Worldwide: Australia Proposes Modern Slavery Reporting Requirements For Multinationals – An Overview And Comparison To Existing Corporate Modern Slavery Disclosure Legislation

The Australian Government has released a consultation paper proposing the adoption of legislation that would require many multinationals operating in Australia to publicly report on modern slavery risk in their business and supply chains and their related compliance practices. "Modern slavery" includes human trafficking, slavery and slavery-like practices such as servitude, forced labor and debt bondage, which have been found to exist to varying degrees in many supply chains across a large number of countries. If adopted, Australia would join the United Kingdom and California in adopting similar reporting requirements. In this Alert, we discuss the proposed legislation and provide a comparison to the UK and California modern slavery reporting requirements.

The Proliferation of Corporate Modern Slavery and Related Legislation

Over the last several years, legislation addressing corporate responsibility for modern slavery has been adopted in several jurisdictions. California was first out of the gate when it adopted the California Transparency in Supply Chains Act, requiring companies to make disclosures concerning their efforts to address modern slavery. This Act took effect in 2012. The UK Modern Slavery Act, which was based on the California Act, was adopted in 2015 and required disclosures beginning last year. The U.S. Federal Acquisition Regulation anti-human trafficking provisions, which among other things require U.S. federal contractors to put in place specified compliance procedures, also were adopted in 2015. And last year saw the repeal of the consumptive demand exception under the U.S. Tariff Act.

This year has been especially active for corporate human rights legislation. Early in the year, France adopted a corporate duty of vigilance law that requires large French companies to take steps to identify and prevent serious human rights impacts, which would include modern slavery, in their supply chains. At around the same time, the Dutch Parliament adopted child labor due diligence legislation, which is awaiting Senate approval. In addition, the Welsh Government released a Code of Practice for Ethical Employment in Supply Chains that businesses involved in Welsh public sector supply chains are expected to sign on to. Next year, many EU companies will begin making disclosures under the EU non-financial reporting directive, which for some companies are expected to include modern slavery-related disclosures. 

Shifting over to Australia, corporate human rights legislation has been under discussion for some time. In 2013, a Parliamentary committee recommended that the Australian Government adopt legislation to improve supply chain transparency. In 2016, a multi-stakeholder working group convened by the Government recommended that it consider adopting a modern slavery reporting requirement. Last month, on August 16, the Commonwealth Minister for Justice announced the Australian Government's proposal to enact an Australian Modern Slavery in Supply Chains Reporting Requirement and released a Consultation Paper outlining the proposed regulation. That Paper and the public consultation process are discussed below.

The Proposed Regulation

Definition of Modern Slavery. "Modern slavery" will encompass slavery, servitude, forced labor, debt bondage and deceptive recruiting for labor or services. The Australian Government proposes that the definition incorporate conduct that would constitute a relevant offense under existing human trafficking, slavery and slavery-like offense provisions contained in the Commonwealth Criminal Code. The definition will exclude practices such as forced marriage that are unlikely to be present in business operations and supply chains.

Subject Entities. The Australian Government proposes that the revenue threshold for the reporting requirement be set no lower than AUD100 million in total annual revenue (approximately USD80 million as of the date of this Alert). For purposes of its cost analysis, at this monetary threshold, the Government has assumed that approximately 2,000 large corporations and entities operating in Australia will be subject to the regulation. The regulation would allow for periodic adjustments. Entities below the threshold would be able to opt in to the reporting requirement.

The Australian Government has indicated that, in the public consultation process, it will collaborate with business and civil society to define the types of entities that the reporting requirement will apply to and to clarify how the proposed revenue threshold will apply. At this stage, the Australian Government proposes to define "entity" broadly to include a broad range of entity types, including bodies corporate, unincorporated associations or bodies of persons, superannuation funds and approved deposit funds. The Australian Government does not propose to limit the application of the reporting requirement to high risk sectors or importers.

Subject to consultation with the business community and civil society, the Australian Government anticipates the reporting requirement will apply to not only entities headquartered in Australia, but also to entities that have any part of their operations in Australia, in each case subject to the revenue threshold.

