What’s the progress on Australian anti-slavery risk reporting?

An estimated $12 billion worth of goods sold in Australia each year are at risk being connected to modern slavery. Since 2019, large Australian organisations have had to report on how they are addressing those risks, with mixed results.

For many Australians grappling with social issues at home, the thought of modern slavery sits somewhere beyond the everyday conscience – especially the idea that they could be in any way supporting such a heinous practice. Yet, an estimated 40 million people worldwide are are subject to some form of slavery today, including on the farms and factories that supply products or their components and base resources to Australians.

As such, the Australian parliament in 2018 passed The Commonwealth Modern Slavery Act, which required mandatory annual reporting from larger Australian organisations (and those operating in the country) on their supply chain and operational risk as it relates to modern slavery, including the steps taken to reduce any identified risks. With the complexity of increasingly integrated global supply chains, this is not the simplest of tasks.

According to Meg Brodie, a Director of Human Rights and Social Impact at KPMG Banarra, both the government and private enterprise have significantly underestimated what would be required. In a blog on the KPMG website, Brodie recounts a business client seeking to manage their modern slavery risk (those required to report have annual consolidated revenues of above $100 million), which expected that the work could be undertaken in a week.

Meanwhile, during the government’s consultation phase prior to the introduction of the legislation in 2018, it was claimed that the average annual cost of adherence would be just $11,500. “Neither the business that wanted modern slavery risk solved in a week, nor the research that underestimated the cost of implementation, took into account the fundamental issue,” says Brodie. “Managing risk to people is a constant and evolving task.”

She notes that such reporting requires the same approach of continuous improvement as to any other risk – but with one fundamental difference; the business is not the first consideration when it comes to the risk of slavery, but rather the potential harm to affected stakeholders. “Keeping sight of this evolution will help businesses plan their ongoing response and enhance their ability to meet one of the mandatory reporting criteria, namely ‘the effectiveness of your actions’.”

Reporting wilderness

A recent article in the online sustainability publication The Fifth Estate examined the nature and quality of reporting to date, noting in the first instance the confusion that still exists, with some reports reading like a marketing brochure, others as clinical legal statements, and then everything in between. This is likely in part due to the actual reporting requirements themselves under the legislation being relatively straightforward, without legal penalty.

Yet, Brodie adds that many businesses have found themselves stuck after the initial period of establishing commitments and controls, despite their best intentions. Much of that seems to be related to an uncertainty around the best approach and what further steps to take – “available guidance on modern slavery is thin,” she says. Some entities for example have gathered a mountain of supply chain data, but are without the capacity to make effective use of it.

Improved approach

On the question of how to report well, Brodie says the answer is in the action. “If you did get stuck in year two, don’t get distracted by the task of producing your second statement. Submit an honest account of where you got up to and now focus instead on year three. Build a commitment to maturing your modern slavery risk management which will offer you a foundation for subsequent years,” she states, adding that for those which did make progress, report on that too.

Robin Mellon, the CEO of sustainability consultancy Better Sydney and author of The Fifth Estate report, agrees that straightforward honesty in reporting and acknowledging how far there is go is one of the absolute keys, together with a focus on people ahead of processes. “Many organisations are just starting out and recognising that they don’t know, or yet understand, where the risks of harm to people really lie – but that’s a good thing,” he writes.

These are the organisations that are being honest. Mellon continues; “The best Modern Slavery Statements that I’ve read – without a doubt – are the ones that focus the reporting, the risks, and the statement – on people. The people within the organisation, in their operations, in their supply chains. The statements that focus on people – and the risk of harm to people – will get it right in the long term, and we’ll see those continuous improvements.”

Driving maturity

Meanwhile, Brodie outlines a number of characteristics of businesses committed to maturing their risk approach and reporting; strong and established governance and accountabilities; clear plans for enhancing maturity over time including a strategic link to other social risk or human rights responses; an emerging articulation of risk appetite; committed resources and use of subject matter experts, and; an openness to ongoing review of existing controls.

She concludes; “Some of my favourite conversations these days are with professionals across procurement, risk, legal and corporate affairs who hold responsibility for managing modern slavery responses. While the introduction of the legislation may have prompted them to turn their minds for the very first time to human rights, for some it has been the start of understanding the profound difference they can make in their everyday roles in preventing harm to people.”