With 30 June 2022 fast approaching, businesses required to report under the Modern Slavery Act 2018 (Cth) (Modern Slavery Act) should take steps to assess and review their second-year progress, and complete their modern slavery statement.
Additionally, given environmental, social and corporate governance (ESG) is increasingly front of mind for stakeholders, corporate commitment to ethical and transparent supply chains is under a microscope. This is particularly so in circumstances where modern slavery reports are publicly available online, together with assessments of organisations’ compliance and failures to adopt practices that mitigate modern slavery risks.
In this article, we outline the required reporting criteria and relevant deadlines, as well as considerations for businesses who will need to progress their statements.
The Modern Slavery Act requires that ‘an Australian entity or an entity that carries on business in Australia with a minimum consolidated revenue of $100 million’ must submit a modern slavery statement for that financial year.
Businesses should be mindful that an ‘Australian entity’ includes a:
all of which are required to submit a modern slavery statement if the revenue threshold is met.
Businesses must accurately assess the risks of modern slavery in their operations and supply chains, as well as assessing and documenting actions and strategies being taken to mitigate such risks.
Mandatory reporting criteria is set out in the Modern Slavery Act which provides a business must include, in its modern slavery statement, the following:
Given that many businesses will be reporting on second-year progress at 30 June 2022, businesses should focus on conducting a gap analysis between their agreed progress in their first-year modern slavery statement and the action actually taken. Additionally, modern slavery policies and audits of operations and supply chains ought to be adopted, particularly where businesses rely on international labour and supply of its goods and services.
A business’ modern slavery statement is due within six months of the end of the financial year of that entity. As such, for businesses with a financial year ending 31 December and which submitted their first-year modern slavery statement before 30 June 2021, second-year statements are due 30 June 2022. For those businesses with a financial year ending 30 June 2022, second year statements are due 31 December 2022.
A business must provide its approved modern slavery statement to the Australian Border Force. It will then be published on the public online register.
If a business has not made its agreed progress outlined in its first-year modern slavery statement it will need to identify this in its second-year statement. It will also need to outline how it will develop and implement remediation measures to ensure that it meets this progress. To ensure that progress is being met, businesses should establish a modern slavery risk management framework to consistently review and monitor their progress to ensure they meet their ongoing obligations.
Independent reports into businesses modern slavery statements published in the previous year indicate that there are significant gaps in what is being reported by businesses and what is actually undertaken to address modern slavery risks. Many businesses are not satisfying or only just satisfying the bare minimum of their reporting requirements. As such, businesses should be conscious of the importance of modern slavery reporting and take steps to be leaders in this area.
The reputational risks associated with a failure to identify or properly report on a risk or finding of modern slavery practices has proven problematic for businesses with consequences such as share price reductions, consumer boycotts and difficulties with attracting or retaining staff.
Reporting on modern slavery obligations increases awareness of the risks of modern slavery, reduces the risks in operations and supply chains and improves workplace practices. Further, given the growing focus on ESG responsibilities, the positive impact of responsible business practices, such as a commitment to addressing and ultimately eradicating modern slavery holds significant weight in the eyes of shareholders, investors, employees, clients, and consumers. Stakeholders use indicators such as modern slavery statements to make qualitative assessments of a business’ broader impact on society to make decisions about procurement. As such, timely, accurate and transparent reporting on modern slavery not only satisfies legal obligations (as relevant) but also forms part of good corporate governance. Accordingly, businesses that do not have a legal obligation to submit modern slavery statements may elect to do so for this reason.
Gadens is able to assist you with any queries you have in respect of modern slavery reporting obligations including preparing statements, conducting gap analyses and implementing policies as well as ESG leadership.
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Louise Rumble, Partner
Sera Park, Associate
Nakita Rose, Lawyer