With an all-new modern slavery bill before the Australian House of Representatives and increasing calls for reform of the UK Modern Slavery Act, the issue is moving up the legislative agenda once more.
New Federal Modern Slavery Bill in Australia
As we noted in our most recent round-up of key global trends in business and human rights, efforts to enact a new modern slavery reporting requirement in Australia have been on foot for some time. At the end of June, federal legislators took a significant step forward in turning the proposals into law, introducing a Modern Slavery Bill to the House of Representatives. It is intended the legislation will pass in the second half of 2018.
The Bill is modelled on the UK Modern Slavery Act 2015, and will require companies to prepare an annual modern slavery statement, approved by senior management, identifying how their operations and supply chains may contribute to modern slavery, and explaining what they are doing to address these risks. The obligation will apply to companies which carry on a business in Australia and have a consolidated annual turnover of A$100m (£56m) or more.
So far, so UK Modern Slavery Act. But unlike the UK legislation, which suggests rather than specifies what the statement should contain, the Australian Bill contains a set of mandatory criteria against which the company must report. The statement must address the modern slavery risks the company faces in its operations and supply chains, the actions taken to address them, and the effectiveness of the relevant initiatives. This leaves little to no scope for the very brief statements that characterised much corporate reporting in the early days of the UK Act.
Ultimately, the Australian federal Bill is an incremental, rather than revolutionary, development in corporate human rights reporting obligations. In terms of what it asks of companies and the risks it creates, it lies somewhere between the UK Modern Slavery Act and the significantly more exacting French Duty of Vigilance Law (see here). Nonetheless, it reflects the clear global trend towards more rigorous legislative standards of corporate respect for human rights. It should also be viewed alongside the new modern slavery law introduced at state level in New South Wales, which resembles the federal Bill but imposes fines of up to AUS$1.1m for non-compliance or misleading statements.
Calls for reform of the UK Modern Slavery Act
One interesting aspect of the Australian federal Bill is the requirement to submit statements to a government-run register, where they will be freely available for public review. A criticism regularly directed at the UK regime is that it is often difficult to locate corporate statements (even though they must be published on the company homepage), and compliance is difficult to track.
The UK Anti-slavery Commissioner, Kevin Hyland, believes this has contributed to weak compliance by a significant proportion of large businesses, including FTSE 100 companies, and wants it to change. In a joint statement signed by a number of companies, business associations and NGOs, the Commissioner has called for a central, publicly owned and operated registry of corporate statements published under s.54 of the UK Modern Slavery Act.
This is hardly the first time reform of the UK Act has been mooted, but companies should pay close attention to any debate emerging from the Commissioner’s joint statement, given it represents a concrete proposal - from a statutory authority - for greater enforcement of s.54.
Not only would a central repository provide a mechanism for third party interests easily and quickly to monitor compliance, it would also force companies to analyse exactly which entities within their corporate groups would be captured by the reporting obligation. Current practice often involves the publication of a single modern slavery statement, prepared on behalf of an entire corporate group without any mention of the particular entities falling within the scope of the UK Act. If, however, each individual entity within a corporate group (being those with an annual turnover of £36m or more that supply goods or services and carry on a business in the UK) was required to submit its own modern slavery statement through a government filing system, companies would clearly need to determine which entities are caught. Given the UK Act can apply to entities not registered in the UK, that might not necessarily be a straightforward exercise.
The Commissioner’s proposal doesn’t address this point. In all likelihood, a revised Act would permit the submission of a joint statement on behalf of multiple entities in a corporate group. That would prevent corporate groups needing to draft, authorise and submit multiple statements pertaining to each individual group company which have essentially identical content; but it may not negate the obligation to at least identify the entities caught by the legislation.
This is where the Australian federal Bill comes out. But again that goes further, requiring the group modern slavery statement to describe the process of consultation undertaken with all of the relevant group companies in drafting the statement.
Of course, the Australian Bill is not yet law, and the Commissioner’s proposals for the UK Act are currently only that: proposals. However, it seems clear that efforts to address corporate modern slavery compliance remain high on the agenda amongst legislators and influential stakeholders.