Covered Business Activities. Entities that are subject to the reporting requirement will be required to report on their actions to address modern slavery in both their operations and their supply chains. The Australian Government intends to provide detailed guidance concerning the definition of "operations" and "supply chains," in collaboration with the business community and civil society. The Australian Government notes in the Consultation Paper that it proposes that the definition of "supply chains" extend beyond first tier suppliers.

Statement Content. The Australian Government proposes that subject entities be required to report on substantially the same topics as are contained in the UK Modern Slavery Act. However, under the Modern Slavery Act, reporting on the enumerated topics is optional.

Subject to feedback received through the consultation process, the Australian Government proposes that entities be required to, at a minimum, report against a consolidated set of four mandatory criteria:

  • the entity's structure, operations and supply chains;
  • the modern slavery risks present in its operations and supply chains;
  • the entity's policies and process to address modern slavery in its operations and supply chains (such as codes of conduct, supplier contract terms and training for staff) and their effectiveness; and
  • the entity's due diligence processes relating to modern slavery in its operations and supply chains and their effectiveness.

The Consultation Paper indicates that entities will have the flexibility to determine what, if any, information they provide against each of the four criteria and whether to include any additional information. The Australian Government intends to provide detailed guidance concerning the nature and extent of the information that should be included in statements.

Approval Requirements. Statements will be required to be approved at the equivalent of the board level and signed by a director.

Statement Publication. Entities will be required to publish their statements on their website. Subject to feedback obtained through the consultation process, the Australian Government also proposes to provide for a free, publicly accessible and searchable central repository.

Reporting Due Date. The Australian Government proposes that entities be required to publish modern slavery statements within five months after the end of the Australian financial year. The Consultation Paper indicates that, if necessary, the Australian Government will provide for a phased introduction of the reporting requirement to ensure the business community has sufficient preparation time.

Compliance Mechanism; Penalties. The regulation would not include punitive penalties for non-compliance. However, the Consultation Paper indicates that the Australian Government will monitor general compliance with the reporting requirement and entities that do not comply may be subject to public criticism.

The Australian Government also is considering options for oversight of the reporting requirement, including the feasibility of and requirement for independent oversight. In addition, the Australian Government is considering ways to support business groups and civil society to undertake analysis and benchmarking of modern slavery statements.

Subsequent Review of the Legislation. The Australian Government proposes to review the legislation three years after its introduction. The review will include further public consultation. The Australian Government also will establish a mechanism for the business community to provide feedback to the Government pertaining to the operation and effectiveness of the reporting requirement. Consumers and civil society also will be consulted.

A Comparison to Existing Corporate Modern Slavery Legislation

The table below provides a high-level comparison of the proposed Australian regulation, the UK Modern Slavery Act and the California Transparency in Supply Chains Act. Australian modern slavery reporting requirements are expected to be further fleshed out in draft legislation during 2018. For additional information on the UK Modern Slavery Act and the California Transparency in Supply Chains Act, see our earlier publications here, here, here and here. Additional publications and source materials are available on our Supply Chain Compliance & Corporate Social Responsibility website.

Australia

United Kingdom

California

Subject Companies 

To be defined broadly; not limited to high risk sectors or importers

Supplier of goods or services, including a trade or profession

Manufacturer or retailer

Annual Turnover Threshold

Not lower than AUD100 million, subject to periodic adjustment

£36 million

USD100 million

Jurisdictional Nexus

Entities headquartered in Australia or having any part of their operations in Australia

Doing business in the United Kingdom

California Revenue and Taxation Code

Covered Business Activities

The subject entity's operations and supply chains

Any of the subject entity's supply chains, and any part of its own business

Direct supply chain for tangible goods offered for sale

Statement Content

(Substantially similar across all three jurisdictions)

Required topics

Suggested topics

Required topics

Publication

Website; potentially also a central repository

Website, with a prominent homepage link, or upon written request

Website, with a conspicuous and easily understood homepage link, or upon written request

Signature/Board Approval

Required

Required

None

Frequency

Annual

Annual

Not specified; on an as-needed basis

Due Date

Within five months after the end of the Australian financial year, potentially subject to a phased introduction 

No mandatory due date; recommended within six months after fiscal year end

Not specified

Next Steps 

The Australian Government is holding a public consultation process with the business community and civil society to refine its proposal. The Commonwealth Attorney-General's Department is leading this process. Written submissions can be made through October 20, 2017. A series of stakeholder roundtables also will be convened during the remainder of 2017.

