As we welcome 2020 we are reminded that just twelve months ago the Modern Slavery Act 2018 (Cth) (MS Act) entered into force. The MS Act requires entities based or operating in Australia with an annual consolidated revenue of more than $100 million to assess, address and report on the risks of modern slavery in their supply chains and operations. The first reporting period for many businesses finishes at the end of June 2020, and so the time is ripe to take action to address modern slavery risks in their operations and supply chains.
Time to check in on progress
While modern slavery statements are not due to be lodged until December 2020 for Australian entities that operate on a July to June financial year, the work to be reported must be completed by 30 June 2020.1
Among other things, this means there is just under six months for entities to:
- map supply chains and operations;
- identify and assess areas exposed to risks of modern slavery;
- ensure policies and procedures are in place to address and manage those risks; and
- engage with suppliers.
Developing supply chain transparency is an ongoing process and the work will continue into the future. However, modern slavery statements must report only on work undertaken in the relevant reporting period (for many organisations this is the financial year ending 30 June), be approved by the Board and submitted to the Minister of Home Affairs by 31 December 2020. It is important to ensure you have taken action within the reporting period and have allowed time for approval and submission processes.
Finding risks and engaging meaningfully
While there is a lot to do, there is no reason to be alarmed. Everyone is expected to find risks of modern slavery in their supply chain – even in Australia cleaning, construction and logistics services and some agricultural products are considered higher risk. At the same time, it is not expected that these risks will be entirely eliminated in the short term.
It is expected that reporting entities will engage meaningfully, and with commitment to continuous improvement. You should begin to understand your supply chain and how it may intersect with modern slavery. You should also take action to put in place policies and procedures that mitigate against the risk of modern slavery. These might include measures as simple as educating staff and suppliers to ensure they understand what modern slavery is, how it manifests and actions to be taken within your business to identify it. On the other hand, you may consider including measures such as sophisticated due diligence and impact assessments that provide insight and understanding into specific higher risk aspects of your supply chains and operations.
If you are a reporting entity it is important to ensure that responsibility for this work is clearly defined and accountabilities are in place. Enlist assistance where internal resources are lacking skills or time. There are technological solutions that may assist but will not replace expertise and understanding, and it is a mistake to think there are easy shortcuts. Modern slavery is insidious, silent and hidden and it requires a great deal of attention.
It is important to remember that there is no 'one size fits all' solution. Every organisation's operations and supply chain is different, and the risks, approaches and responses will vary from entity to entity.
A word of caution
Attention should be taken when adjusting a UK modern slavery statement to an Australian one. The requirements of the MS Act are more extensive and mandatory, so the UK Statement will not always meet local requirements. If unsure, seek advice.
The modern slavery statement must be approved by the principal governing body of the reporting entity, which is likely to be the Board. For listed companies disclosure duties and obligations will apply and the required due diligence should be undertaken on information provided in the modern slavery statement.
For reporting entities, and those above the $100 million reporting threshold, to present a credible modern slavery statement it is important to begin work now, or consolidate the work you have done.
For those just beginning, first steps might include identifying someone to be responsible for leading the process, establishing a cross-functional team and committing to a program of work. The 'Commonwealth Modern Slavery Act – Guidance for reporting entities' guide prepared by the Department of Home Affairs is helpful, but ensure you have appropriate skills and expertise to guide you in your implementation.
For those who are further along the road, there is still only six months left in this reporting period. Have you considered your ongoing program of work, how the initial start-up of assessment and monitoring of modern slavery risks will continue into the future and into the next reporting period? It is helpful to have a strategy for ongoing engagement with suppliers and contractors as you work to eradicate modern slavery from your supply chain. The internal processes to ensure ongoing mapping and monitoring of the supply chain (sometimes overwhelming in the first instance) can become more manageable in the future with considered systemic implementation.
Building an understanding of modern slavery in your organisation, and a clear understanding of why it's important to include risk assessments in the procurement and operational process, is critical to the eradication of modern slavery. With over 15,000 people in Australia and over 40 million worldwide living and working in modern slavery, we all have a role to play.
1 For entities on a different fiscal year please see our earlier article for reporting periods and deadlines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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