Thousands of modern slavery statements have been published under Australia’s Modern Slavery Act (“the Act”) since it entered into force at the beginning of 2019. However, recent studies into statements to date have found concerning trends. Many do not meet the minimum reporting requirements, and those that are compliant often fail to demonstrate effective mechanisms to assess and address modern slavery risks.
It is estimated that 40 million people worldwide are victims of modern slavery, which includes a range of exploitative practices including forced labour, debt bondage and the worst forms of child labour.1 The purpose of the Act is to drive organisations operating in Australia (“entities”) to identify and address risks of modern slavery in their operations and supply chains. The mandatory reporting requirement aimed to shift practice by encouraging transparency and action.
We have outlined three key ways to ensure your modern slavery statement avoids the traps of poor practice.
1. Report meaningfully on your modern slavery risks.
One of the Act’s key mandatory criteria requires businesses to describe the risks of modern slavery practices in their operations and supply chains. These are not business risks, but risk to people of exploitation. However, a study analysing modern slavery statements from businesses in high risk sectors – those with known prevalence of modern slavery such as garments, horticulture and seafood – found that 63% of the statements did not meet this basic requirement.2
Other research has found that entities that do report on their modern slavery risks largely do so at a superficial level. Many simply report on their supply chain being linked to high risk countries or industries where modern slavery is more prevalent, with little analysis of how modern slavery might occur in practice – such as through debt bondage, exploitation of migrants, or child labour.3
In addition, few statements describe their relationship to the risk. The UN Guiding Principles on Business and Human Rights (UNGPs), an internationally recognised framework that forms the basis of the Act, set out three forms of a business’ relationship to risk: cause; contribute; and directly linked.4 The Australian Council of Superannuation Investors’ (ACSI) analysis of modern slavery statements from ASX200 companies, found that only 5% used the UNGPs’ continuum to describe their relationship to the risk. 5
To be able to demonstrate a deeper awareness of risk, entities need to move beyond surface level research and take a comprehensive approach to risk assessment – as we outline below.
2. Take a comprehensive approach to risk assessment.
The Act requires entities to report not only on what their modern slavery risks are, but how they assess them. Yet many reporting entities are employing risk assessments in inadequate or superficial ways.
Many focus risk assessments on their supply chain and do not take into account their own operations, despite a clear requirement of the Act to do so.6 These entities make the frequent, and incorrect assumption that modern slavery is a largely offshore issue in international supply chains, and that their Australian based operations present negligible risk. Modern slavery does occur in Australia, with some 15,000 people across the country living in conditions of modern slavery.7 Sectors that present a known risk of modern slavery in Australia include cleaning, construction and maintenance – all of which commonly intersect with the operations of domestic businesses.
Meanwhile, several studies have shown that few businesses demonstrate an understanding of their extended supply chain, limiting their awareness of the risks they may be connected to.8 A robust approach requires going beyond direct tier 1 suppliers, as this is where there is less visibility of labour practices and where the extraction and manufacture of raw materials in many sectors carries high modern slavery risk.
A comprehensive risk assessment framework that encompasses both operations and supply chain is essential to uncover risk, reveal blind spots, and inform appropriate action and decision making.
3. Take a people-centred approach to remediation.
Remediation remains a poorly understood requirement of the Act. While the Act requires entities to report on their remediation processes, only half of ASX300 companies did so.9 The UNGPs make it clear that businesses that have caused or contributed to negative human rights impacts such as modern slavery must provide or cooperate in the remediation of that impact.
Managing supplier conformance and corrective action is a necessary step, but is not sufficient. Research shows many businesses view this as the ‘be all and end all’ of remediation – missing the key element of ensuring remedy for affected workers.10 Remedy should take a people-centred approach and aim to restore the affected person to the situation they would be in if the adverse impact had not occurred.
Similarly, the mere presence of a whistleblower line does not constitute a grievance mechanism. Entities need to demonstrate a readiness to proactively receive and act on modern slavery related complaints appropriately. This includes ensuring workers in the supply chain have access to grievance mechanism and are protected from retaliation.
A sound remediation framework readies an entity to identify and correct the harm experienced by affected persons, building on effective grievance mechanisms.
Producing a quality Modern Slavery Statement is challenging, but is quite possible with a comprehensive approach to risk that focuses on the people affected by your organisation and supply chain, and allows you to prioritise efforts to address risk.
At Point Advisory, our expert team supports clients from across sectors to develop and implement a sound modern slavery approach. Don’t hesitate to reach out to Annabel Hart or Emily Dafter if your business requires support.
1 ‘Global Estimates of Modern Slavery’, International Labour Office (ILO) & Walk Free Foundation (2017)
2 ‘Paper Promises: Evaluating the early impact of Australia’s Modern Slavery Act’, Human Rights Law Centre, et al. (2022)
3 ‘Moving from paper to practice: ASX200 reporting under Australia’s Modern Slavery Act’, Australian Council of Superannuation Investors (2021); ‘Paper Promises: Evaluating the early impact of Australia’s Modern Slavery Act’, Human Rights Law Centre, et al. (2022)
4 ‘Guiding Principles on Business & Human Rights: Implementing the United Nations “Protect, Respect & Remedy” Framework”’, United Nations (2011)
5 ‘Moving from paper to practice: ASX200 reporting under Australia’s Modern Slavery Act’, Australian Council of Superannuation Investors (2021)
6 ‘Driving Improvements in Modern Slavery Reporting: The Role for Australian Investors’, ISS ESG & Monash University (2022); ‘Moving from paper to practice: ASX200 reporting under Australia’s Modern Slavery Act’, Australian Council of Superannuation Investors (2021)
7 ‘Country Studies: Australia’, Global Slavery Index (2018) <https://www.globalslaveryindex.org/2018/findings/country-studies/australia/>
8 ‘Spot Fires in Supply Chains’, International Justice Mission Australia (2022), ‘Driving Improvements in Modern Slavery Reporting: The Role for Australian Investors’, ISS ESG & Monash University (2022); ‘Paper Promises: Evaluating the early impact of Australia’s Modern Slavery Act’, Human Rights Law Centre, et al. (2022); ‘Moving from paper to practice: ASX200 reporting under Australia’s Modern Slavery Act’, Australian Council of Superannuation Investors (2021)
9 ‘Driving Improvements in Modern Slavery Reporting: The Role for Australian Investors’, ISS ESG & Monash University (2022)
10 ‘Paper Promises: Evaluating the early impact of Australia’s Modern Slavery Act’, Human Rights Law Centre, et al. (2022)