The Australian Government has just confirmed that new legislation will be introduced requiring large Australian businesses to report annually on their efforts to address modern slavery. The result will be a framework similar to the corporate-focussed legislation enacted in the UK in 2015 and similar initiatives that are under discussion in other jurisdictions including the US, France and Switzerland. Given the context of these reforms, any non-compliance is likely to result in serious and potentially irreparable harm to an organisation's brand and reputation. For this reason, compliance with the forthcoming Modern Slavery legislation needs to be part of every organisation's brand management strategy.
The reporting obligations are expected to apply to both the operations of the reporting business and its supply chain, and will not be limited to corporate entities. All businesses that meet the turnover threshold (expected to be A$100 million) are likely to have to report, regardless of their risk exposure and whether they are public or private companies, partnerships or joint ventures.
Slavery and forced labour practices have been defined and condemned in two separate international conventions for more than 50 years. Despite this, modern slavery remains prevalent globally. As of 2016 it was estimated that there were a total of 45.8 million people in modern slavery globally.1
The reputational implications of any association with slavery and forced labour practices are significant and often irreparable. Many global brands have suffered extensive brand damage as a result of reported associations with slavery or unethical working practices. These practices are often concealed somewhere within the supply chain, but global legislators are focussing on sustainability and ethical business and under new legislative frameworks the onus is increasingly on large corporate organisations to unearth these practices.
To date, there have been no known reports under the UK Modern Slavery Act that businesses are taking no action to eradicate slavery from their business. Businesses have exhibited a proactive and positive response to the new legal framework in the UK. When the Australian legislation comes into force, a similar response is expected.
Reports submitted under the new legislation will be collated and filed centrally, and are likely to be searchable by key stakeholders. NGOs have reported on the quality of Modern Slavery Act 2015 statements filed in the UK, and are even benchmarking reports in an effort to improve the quality of submissions. This publicity illustrates the potential significance of the reporting obligations for brand management. A negative report card could cause irreparable brand damage.
Australian businesses that are able to report substantive and meaningful efforts to eradicate slavery from their own operations and their supply chain stand to enhance their brand and reputation; whereas the new reporting framework may result in reputational damage for businesses that are unable to report any action.
Until the draft legislation has been published, the precise scope and nature of these new obligations will be unknown. The UK Modern Slavery Act 2015 is likely to inform the Australian government's framework. It is possible that the Australian framework will be more robust, having the benefit of hindsight and the opportunity to consider the effectiveness of the UK regime two years after implementation.
However, there are steps that businesses could and should be taking now in preparation for their first report. These steps include establishing corporate policies and procedures in connection with eliminating modern slavery from your business or analysing your supply chain and ensuring that contractual arrangements with suppliers and distributors include enforceable contractual obligations.
Our lawyers participated in the Parliamentary Joint Committee inquiry on the proposal to introduce an Australian Modern Slavery Act ( Foreign Affairs Defence and Trade Modern Slavery Submissions) and have worked with businesses that are subject to the UK Modern Slavery Act 2015 in relation to complying with their obligations under the UK regime. For a discussion about how the new Modern Slavery Act could impact your business, and what you could be doing to prepare, contact Abigail McGregor.
1 The Walk Free Foundation, The Global Slavery Index 2016 (2016) The Global Slavery Index, 4 HTTP://WWW.GLOBALSLAVERYINDEX.ORG/>.