite unaware of the risk that they have slavery in their business or supply chains.
Steps for affected businesses
Businesses now covered by the legislation should be taking steps to ensure they comply with the modern slavery laws and are aware of the risks in their supply chains. Steps they should consider include:
- Understand what the legislation means for the business;
- Develop internal anti-slavery policies;
- Increase transparency using web-based solutions to monitor, track and engage with suppliers;
- Consider an industry-wide joint approach with the added benefits of efficiency and consistency;
- Review procurement methods; and
- Train staff on modern slavery risks.
Weaknesses of the Act
Many NGOs (non-government organisations) and activists have likened the Act to a “toothless tiger”. Two notable and controversial omissions of the Act are penalties and independent oversight in the shape of an anti-slavery commissioner. With regards to the former, the government was unwilling to impose penalties for failing to lodge a statement or for lodging an incomplete statement.
However, the requirement and the public register means that companies who don’t report properly can be “named and shamed” by NGOs and activists, which could then have a significant negative impact on such companies.
Impact of the legislation
Moving forward, the Act means businesses will no longer be able to claim ignorance to forced labour, child labour or any kind of deceptive recruiting. It will provide much-needed transparency and accountability in supply chains and yield information that businesses, stakeholders and the public can use to drive change in corporate practices. It will also drive greater collaboration and engagement by companies with their suppliers, workers and community. And finally, it will prompt greater exposure and engagement with human rights issues in general.
While this is a step in the right direction towards ending slavery in Australia, the legislation will need refining over time to deliver the objective of eradicating slavery entirely. Ideally it will be the catalyst for mandatory reporting across the full spectrum of human rights in the future.
By Nicholas Bernhardt, CEO and co-founder of Informed 365.