The guide addresses the requirements of the Australian Modern Slavery Act 2018, which builds on the UK Modern Slavery Act 2015, and can be seen as a step towards eradicating modern slavery, which is part of the UN Sustainable Development Goals (goal 8, target 8.7). The Act requires entities based or operating in Australia with annual consolidated revenue greater than A$100 million to report on the risk of modern slavery occurrence within their operations and supply chains, as well as the steps taken to address and reduce associated risks and impacts.

The Act requires entities to release mandatory statements which must contain and describe eight components, including:

• identity of the entity;
• structure, operations and supply chain of the entity;
• risks of modern slavery practices in the operations and supply chains;
• actions taken to assess and address those risks;
• how effectiveness of such actions is assessed;
• consultation process with owned or controlled entities;
• other relevant information and details on approval.

Importantly, for investors the reporting obligation includes risks of modern slavery in their investment portfolios. The guide addresses each of the eight requirements, summarising the Government Guidance and providing practical tips and examples to assist entities in their reporting. For instance, for the requirement to describe structure, operations and supply chains, the guide explains what constitutes a supply chain and how to report on it. It also clarifies that ‘financial investments’ may form part of either ‘operations’ if directly/internally managed, or ‘supply chain’ if externally managed, and that reporting can be on a thematic basis.

The hypothetical examples are expressed through a fictional investor, and provide an idea on how reporting entities may identify and address risks. For example, in the case of a financial services business, high-risk areas in own operations include logistics, IT procurement and building services such as cleaning and security, which can be addressed this by amending policies and engaging with stakeholders.

The report highlights that the word ‘risk’ in relation to modern slavery is primarily attributed to risks to people and society, rather than business risks such as reputational and financial impacts of modern slavery practices, although these tend to intersect. Entities must carefully consider whether their activities directly cause or contribute to modern slavery practices, and the effects on those affected.

Entities also have discretion and flexibility in the amount of detail they disclose, and may prioritise some industries or geographical areas over others depending on which pose the most significant impact on people. For example, a workforce with a high proportion of migrant workers tends to present a higher risk of forced labour. After deciding on the high-priority areas, formulating a plan of action and implementing the plan, entities are required to continuously monitor the situation, evaluate the plan’s effectiveness, and provide other relevant information, such as reviewing staff training or working with suppliers to ensure action is undertaken.

This guide is useful for institutional investors reporting under the Act, as they can play a key contributing role in eradicating modern slavery.

1. In reality, forced labour and related practices are likely taking place covertly in the operations or supply chains of most firms, and in almost every region of the world, thus requiring careful consideration and assessment of the potential occurrence of such practices.
2. In taking action to address the risks of modern slavery, entities should consider their existing policies and how to improve them, as well as engaging with stakeholders to introduce new policies, codes of conduct and practices which address those risks.
3. Entities that are required to report on modern slavery should first consider the risks to people and society affected by forced labour and other practices, and in doing so, reduce potential business, reputational and financial risks.
4. Investors, especially those with large portfolios spread across numerous asset classes, may have varying exposures to modern slavery risks. Investors are encouraged to engage with investee companies and form partnerships to address modern slavery, which can enable them to construct more financially sustainable portfolios.
5. Although the goal is to eradicate all use of modern slavery, given that many entities have complex operations and supply chains, they should prioritise assessing high-risk areas of their operations and supply chains, e.g. certain geographic locations or industries.
6. Collaboration with employees, subsidiaries, suppliers and other stakeholders is key. Entities are also encouraged to form partnerships with civil society and may disclose these partnerships as additional information. Ultimately, engaging in these activities may attract and encourage more sustainable investment which provides long-term value to a business.
7. The final section of the reporting guide contains useful sources and external references, and the appendix outlines key risk indicators for modern slavery practices. These can assist companies and investors in their assessment and reporting processes.