Free Article : Modern Slavery
This article was originally published in the Financial Crime Edition of the GRC Professional Magazine. (Sign in to access your member copy.)
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On 25 May, the Australian Government published a statutory report on the Modern Slavery Act 2018. There were 30 recommendations, but the broad scope of these proposed changes to the modern slavery act based on the statuary review could capture companies with an annual turnover of $50 million instead of the current $100 million, there could be penalties for non-compliance with the modern slavery act and scope for the role of an antislavery commissioner.
In the opening, the report addressed the question of whether there had been any meaningful change brought about because of the Act: A widely endorsed view in the consultations for this review is that there is no hard evidence that the Modern Slavery Act in its early years has yet caused meaningful change for people living in conditions of modern slavery.
There are occasional scattered instances of modern slavery incidents and victims being identified, but no strong storyline that the drivers of modern slavery are being turned around.
Conversely, there has been a more significant business focus on modern slavery risk and improvements in the quality and consistency of the modern slavery statement required under the Act.
This is confirmed by a Monash University report assessing the quality of modern slavery statements.
The first round of Australian modern slavery statements was of variable quality. Last October, Monash University published a report looking at the quality of modern slavery statement of the top 100 ASX companies and has found that the quality of the modern slavery statements has improved since then:
There is evidence of improvements in the disclosure quality of modern slavery statements. 64% of FY2021 statements were upgraded compared to FY2020, and no statements were downgraded. The observed improvement after one year of reporting is encouraging.
The paper also observed an emergence of new best practice due diligence as it relates to modern slavery.
The paper recommends the importance of supplier or third-party risk assessment systems, understanding the risk and risk exposure, and the remediation programs should focus on victims, not just businesses.
But what happens after the modern slavery statement is completed?
The review of the Act highlights the fact that there are no requirements for businesses to do anything after the risk assessment and the completion of the modern slavery statement:
A second criticism is that the Modern Slavery Act itself is not strong enough. It only requires entities to prepare a report and does not expressly impose a duty to take action – to engage in human rights due diligence. Nor does the Act have adequate mechanisms to enforce compliance with the reporting requirement – such as penalties, or compliance monitoring and regulatory enforcement by an independent antislavery commissioner.
The Current State of Modern Slavery Freedom Hub Founder Sally Erwin asked at the AML & Financial Crime Congress 2023 echoes the review's statement that the responsibility of the business to tackle modern slavery does not stop after the mandatory or voluntary statement. "It's about saving people's lives. So how can we, as businesses, start the journey? How can we begin to monitor the risk in every area of our businesses?"
This article was originally published in the Financial Crime Edition of the GRC Professional Magazine. (Sign in to access your member copy.)
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