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Briefing: Australia’s draft modern slavery law

Briefing: Australia’s draft modern slavery law

Background and timelines

Australia has confirmed that it will adopt a modern slavery act in 2018. On 16 August, the Minister of Justice, the Hon Michael Keenan MP, published the government’s preferred option for the contents of new law. This proposal will now be refined through a national consultation process, led by the Attorney General, and concluding on 20 October.

The government’s proposal for the anti-slavery law is the outcome of an inquiry launched in February 2017. The Foreign Affairs and Aid Sub-Committee, which is leading the inquiry, has been careful to consider opinions from all parties. Global businesses, investors, NGOs and academics made 173 submissions, many of them reflecting on lessons learned from the implementation of the UK Modern Slavery Act.

These stakeholders all now have the opportunity to amend and refine the government’s proposal for the new modern slavery law in the ongoing consultation. The threshold for reporting may lower, requiring more businesses to report, but changes causing a significant increase to the regulatory burden for business are unlikely.

What this means for business

  • Businesses with their headquarters or operations in Australia and with annual total revenue currently set at AUS100 million will have to publish an annual disclosure statement on anti-slavery due diligence
  • Annual disclosure statements will be structured around mandatory reporting criteria, which enable the business to set out what it is doing to prevent slavery in its operations and supply chain
  • Statements must be approved by the board and signed by a director

Modern slavery risks: Australia and import partners

Source: Verisk Maplecroft 2017-Q3

As the visual shows, our Modern Slavery Index reveals that Australia, and most of its major import partners, fall into the higher risk categories for modern slavery. This underlines the considerable human rights risks impacting Australian business, including those covered by the country’s forthcoming anti-slavery law, expected in 2018

Key elements of the draft law

Timetable:

  • The Australian Modern Slavery Act is likely to be adopted in late 2018
  • Annual disclosure statements will be required within 5 months after the end of the Australian financial year. There may be a phased introduction following the adoption of the act to give business time to prepare

Definition:

  • Modern slavery will encompass slavery, servitude, forced labour, debt bondage, and deceptive recruiting for labour or services. In the proposed law, the definition currently excludes forced marriage

Scope:

  • The government proposes that entities with total annual revenue no lower AUS100 million (GBP61,135,240) will be required to report. This is estimated to affect about 2,000 businesses. The threshold may be adjusted periodically. Businesses that are below the threshold, but want to report can ‘opt in’
  • The entities covered by the act may include, “bodies corporate, unincorporated associations or bodies of persons, superannuation funds and approved deposit funds”
  • The law will apply to entities with their headquarters in Australia or part of their operations in Australia. State procurement will be covered through a different human rights instrument

Reporting requirements:

  • Disclosure statements must cover both operations and supply chain. The definition of these terms will be clarified during the national consultation, but the government states that its understanding of supply chain extends beyond Tier 1
  • Disclosure statements are based on mandatory reporting criteria, as illustrated below. The government will provide a reporting template based on the mandatory criteria. The reporting entity can decide what information, if any, to provide in this framework
  • These criteria are a consolidated version of the recommended reporting guidelines in the UK MSA. The alignment is intended to reduce the reporting burden and facilitate mutual recognition of disclosure statements

Reporting requirements

Disclosure statements must cover the following 4 criteria at a minimum:

  • 1. Describe your business structure, operations and supply chains
  • 2. Identify modern slavery risks in your operations and supply chains
  • 3. Identify and assess the effectiveness of policies and processes (including codes of conduct, supplier contracts and training), which address modern slavery in your operations and supply chains
  • 4. Identify and assess the effectiveness of your due diligence process, which addresses modern slavery in your operations and supply chains

Source: Government of Australia, Attorney General's Office

Approval:

  • Disclosure statements must be approved at the equivalent of board level and signed by a director

Transparency:

  • Disclosure statements must be published on the business website
  • Statements will be hosted in a free, publicly accessible central repository managed by the government or a third party (potentially the anti-slavery commissioner)

Compliance:

  • There will be no fines or other punitive penalties for non-compliance
  • The government will monitor compliance and entities that don’t comply may be subject to public criticism
  • An anti-slavery commissioner may be established to provide independent oversight

Review and amendments:

  • The law will be reviewed three years after first introduction
  • There will be a mechanism for the business community to provide feedback about the operation and effectiveness of the law
  • The government will use the three year review as an opportunity to assess overall compliance by business with the reporting requirement

Verisk Maplecroft modern slavery service

Verisk Maplecroft supports companies through the stages of building a robust modern slavery due diligence process. In addition to expert consultancy, tailored to answer your particular questions, we offer a modern slavery service that covers the essential steps necessary to produce a robust annual statement.

Contact info@maplecroft.com for more information

Modern slavery due diligence

Source: Verisk Maplecroft

By: Alexandra Channer, Principal Analyst, Human Rights; Gayle Gunawardena, Head of Human Rights; Sarah Kerrigan, Strategic Lead, Human Rights; Hannah Broscombe, Supply Chain Analyst, Human Rights; James Allan, Director, Human Rights and Environment; Michelle Carpenter, Analyst, Human Rights & Liudmila Chambers, Principal Consultant

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