We have been receiving lots of questions in relation to the second year of reporting under the Australian Modern Slavery Act. Here are our answers in a nutshell.
Question 1: Is it acceptable to copy the bulk of the first year statement and just make some minor adjustment for year 2?
Answer: the first part of the answer is that statements need to be accurate and opinions expressed in them need to have reasonable grounds. Statements need to describe risks and actions taken in the reporting year (not in previous years). So, as a first step, statements need to be reviewed to make sure that they are compliant and not misleading for the current reporting period.
Beyond ensuring legal compliance, reporting entities need to think about how readers of the statement will view progress described in the statement. Adopting a “copy and paste” approach will not be viewed well by those assessing and benchmarking year 2 statements. Most Boards approving the statements will expect to see some year on year progress and to see what is planned for year 3. Investors, shareholders, business partners and consumers will expect to see a degree of increasing maturity in modern slavery frameworks and may mark down entities that do not appear to be making meaningful progress in assessing and addressing modern slavery risks in their operations and supply chains.
One final point – the year 2 statements that we are seeing are focusing a lot more on implementation of policies than year 1 statements. Simply copying last year’s statement will mean that your statement falls behind those of your peers.
Question 2: What do I do if there is nothing new to report for year 2?
Answer: Even if there is nothing new to report, you need to check that the description of your operations, supply chains and risk is accurate.
It is important to be up front if your business has had limited progress in responding to modern slavery risk during the second year. If there are reasons for the slow progress, they should be noted. Entities should still address the mandatory reporting criteria and use the opportunity to commit to goals for year 3. Those goals will demonstrate commitment if the last year has proved challenging.
Question 3: What can be achieved between now and the end of my year-end for inclusion in the year 2 statement?
Answer: If your year-end is December, you still have time to review the planned activities foreshadowed in your first statement and take steps to implement changes. It is best to prioritise the actions with the biggest impact first. For example, a review of procurement practices to identify where modern slavery considerations can be embedded, introduce modern slavery awareness training, incorporate modern slavery clauses into template supplier contracts and work with the internal stakeholders to introduce a human rights or modern slavery policy. These are just some measures that can be undertaken relatively swiftly.
If your year-end was June (or has otherwise passed), then your statement can refer to the actions that you are currently taking as KPIs for the next reporting year.
Question 4: How are NGOs and civil society groups going about benchmarking statements and giving them scores?
Answer: A number of organisations have published benchmarking reports and allocated scores for modern slavery statements based on a variety of different standards. These reports are only going to become more frequent and pointed over the coming years as second year statements become available on the Australian Border Force register.
It is important to be aware that benchmarking reports are often marking statements based on the authors’ views of best practice. Legal compliance with the mandatory reporting criteria is seen as the basic minimum. So a technically compliant statement may not receive a high score in a benchmarking study where the bar is set much higher than compliance.
In the absence of financial penalties for a non-compliance with the legislation, it was always envisaged that civil society groups would step in and perform the ‘naming and shaming’ function to drive best practice by critiquing statements on the government register.
If your entity is concerned about benchmarking, it is important to understand the methodologies being adopted. It could be scoring arises from lack of detail or transparency in relation to your program, rather than being a reflection upon the program itself.
Question 5: What happens if I choose not to submit a statement or my statement is not compliant?
Answer: The Minister for Home Affairs has powers under the legislation to call out the entities that should have reported and didn’t. Businesses should proceed on the basis that the Minster will act on this power.
The Australian Border Force has recently contacted a number of reporting entities to advise that the description of consultation in their statement is non-compliant. We anticipate that next year it will take a stronger line on non-compliance.
Currently, there are no financial penalties for non-compliance with the Modern Slavery Act 2018 (Cth). However, this may change when the legislation comes up for review next year.
Question 6: What is the upshot of the Modern Slavery Amendment Bill
Answer: The NSW Act was passed in June 2018, but has not yet taken effect. A bill is currently before the NSW Parliament, which is seeking to amend the act. It seeks to remove the reporting obligation for New South Wales, leaving only the Commonwealth modern slavery reporting regime. The Bill retains the general obligation on NSW Government agencies to take reasonable steps to avoid modern slavery in the supply chain of goods and services they acquire.
Question 7: When is my second year statement due?
Answer: Second year statements are due within six months after the end of the reporting entity’s first reporting period. The Australian Border Force has given a one-off three month extension for FY2020 June year ends.
The table below outlines the upcoming deadlines, in accordance with each reporting period.
|1 July 2019 to 30 June 2020
|| 31 March 2021
|1 January 2020 to 31 December 2020
|| 30 June 2021
|1 April 2020 to 31 March 2021
|| 30 September 2021
|1 July 2020 to 30 June 2021
|| 31 December 2021