By Jacqueline Monk, Special Counsel

Recent reports reveal that on any given day, at least 49.6 million people live in situations of modern slavery. In May this year, the Federal Government passed legislation which establishes Australia’s first federal Anti-Slavery Commissioner. This is the initial step in implementing a series of reforms recommended by a report issued by the Attorney-General’s Department (Report). 

Currently, under the Modern Slavery Act, companies with a consolidated revenue of $100 million or more must upload an annual “modern slavery statement” to the Modern Slavery Statements Register within 6 months of the end of the entity’s financial year.  

The annual statement must include information on the following (among other things): 

• structure, operations and supply chains of the entity 
• risks of modern slavery practices in the operations and supply chains  
• actions taken to assess and address those risks, including due diligence and remediation processes (for this step, entities can include development of policies and processes and provision of staff training), and
• how the effectiveness of such actions are assessed.
  

The requirement for due diligence for reporting entities 

A point of significant debate has been around the level of “due diligence” that reporting entities must undertake. Currently the Act does not elaborate on what is meant by “due diligence” but the Report has recommended that the Act be amended to provide that a reporting entity: 

• must have a due diligence system that meets certain requirements (which are to be specified in rules made under the Act) and 
• explain in its statement the activity carried out in accordance with that system. 

Importantly, the Report has recommended that failure to have such due diligence system in place be an offence under the Act. 

The Report has also recommended (among other things) that the reporting threshold be lowered to $50 million which, based on estimates set out in the Report, would mean that an additional 2,393 businesses would be required to report. 

What about non-reporting entities? Should they know their supply chain? 

Even if your business falls below the reporting threshold, it is important to examine your particular supply network. It is becoming increasingly common for a modern slavery checklist to form part of any onboarding procurement process, so you need sufficient information at hand and risk mitigation measures in place. Potential purchasers and investors will also have a keen interest in this area in their due diligence investigations, as will government agencies when going to tender for services.  

The Report reflects Australia’s intention to do as much as possible to reduce instances of modern slavery in commercial arrangements. As a result, the new Anti-Slavery Commissioner will be scrutinising the supply chain and product sourcing of businesses. Now is the time to become familiar with the extent of your supply network and ensure that your vendors are providing sufficient information about their employment and manufacturing practices.  

Reach out to Jacqueline Monk if you would like to discuss further or would like guidance on preparing your modern slavery statement.