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Australia’s Modern Slavery Act Review and What it could mean for Procurement?

The long-anticipated review of Australia’s Modern Slavery Act 2018 has been presented in Parliament, bringing significant recommendations for strengthening its effectiveness. 

The Australian Institute of Company Directors believes major changes loom from the fall-out of the recommendations, relating to due diligence and reporting  – and has urged company boards to get properly prepared. (More below)

Led by Professor John McMillan AO, the review assessed the Act’s performance during its initial three years and put forth 30 recommendations to enhance its implementation.

Some of the key areas examined were the potential benefits and drawbacks of imposing penalties and mandatory due diligence requirements, tailoring reporting obligations based on industry and entity type, and the necessity of an independent body to oversee the Act’s execution.

Recommendations from the review include:

  • Introducing penalties for non-compliance with statutory reporting obligations
  • Lowering the reporting threshold for businesses to address modern slavery risks from $100M to $50M
  • Amending the Act to mandate greater due diligence by entities in their operations and supply chains
  • Strengthening administration of the Act by enhancing the processes for submitting and reviewing Modern Slavery Statements through legislative amendments and procedural improvements
  • Proposing the role of a federal Anti-Slavery Commissioner with specific functions related to the Act.

The Global Slavery Index, by Walk Free, estimates 49.6 million people live in modern slavery worldwide – up 25% over five years. 

61% of survey respondents to the review had experienced difficulty in obtaining information from suppliers for modern slavery reporting purposes. 

Key questions companies should consider

The AICD has provided some key questions for boards to consider relating to the act which should be considered by procurement professionals. 

Questions include: 

  • Will your organisation be subject to the modern slavery reporting regime if a lowered reporting threshold ($50M to $100M) is adopted?
  • Does your organisation have a due diligence system in place to identify and mitigate the risks of modern slavery practices in its operations and supply chains?
  • How extensive is your organisation’s internal and external consultation on modern slavery risk management?
  • Does your organisation make grievance and complaint mechanisms available to support modern slavery risk identification?
  • How is your organisation assessing the effectiveness of its modern slavery risk management?

Procurement analytics company Sievo says procurement can start by ensuring that ethical practices are tied to procurement culture, policy and processes and for a code of conduct to be attached as part of contract appendices.

EcoVadis chief impact officer Valerie Touchon says companies shouldn’t wait to deploy their due diligence strategies until legislation impacts them. 

“Companies across all industries can start or accelerate their efforts, building internal understanding and a capacity to implement a foundation for monitoring and managing risks,” Valerie told Supply Chian Brain. 

Researchers call for tougher laws 

Researchers and leading human rights advocates have welcomed recommendations made by an independent review of Australia’s Modern Slavery Act but have called on the Government to urgently rubber stamp tougher laws.
Associate Professor, Fiona McGaughey, from the University of Western Australia’s WA’s Law School said the sooner the government implemented the recommendations, the closer Australia would be to international standards on business and human rights.

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