Modern slavery in supply chains ‒ reporting requirements coming

The Australian Government has announced an intention to introduce a "Modern Slavery in Supply Chains Reporting Requirement" in Australia to combat modern slavery.

Modelled on the UK Modern Slavery Act 2015, the proposed Reporting Requirements will be used as a means to combat the human trafficking, forced labour and slavery-like practices which exist in business supply chains.

The Reporting Requirements will require large businesses and entities operating in Australia to publish an annual Modern Slavery Statement.

Even though consultation is still underway, businesses (particularly large businesses) should begin preparing for the increased transparency pressures which will be imposed by the Reporting Requirements.

What will the Reporting Requirements do?

Subject to feedback through the consultation process, the government has proposed that large Australian entities headquartered in Australia, or entities that have any part of their operations in Australia, with an annual turnover of more than AUD$100 million will be subject to the Reporting Requirements. Entities covered by the Reporting Requirements will need to publish an annual Modern Slavery Statement, within five months after the end of the Australian financial year, reporting on the steps they have taken to combat modern slavery within their supply chains and operations.

The government has proposed that the Modern Slavery Statement must at a minimum include information about the:

• entity’s structure, its operations and its supply chains;
• modern slavery risks present in the entity’s operations and supply chains;
• entity’s policies and process to address modern slavery in its operations and supply chains and their effectiveness (including codes of conduct, supplier contract terms and staff training); and
• entity’s due diligence processes relating to modern slavery in its operations and supply chains and their effectiveness.

Further, it has been proposed, that the Modern Slavery Statements will need to be:

• approved at the equivalent of board level;
• signed by a director of the company;
• published on the company's website; and
• filed in a public accessible central repository.

What this means for your businesses

We recommend that businesses:

• review existing policies and contracts to identify whether modern slavery issues are addressed;
• update or draft new policies and procedures which respond to the proposed Reporting Requirements;
• task a member of the senior leadership team with the responsibility for implementing and administering the proposed policies and procedures, monitoring compliance and reporting to the board;
• identify what business areas may be vulnerable to modern slavery, including high risk sectors and high risk goods;
• identify the type of internal and external audits/due diligence that may need to be undertaken; and
• consider the training required to assist employees in applying the new modern slavery policies and procedures.

Conducting due diligence on supply chains and operations may seem like an onerous exercise. However, there is anecdotal evidence to suggest that the information gathered from this process has positive effects from a supply management and business perspective.

Further, a failure to engage in this important issue may result in severe disruption to your business and damage to your reputation and brand.

If your company would like to make any comments on the proposed Reporting Requirements, submissions for the consultation are open until 20 October 2017.

If you have any further questions about how your business can prepare for the Reporting Requirements, or if you require assistance in preparing for this important development, Clayton Utz can help you.