On 21 June, the NSW Parliament passed a Modern Slavery Act, the first legislation in Australia that requires corporations with earnings over AUD$50million to have mandatory reporting on modern slavery in their supply chains.
Modern slavery is one of the most abhorrent global human rights problems at present, with a troubling number of instances still occurring both in Australia and overseas. So, it’s great to see the NSW Parliament taking such a strong stand and enacting a bill which includes penalties for non-compliance.
The objective of the Act is:
a) to combat modern slavery,
b) to provide assistance and support for victims of modern slavery,
c) to provide for an Anti-Slavery commissioner,
d) to provide detection and exposure of modern slavery that may have occurred or be occurring or that is likely to occur,
e) raise awareness of, and provide for education and training about modern slavery
f) to encourage collaborative action to combat modern slavery
g) provide assessment of the effectiveness of laws prohibiting modern slavery and to improve the implementation and enforcement of such laws
h) provide for mandatory reporting risks of modern slavery occurring in supply chains of government agencies and commercial organisations
i) to make force marriage of a child and certain slavery and slavery-like conduct offences in NSW
j) to further penalise involvement in cybersex trafficking
What this means for business
Commercial organisations with an annual turnover of over AUD$50million and operating within NSW are mandated to report annually on what they are doing to combat modern slavery within their supply chain. Reporting will be required within 5 months from 30 June, each year.
Key points to the anticipated legislation:
1. Companies will be required to prepare a modern slavery statement outlining the steps taken to ensure that the goods and services they procure are not a product or service of modern slavery – maximum penalty: 10,000 penalty units or AUD$1.1 million
2. Commercial organisations must make their modern slavery statement publically available in accordance with the regulation – maximum penalty: 10,000 penalty units or AUD$1.1 million
3. Organisations’ modern slavery statements are to include:
a. The organisation’s structure, its business and its supply chains
b. Its due diligence process in relation to modern slavery in its business and supply chains
c. The areas of its business and supply chains where there is a risk of modern slavery taking place and steps taken to assess and manage risk
d. Training of employees about modern slavery
4. A person must not provide information in connection with a matter that the person knows, or ought to reasonably know, is false or misleading – maximum penalty: 10,000 penalty units or AUD$1.1 million
For a full list of requirements under Part 3, Supply chains, Transparency of supply chain, please review the full Modern Slavery 2018 NSW bill.
Government agencies will also be impacted by the NSW Modern Slavery Act
As well as the legislation requiring corporate entities to report, the Act will have a significant impact on NSW government agencies and their procurement processes.
It imposes an obligation for government agencies to take reasonable steps to ensure that the goods and services procured by and for the agency are not the product of modern slavery.
There will be an amendment to the Public Works and Procurement Act to ensure that one of the objectives of the NSW Procurement Board is to oversee this and departments will have to provide annual reports that lay out what steps have been taken to ensure that goods and services, which have been procured, are not the product of modern slavery.
It is expected that the Commissioner will regularly consult with the Auditor-General and the NSW Procurement Board to monitor the effectiveness of due diligence procedures within government agencies.
Opportunities for product manufacturers
If your organisation is not directly affected by the NSW Modern Slavery Act and is not required to report, it may be that the Modern Slavery Act indirectly affects your business. If your company is supplying goods or services to companies that are having to report, then I would suggest you start conducting supply chain due diligence on your suppliers so you too understand your level of risk and whether your supply chain is free from modern slavery.
I suspect there will be opportunities for companies that demonstrate their commitment to addressing supply chain risks. Large companies and government agencies will want to partner with socially responsible organisations.
Key takeaways
1. Understand the legislation if your commercial business falls under the reporting threshold.
2. Seek to understand not only the requirements of the Modern Slavery Act, but also your supply chain risks.
3. If your business does NOT fall under the reporting threshold, know that you may be indirectly affected.
4. Set up a system for supply chain due diligence – it won’t only be a government requirement, but industry too. The Green Building Council of Australia has made it known that they too will be looking at addressing modern slavery (human rights) in supply chains in the next evolution of Green Star rating tools.
5. If you are supplying products to government agencies, know that they will want to partner with organisations that understand their supply chains and have systems in place to conduct proper supply chain due diligence to mitigate risk of modern slavery.
6. The Australian Government in the second half of 2018 will also be legislating against modern slavery.
7. Penalties apply for non-compliance for the NSW Modern Slavery Act.
If you would like to know more about the Modern Slavery Act or how to start the process of conducting sustainable supply chain due diligence, then please get in touch.
Important Links
Commonwealth Director of Public Prosecutions (CDPP)- Human Trafficking and Slavery