Supply Chain Sustainability Reporting Series by Emma Woodberry
Part 3 – Modern Slavery in the supply chain and reporting obligations
What is Modern Slavery?
Modern slavery describes a workforce that is exploited during their employment, without an option to leave or refuse due to threats, violence, coercion, deception or abuse of power. It comes in many forms including human trafficking, forced labour, child labour, and debt bondage.
Due to the nature of the work involved in production, processing, packaging and transport of goods, there is a high risk of modern slavery in most supply chains in Australia – these risks vary by industry and are heightened in imported food produce and textiles.
Modern Slavery Reporting
Modern Slavery reporting helps to hold organisations accountable for their actions and policies, ensuring they are taking steps to prevent and address modern slavery within their operations and supply chains. Australia’s Modern Slavery Act 2018 has encouraged transparency and ethical practices for Australian organisations to help identify patterns and hotspots, which can be targeted for prevention efforts. A recent independent review of the Act has identified key changes that will impact organisations existing reporting, including:
Increased modern slavery due diligence requirements
Requiring organisations to have due diligence processes in place to effectively identify risks in their supply chains through supplier assessment
New mandatory reporting criteria
The threshold for reporting on Modern Slavery risks in the supply chain via a published Modern Slavery statement has been reduced from $100m to $50m annual consolidated revenue
New penalties for non-compliance
Financial penalties are likely to be introduced for failure to comply to with any of The Acts requirements, such as failing to publish a modern slavery statement or failing at having an appropriate due diligence process in place.
Understanding your supply chain’s risk of Modern Slavery
When looking to understand the level of risk in your supply chain, it’s important to understand the inherent risk based on your industry and types of goods and services you offer. For most Australian operations, the risk is focused on supplier’s supply chains, and depending on where operations are based, transport and logistics processes.
Given the need for increased due diligence coming into legislation, trace. takes a two-way approach to modern slavery risk assessments:
1: Assess current maturity in supplier due diligence and risk assessment
- Review internal processes, systems and data used when selecting and onboarding suppliers
- Assess existing risk assessment processes and outcomes to determine effectiveness
- Identify opportunity to uplift and improve due diligence and risk management
2: Identify and assess modern slavery risks within the value chain
Map out the value chain in providing goods and services, including supplier’s supply chains
Assess modern slavery risk by each supplier and identify actions taken to date
Identify improvement opportunities and develop an implementation plan
Develop / update modern slavery statement and publish in line with The Modern Slavery Act 2018
Determine adequate reporting required to ensure ongoing transparency and risk management
Modern Slavery is one element of sustainability reporting for organisations, feeding into broader ESG objectives. You can read more about supply chain sustainability reporting in our first article, and Scope 3 carbon emissions in our second.
Get in touch today to see how we can help you identify the effectiveness of your due diligence processes, or assess your risk for Modern Slavery in the supply chain.
Emma Woodberry
Senior Manager
