The Modern Slavery Act 2018 (Cth) requires Australian entities with annual consolidated revenue of $100 million or more to report annually on their actions to assess and address modern slavery risks in their operations and supply chains. For many organisations, modern slavery reporting is integral to ESG disclosure and supply chain governance.
What is Modern Slavery?
Modern slavery encompasses serious exploitation including:
- Human trafficking: Moving people for exploitation through force, fraud, or coercion
- Slavery: Ownership over a person including buying, selling, or trading
- Servitude: Coercion to provide services without freedom to leave
- Forced labour: Work extracted under threat, force, or deception
- Forced marriage: Marriage without free and full consent
- Debt bondage: Forced work to repay debt where value is not reasonably applied
- Child exploitation: Worst forms of child labour
Modern slavery exists in Australia and Australian supply chains. Reporting entities must assess and address these risks.
Reporting Requirements
The Modern Slavery Act requires mandatory reporting for:
- Australian entities with $100M+ consolidated revenue
- Corporate Commonwealth entities with $100M+ revenue
- Voluntary reporting is encouraged for smaller entities
Modern Slavery Statements must be approved by principal governing body and signed by a responsible member.
Statement Content Requirements
Modern Slavery Statements must describe:
- Reporting entity: Identify the entity and structure
- Operations: Describe the reporting entity’s operations
- Supply chains: Describe the reporting entity’s supply chains
- Risks: Describe modern slavery risks in operations and supply chains
- Actions: Describe actions taken to assess and address risks
- Effectiveness: Describe effectiveness of actions taken
- Consultation: Describe consultation with owned entities
Statements must be submitted to the Modern Slavery Statements Register within 6 months of reporting period end.
Supply Chain Due Diligence
Effective modern slavery due diligence involves:
- Mapping: Identify supply chain tiers and geographic risk
- Risk assessment: Evaluate sector, geographic, and product risk factors
- Supplier engagement: Communicate expectations, survey suppliers, conduct audits
- Grievance mechanisms: Enable reporting of concerns without retaliation
- Remediation: Address modern slavery when identified
Supply chain complexity requires prioritised risk assessment based on sector and geography.
High-Risk Sectors and Regions
Certain sectors and regions present elevated modern slavery risk:
- Sectors: Agriculture, construction, garments, electronics, mining, hospitality, cleaning
- Products: Cotton, timber, rubber, minerals, seafood, palm oil
- Regions: Countries with weak governance, conflict zones, high corruption
The Global Slavery Index and US Department of Labor List of Goods Produced by Child Labor or Forced Labor provide guidance on risk factors.
Embedding Modern Slavery in ESG
Modern slavery intersects with broader ESG topics:
- Governance: Board oversight of modern slavery risk
- Human rights: Alignment with UN Guiding Principles on Business and Human Rights
- Supply chain: Sustainable procurement and supplier engagement
- Social licence: Reputational risk from supply chain exploitation
Modern slavery risk management supports sustainability reporting and stakeholder confidence.
Common Reporting Gaps
The Modern Slavery Register identifies consistent improvement areas:
- Reporting structure: Clearly identify the reporting entity and structure
- Supply chain description: Provide meaningful detail on supply chains
- Risk assessment: Explain methodology, not just risk identification
- Actions taken: Report specific actions, not generic commitments
- Effectiveness: Include metrics, not just process descriptions
- Consultation: Explain consultation with controlled entities
Quality statements provide transparency on both challenges and progress.
Beyond Compliance
Leading practice extends beyond minimum compliance:
- Living wage: Address root causes of vulnerability through fair wages
- Recruitment fees: Ensure workers do not pay fees for employment
- Worker voice: Enable workers to raise concerns without fear
- Transparency: Publish supplier lists and audit findings
- Collaboration: Participate in industry initiatives to address systemic issues
Authentic commitment to addressing modern slavery demonstrates values-based governance.
Connection to Double Materiality
Modern slavery is relevant to double materiality assessment:
- Impact materiality: Modern slavery causes severe harm to affected individuals
- Financial materiality: Regulatory action, reputational damage, and supply disruption
Materiality assessment ensures modern slavery receives appropriate disclosure and governance attention.
How ESG Solutions Can Help
ESG Solutions supports Modern Slavery Act compliance:
- Statement preparation: Draft compliant Modern Slavery Statements
- Supply chain mapping: Identify and prioritise risk areas
- Risk assessment: Structured evaluation of modern slavery risks
- Policy development: Supplier code of conduct and procurement policies
- Training: Procurement team awareness and capability
- Due Diligence: Supplier assessment frameworks
Contact ESG Solutions for Modern Slavery Act compliance support.
Key Takeaways
- Modern Slavery Act requires annual reporting for entities with $100M+ revenue
- Statements must identify, assess, and report on supply chain risks
- Supply chain due diligence is essential to identify hidden exploitation
- High-risk sectors require prioritised attention
- Leading practice extends beyond compliance to address root causes
- Modern slavery integrates with broader ESG and human rights governance