This article was written by Monique Carroll and Frances Leitch.
After a long consultation period and the current Parliamentary Inquiry, the Australian government has indicated that it proposes to introduce a “Modern Slavery in Supply Chains Reporting Requirement” (see our article, Australia to consider a Modern Slavery Act). This new regime would require large entities to report annually on the steps they are taking to address modern slavery in their supply chains.
The proposed reporting requirement is modelled on the UK legislation, with some differences. We have set out the key points below, with more detail to be found in both the Government’s Consultation Paper and the inquiry’s Interim Report (each released last week). The proposal is neither final nor complete, and the Government is offering businesses an opportunity to be a part of the development of these requirements through its consultation process.
Who will be affected?
Under the current proposal, entities with 100 million in annual revenue will need to report under the new regime, with entities below this able to ‘opt-in’, and with a phase-in period to allow time for preparation. The scope of entities is deliberately broad, with the Consultation Paper stating it will include “bodies corporate, unincorporated associations or bodies of persons, superannuation funds and approved deposit funds.”
What will be required?
In contrast to other regimes, the Government has explicitly decided not to introduce any requirements to undertake due diligence, for which the compliance burden was deemed too high. Rather, the Government has opted for a “targeted” approach, which requires entities to report on the steps (if any) they have taken to address modern slavery in their supply chain.
It is proposed that the reporting must cover the following minimum information:
- the organisation’s structure, its business and its supply chains;
- its policies in relation to slavery and human trafficking;
- its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
- the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
- its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate;
- the training about slavery and human trafficking available to its staff.
This is a departure from the UK regime, which sets out a set of optional criteria that entities may report on (which is broadly the same as the above). However, the proposal states that there will be some discretion as to what, “if any”, information should be included for each of the Australia criteria, and any other information the reporting entity would like to include. This approach is designed to ensure “certainty and consistency” by providing “clear standards that apply to all entities.”
Consistent with the UK regime, the proposal is for reports to be made after the financial year (but within 5 months) and to be approved at the equivalent of Board level.
Although the Government has chosen to legislate so as to send a clear “no tolerance” message, they have also followed the UK regime in explicitly not seeking to impose any penalties for non-compliance, with the stated threat being “public criticism”. However, the Government is considering “options for oversight” of the reporting requirement.
The Government is proposing to release comprehensive guidance and awareness raising material for businesses. Helpfully, the Guidance is expected to include templates, examples and information on remedying and reporting instances of modern slavery that they have identified.
Importantly, and in contrast to the UK regime, the Government also expects to “provide for a free, publicly accessible central repository” for these statements that is searchable (which remains subject to feedback through the consultation process). Depending on the oversight mechanism decided upon, if any, its functions could include the maintenance of the repository, together with being the contact point for business and raising awareness of modern slavery risks.
What can you do now?
These developments are consistent with supply chain monitoring and reporting requirements increasingly becoming regulators’ preferred method of top-down anti-slavery regulation (see our article, Modern slavery risks in Australian agribusiness). Although not yet in place, we are expecting to see legislation on this proposal (in some form) in the next year.
If you haven’t already, you should consider better understanding the risks posed by modern slavery in your supply chain, how to address them, what policies and procedures you should have in place, and what you will need to report (see for example, UK Modern Slavery Act - seven things businesses in Asia need to know and Supply chain transparency – is your business ready?).
Businesses should also be aware of any existing reporting requirements that may already require reporting on modern slavery risks, for example if they are a reporting entity under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) or subject to similar legislation in other jurisdictions.
Additionally, there is the opportunity to make submissions on the details of the proposed legislative framework. The deadline for submission is 20 October 2017.
How can KWM help?
We can help you to:
- prepare a submission;
- develop internal anti-slavery policies and advise on a framework for monitoring the implementation of these policies;
- audit your supply chains;
- consider and amend your procurement agreements;
- develop culture and corporate governance guidelines; and
- conduct awareness seminars for boards, executives, and employees.
Contact us for an in confidence and privileged discussion, or about how we can help you undertake an independent review and develop the right policies, procedures and culture to be in the best position once the reporting requirements are finalised.