'Paper Promises? Evaluating the early impact of Australia's Modern Slavery Act'
A report titled, ‘Paper Promises? Evaluating the early impact of Australia’s Modern Slavery Act’ (Report) was released earlier this month, following a study by academics and civil society organisations of Australia’s response to the Modern Slavery Act 2018 (Cth) (MSA).
The MSA requires certain entities, including organisations with an annual turnover of at least $100m, to annually submit a modern slavery statement detailing their commitment to end modern slavery. Annual statements must comply with the MSA by addressing mandatory criteria.
The Report is promoted as a two-year project that analysed the compliance of 102 organisations.
The Report considers only the very first statement from 102 organisations (out of approximately 3,000 organisations)[1], just over three per cent of the annual statements submitted in the first reporting cycle.
High compliance, dismal statements
In short, the Report is very bleak for modern slavery statement compliance. The Report acknowledges that compliance by organisations to submit a modern slavery statement is high but suggests that 77 per cent of organisations have failed to address the mandatory criteria set by the MSA.[2] The Report bluntly states, ‘the results are dismal. On average, companies score 34% on evidence of effective actions to address modern slavery.’[3]
Lack of effective measures or lack of ability to measure?
The only criterion that received a high score in the Report’s assessment, was “the provision of evidence of continuous improvement in its approach to addressing modern slavery” i.e. an organisation’s plan for future action. However, the Report negates this result by stating that ‘a low threshold was applied in assessing statements for a commitment to continuous improvement’[4] due to the assessment of only one annual statement from each organisation.
The Report acknowledges the encouraging responses from organisations regarding the disclosure of relevant policies and expectations of suppliers, and carrying out of risk assessments, but counteracts its praise of these actions by adding, ‘[w]hile this is a positive outcome, it is notable that there is little evidence of validation of the effectiveness of these policies and practices.’[5]
The Report concedes the fact that, ‘many companies require the first reporting period to gain a foundational understanding of the issue, make assessments and develop plans to be implemented in the future.’[6] This comment is spot on, and many organisations would argue that meaningful action is occurring. Modern slavery is a new sphere for many of the people charged with heading the response to combat modern slavery in their respective organisations. People are learning more about modern slavery and how it can occur. Organisations are identifying risks and educating their workforce.
The Report noted the importance of statements to include information about how the COVID-19 pandemic affected the risks of modern slavery in an organisation’s operations and supply chains. What wasn’t recognised in the Report, is that the pandemic hit Australia during the first reporting period for all organisations. Many organisations struggled to remain active during the pandemic, adjusting to various impacts and regulations, let alone achieve all the objectives of even a standard strategy to address modern slavery in the first reporting period.
Increased consequences
The Report proposes that assurances made by organisations in their statements should be tracked and verified.[7] Further, the Report calls for action against organisations who don’t comply with the mandatory criteria in the MSA, including financial penalties, naming and shaming for non-compliance, and prohibition of organisations from public tenders.[8] Conversely, consideration should be given to public procurement incentives for organisations that do the right thing.[9]
Naming and shaming is already a potential consequence for an organisation should they fail to submit a valid statement, but no organistaion appears to ahve fallen foul of the MSA as yet.
Three-year review
Section 24 of the MSA provides that a three-year review is to be conducted in 2022 (three years from the date of enactment), with the final report to be completed within 12 months. This review will consider at least two statements from most organisations and is likely to contain more comprehensive insights into the compliance and actions of all entities required to report. This review is also likely to include the input of the Modern Slavery Expert Advisory Group who’ve convened every few months since June 2020, as well as civil society and business stakeholders.
Conclusion
The Report suggests that the promises of organisations contained in their statements, exist only on paper.[10] This suggestion is made even though the Report states in a disclaimer that the study never attempted to verify whether companies are in fact taking any action.[11]
These statements indicate that some of the assertions put forth in the Report are made in haste.
By reviewing the statements from a larger portion of entities, and more significantly, by reviewing the second statements of organisations which provide evidence to measure effectiveness of actions, a real assessment can be performed to determine the genuine and effective steps organisations have taken to eliminate, and reduce the risks of, modern slavery.
One thing is for sure, as the Report highlights, ‘[t]he question of effectiveness will become increasingly significant from 2022 onwards, as expectations grow for companies to demonstrate how plans and activities are yielding meaningful change.’[12]
How we can help you with your modern slavery obligations
Our team has experience developing and implementing specific measures to address modern slavery in operations and supply chains, including the design and operation of human rights due diligence processes, grievance and remediation processes, responsible and strategic sourcing practices, and delivering training and education pieces.
We know the legislation, best practice guides and tools, and what’s required of organisations to adequately comply with the mandatory criteria.
We are highly skilled in robust, strategic, and adaptive procurement management processes, implementing and overseeing model code clauses and obligations, understanding and identifying risks and developing and implementing mitigation strategies.
[1] Report page 12
[2] Report pages 4 and 12
[3] Report page 61
[4] Report page 68
[5] Report page 68
[6] Report page 68
[7] Report page 73
[8] Report page 8
[9] Report page 73
[10] Report page 73
[11] Report page 69
[12] Report page 68