The reporting requirement will be established through a new Act of Parliament. Taking into account feedback provided during the consultation process, the Minister for Justice proposes to seek to bring forward draft legislation in the first half of 2018. As noted earlier in this Alert, the legislation may include a phase-in period to allow businesses additional time to prepare their first annual statement.

Thoughts on the Proposed Legislation and the Continuing Evolution of Modern Slavery Compliance

There Isn't Much for Multinationals to Do Now under the Proposed Legislation, but There Are a Couple of Near-Term Action Items to Consider 

At this point, it is premature for multinationals to begin preparing for compliance with Australian modern slavery legislation. Many details remain to be worked out through the ongoing public consultation and the legislative process to follow. In addition, aspects of the legislation may change from what is described in the Consultation Paper, with some NGOs and other constituencies continuing to advocate for a more expansive approach. Finally, the timing of both the adoption of legislation and the due date of the first statements remain unknown.

With that said, there are two nearer-term action items to consider. The more immediate action item is to consider whether to participate in the consultation process. As noted earlier in this Alert, submissions can be made through October 20, 2017. This is something that larger multinationals should consider, either individually or through their trade associations, given their substantial experience reporting under existing corporate modern slavery legislation.

The second action item is to determine which entities in the consolidated group may be subject to the proposed legislation, and whether those entities present modern slavery risks that may require different disclosures and/or compliance procedures than other group companies already publishing modern slavery statements.

The Proposed Australian Modern Slavery Legislation Will Accelerate the Movement Toward Combined Disclosure Statements 

Many multinationals that are subject to both the UK Modern Slavery Act and the California Transparency in Supply Chains Act already have opted to prepare a single combined statement to address both requirements, since this tends to be more efficient and substantive modern slavery compliance procedures typically are the same across the consolidated group. With potentially three jurisdictions at issue, we expect most of the remaining holdouts to move over time to combined statements.

Notwithstanding the trend toward combined statements, at many multinationals, responsibility for CSR disclosures remains spread out across functions, business units and geographies. With the increase in mandatory human rights disclosures on modern slavery and other topics, and potentially more on the way in addition to Australia, this approach is becoming unwieldy and is in some instances creating risk. We are already starting to see more multinationals move global responsibility for modern slavery and other human rights-related disclosures into a single team and expect this trend to continue as well.

Keep the Big Picture in Mind – Mandatory Disclosures Are Only One Piece of Modern Slavery Compliance 

As articulated in both the Consultation Paper and previously by the UK Home Office, modern slavery disclosure requirements are intended to create a "race to the top." NGOs and other stakeholders already have published several expectations documents and assessments and rankings of California and UK modern slavery disclosures and company compliance practices, and we expect to see these continue to spring up like wildflowers after a rainstorm. In addition, companies are benchmarking their modern slavery disclosures and compliance programs against those of peers and competitors. These factors – along with greater awareness of modern slavery, more supply chain transparency and an increasing focus on ethical sourcing generally – will continue to drive enhancements to compliance programs and disclosures, well beyond what is required by California, UK or Australian legislation, for the foreseeable future.

About Our Supply Chain Compliance and Corporate Social Responsibility Practice

Ropes & Gray has a leading Supply Chain Compliance and Corporate Social Responsibility practice. With team members in the United States, Europe and Asia, we are able to take a holistic, global approach to supply chain compliance and CSR. Senior members of the practice have advised on these matters for almost 30 years, enabling us to provide a long-term perspective that few firms can match.

For further information on the practice, click here.

Click here to visit our Supply Chain Compliance and CSR website.

To join our Supply Chain Compliance and CSR mailing list, click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.