Understanding your supply chain is a must for modern slavery reporting

With all the focus around climate reporting (the ‘E’ in ESG or environmental, social and governance matters), discussion around ‘S’ and ‘G’ factors, including modern slavery reporting, can seem like they’ve taken a back seat. However, priorities may need to change. Larger entities must already abide by modern slavery reporting rules in Australia, and a group of investors representing over $1 trillion of assets under management recently wrote to the International Sustainability Standards Board (ISSB) urging them to prioritise the development of global reporting standards for human capital and human rights, which includes modern slavery.  This means we may see mandatory modern slavery reporting for many entities soon.

What is modern slavery?

Modern slavery can include human trafficking, slavery, servitude, forced labour, debt bondage, deceptive recruitment for labour services, forced marriage and the worst forms of child labour.

Is modern slavery reporting mandatory in Australia?

Yes. Modern slavery reporting in Australia is governed by the Modern Slavery Act 2018, which requires entities of a certain size to prepare a Modern Slavery Statement. The requirements apply to financial years beginning on or after 1 January 2019.

Who must prepare a Modern Slavery Statement?

The Modern Slavery Act 2018 requires a ‘reporting entity’ to report annually on:

• The risks of modern slavery in their operations and supply chains
• Actions to address those risks.

This information, contained in a Modern Slavery Statement, must be lodged with the Minister within six months of the end of the reporting period.

What is a ‘reporting entity’?

A ‘reporting entity’ is an entity that is based in or carried on business in Australia at any time during the reporting period and has an annual consolidated revenue of more than $100 million. The Modern Slavery Statement for a ‘reporting entity’ can be submitted for a single reporting entity or a group (joint Modern Slavery Statements). Other entities based or carrying on business in Australia may voluntarily prepare and lodge a Modern Slavery Statement.

What is required?

A Modern Slavery Statement must include the following:

	Requirement	Modern Slavery Act 2018
1	Identify the reporting entity.	Section 16(1)(a)
2	Describe the structure, operations and supply chains of the reporting entity.	Section 16(1)(b)
3	Describe the risks of modern slavery practices in the operations and supply chains of the reporting entity and any entities that the reporting entity owns or controls. See below ‘Risk assessment is key’.	Section 16(1)(c)
4	Describe the actions taken by the reporting entity and any entity that the reporting entity owns or controls to assess and address those risks, including due diligence and remediation processes. See below ‘Risk assessment is key’.	Section 16(1)(d)
5	Describe how the reporting entity assesses the effectiveness of such actions.	Section 16(1)(e)
6	Describe the process of consultation with any entities that the reporting entity owns or controls.	Section 16(1)(f)
7	Provide any other information that the reporting entity or the entity giving the Statement considers relevant.	Section 16(1)(g)
8	Details of approval by the relevant principal governing body or bodies.	Section 16(2)

Risk assessment is key

As noted, the Modern Slavery Statement must describe the risks of modern slavery practices in the operations and supply chains, and also describe actions taken to assess and address those risks.

Therefore, performing a risk assessment of operations and supply chains is crucial in providing this disclosure. It involves assigning a risk rating to your suppliers, customers, employees, etc. A Modern Slavery Questionnaire will assist in this process, as will the use of a technology solution.

Need help?

While your entity may not be required to prepare a Modern Slavery Statement yet, you may voluntarily choose to do so, or your customers may require this information. Please contact Aletta Boshoff if you require assistance preparing your Modern Slavery Statements and conducting risk assessments. Contact us today.