In the first year of compulsory modern slavery reporting, most companies have complied with the minimum requirements, but there is room for more meaningful reporting to avoid promoting a ‘race to the middle’, a new study ACSI commissioned has found.
The report, Moving from paper to practice: ASX200 reporting under Australia’s Modern Slavery Act, is a snapshot of key reporting trends among 151 ASX 200 companies. It identifies areas where reporting can be improved and covers the practical steps businesses have taken to mitigate modern slavery risks in their operations and supply chains.
Key findings include:
- The majority of statements appear to satisfy the requirements of the Modern Slavery Act (MSA), without disclosing more than key peers;
- About a third of ASX200 companies’ statements appeared to be potentially non-compliant with one or more of the MSA’s requirements, potentially reflecting differences in legal interpretation;
- Nearly 65% of statements did not identify any general modern slavery risk areas/factors relating to companies’ operations and focused solely on supply chain;
- Less than half of statements identified how key policies are communicated or enforced, with only 13% of statements outlining details about training and 33% elaborating on supply chain risk assessments;
- Only 17% of statements identified actions taken to ensure grievance mechanisms or other processes to respond to modern slavery complaints; and
- Although 36% of statements identified instances of collaboration, these tended to be with other businesses rather than broader stakeholders.
“Modern slavery is a global issue and most businesses are exposed in some way. Given Australia’s reliance on imported goods there is a particular risk for Australian companies,” ACSI CEO Louise Davidson said.
Until recently, there was no legal requirement for businesses to assess and address modern slavery risk in their operations and supply chain. The Modern Slavery Act (2018) now requires companies with revenue of over AUD$100M to publicly disclose their exposure to modern slavery risks.
Ms Davidson said there was an opportunity for ASX200 companies to deepen assessment and disclosure of operational risks, provide more detail about policies, risk assessments and training, collaborate with stakeholders to refine their risk management approach and strengthen grievance mechanisms to manage modern slavery complaints.
“The Modern Slavery Act was introduced to help improve the way that companies understand the modern slavery risks in their operations and supply chains, and outline how they will approach issues when they arise,” Ms Davidson said.
“While many companies have strong governance of these issues and policies in place, it can be more challenging understand and address what happens in practice across both their operations and supply chains.
“Modern slavery not only has a devastating human impact, but it undermines shareholder value. Safeguarding human rights is vital for businesses to build long-term sustainability as poor practice can expose companies to significant reputational and financial risk.
“In the first year of reporting it is clear there is some way to go. Investors and other stakeholders will play an important role over the next 12 months in helping companies to continue to improve modern slavery risk management and drive meaningful change.”
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