Australia takes the next step on modern slavery in supply chains, but is it enough?

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25 August 2017

Written by Claire Falconer, FLEX Legal Director

Last week the Australian government announced that it would be introducing a “Modern Slavery in Supply Chains Reporting Requirement” into Australian law, requiring big businesses to report each year on what they are doing to eradicate slavery from their supply chains. The proposed law closely follows the much lauded UK Modern Slavery Act, but plans to go further on some elements. The question is whether this will be enough to make real change to company practices and the working conditions of their most vulnerable workers.

The Australian proposal explicitly replicates section 54 of the UK Modern Slavery Act in many respects. As in the UK Act, the proposed Australian legislation will require businesses to report annually on their efforts to address modern slavery in both their operations and their supply chains. The statements will need to be approved at board level, signed by a director and published on company websites, just as in the UK. And like the UK legislation, the Australian requirement has significant reach and will apply to all businesses either headquartered in Australia or having any part of their operations in Australia. This means that many multinational businesses already reporting in the UK will also be required to report in Australia.

The subject areas that Australian businesses will report on will also match the areas set out in the UK Act, with the significant difference that these areas of reporting will be mandatory under the Australian law, rather than optional as in the UK. As the Australian Government has said, this should hopefully lead to reports that are more consistent and easily comparable, and go some way to addressing the quality issues in many of the UK reports.

Another significant and positive difference is the intention of the Australian government to provide for a free, publicly accessible and searchable central repository, in which all statements will be housed. The lack of a central repository in the UK has been much criticised, and makes it both difficult and time-consuming for NGOs and consumers to locate and compare statements, significantly undermining the ‘public pressure’ effect of the Act.

However, while the Australian proposal is an advance on the UK Act in these key respects, it unfortunately retains some of the UK Act’s limiting features. These include the lack of any penalty for non-compliance, relying instead on ‘public criticism’ to punish laggard companies. How these companies will be identified is also unclear, with no mention of the publication of any list of companies required to comply. In the UK this omission has made it impossible for NGOs or the public to identify exactly which companies are failing to comply, and to apply pressure accordingly. The Australian proposal has also made clear that neither State or Federal Governments will be required to report on their procurement practices, despite the size and potential impact of these purchases.

Aside from these legislative details, there is also the overarching question of the impact of supply chains reporting in addressing modern slavery, and what else is needed to really stop modern slavery from happening. There is no doubt that the UK Modern Slavery Act, and its predecessor, the California Transparency in Supply Chains Act, have been successful in stimulating company interest and discussion on the issue of modern slavery. Positive outcomes identified to date include increased engagement of senior level executives, an increase in awareness training and development of company policies, and greater collaboration and information-sharing between companies.

However, there remains a lack of clear data or understanding about the difference that reporting makes to workers ‘on the ground’. In particular, while consumer-facing industries such as garment manufacturing are highly engaged and active in addressing exploitation in their supply chains, there is less obvious progress among industries that are less susceptible to consumer pressure, such as construction or extractive industries. There is also no clear evidence that reporting is creating the desired ‘level playing field’, or is changing the behaviour of the worst performing companies.

This is not to say that supply chains reporting is not effective, or that it doesn’t have a crucial role to play – FLEX advocated strongly for the transparency in supply chains clause in the UK Modern Slavery Act. But we also can’t rely on reporting as the ‘silver bullet’ to end modern slavery in global supply chains. While we continue to push forward for more and better transparency in supply chains legislation, we must also continue to ask what else is needed, and be prepared to put similar resources and efforts into those answers.