Broken promises: Two years of corporate reporting under Australia’s Modern Slavery Act
This report reviews corporate compliance with Australia’s Modern Slavery Act’s requirements. Findings reveal limited progress, with many companies failing to address mandatory reporting criteria and fulfil commitments to tackle modern slavery risks. The report urges stronger oversight, due diligence, and legal consequences to shift responses from policy statements to actionable measures that effectively protect vulnerable workers.
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OVERVIEW
Tracking progress
The report evaluates company compliance under Australia’s Modern Slavery Act (MSA) and the effectiveness of corporate actions to combat modern slavery. Two years in, compliance remains low, with 66% of companies failing to meet mandatory reporting criteria. Despite this, some improvements are noted, with a modest 7% average score increase from the first to the second reporting rounds. Only 34% of companies addressed all reporting areas required by the MSA. Notably, 43% failed to identify obvious modern slavery risks, and 72% of garment companies did not mention Uyghur forced labour risks in their supply chains. This limited engagement with specific risk factors and geographical concerns suggests a lack of effective risk management practices.
Are companies complying with the mandatory reporting requirements?
In this section, the report highlights that only one-third of companies comply fully with the MSA’s six mandatory reporting areas. Reporting on supply chain risks remains higher than operational risks, as many companies perceive modern slavery risks as an “offshore issue.” Companies that meet MSA standards have improved their documentation and policies, but 56% of the commitments made in the first reporting year remain unfulfilled. Further, 29% fail to describe their corporate structure, operations, and supply chains, and 25% omit information on actions taken to address risks, indicating a need for greater transparency in corporate reporting.
How well are companies disclosing modern slavery risks?
While 96% of companies acknowledge supply chain risks, nearly half (43%) fail to disclose key risks specific to their sector. Qualitative improvements in disclosing instances of modern slavery and responding to these issues are noted, with 14% reporting actual incidents in the second round, compared to 8% in the first. Disclosure of supplier countries beyond Tier 1 is minimal, with only 13% identifying lower-tier supply chain locations, which limits the potential for effectively addressing root causes of modern slavery.
Are companies initiating effective actions to tackle modern slavery?
Effective action remains limited, with only 33% of companies demonstrating some progress in addressing modern slavery risks. Supplier engagement measures are insufficient, with only 26% of companies conducting human rights due diligence on new suppliers. A fifth (20%) incorporate responsible purchasing practices, which help avoid exacerbating risk factors like low wages and poor working conditions. Minimal progress is noted in living wage commitments (21%) and the support for freedom of association (14%). Collaboration with unions and civil society groups is low, with only 35% of companies reporting such engagements, which is critical for addressing exploitation risks.
Looking forward, looking back
While there have been notable improvements in corporate reporting practices, significant gaps remain, with only a few companies showing substantial year-on-year progress. Around 8% of companies recycled content in their second-round reports without substantive updates. Of the 532 commitments made by companies in the first round, 56% were not followed through in the second round, and 64% of specific, time-bound commitments were left unfulfilled. The report calls for companies to outline clear, measurable commitments and suggests that generic promises do little to foster continuous improvement.
Conclusion
The report concludes that, while some progress has been made, most companies show only superficial compliance with the MSA. To strengthen Australia’s MSA, the report recommends establishing an independent Anti-Slavery Commissioner and introducing penalties for non-compliance to drive more effective corporate action. Key recommendations include mandating human rights due diligence, ensuring meaningful oversight, and creating legal avenues for redress for workers affected by modern slavery. The report asserts that improved regulation and accountability measures are essential for Australia to align with other OECD countries in addressing human rights issues in global supply chains.
