Modern Slavery: an opportunity not a compliance measure
- The Modern Slavery Act came into effect on 1 July 2019 and applies to entities with over $100m in consolidated revenue.
- Entities will have to publish their statements within six months of the end of the first reporting period after 1 July 2019.
- No organisation’s supply chain is completely free from modern slavery risk, in one form or another.
- The extent of the review of your supply chain and operations and the actions taken ultimately lie with you and are informed by your risk appetite and core values.
- The Act is an opportunity to showcase your values to all of your stakeholders including employees, customers, shareholders and the wider community.
The introduction of the Modern Slavery Act reflects a societal shift and represents an opportunity for organisations to do the right thing while leveraging it as a competitive advantage.
The Modern Slavery Act 2018 (Cth) came into effect on 1 July 2019 and applies to entities with over $100m in consolidated revenue. There are plenty of articles that dissect the minutiae of what this legislation means for entities and attempt to explain what modern slavery captures, what to report and when to report. But where does one start when trying to work out the next steps?
While the legislation is prescriptive, in the sense that you comply by addressing the seven items identified in the legislation, an organisation has a choice to either do the minimum it needs to comply or, leverage this as an opportunity to delve deeper in exploring the modern slavery risks that exist in their supply chain and operations. This decision lies with the organisation and is influenced by its risk appetite and values.
The risk of the supply chain
In this day and age, it seems inconceivable that there would be an organisation that does not rely, in one way or another, on another organisation. In our experience, we have not come across an organisation whose supply chain is completely free from modern slavery risk in one form or another. Each organisation sources goods or services from another organisation, whether it be as trivial as tea and coffee for the kitchen or as integral as steel for construction of a building. Therefore, there will always be some underlying risk of modern slavery in your operations or supply chain regardless of the industry you operate in.
There are many factors that influence an organisation’s decision on how deep the review of their supply chain will be. Before an organisation decides on the extent of their review, we recommend organisations consider their risk appetite and ultimately, their core values. The nature of the legislation gives you room to tailor your modern slavery strategy to one that reflects your values and the nuances of your organisation to avoid a ‘tick the box’ approach.
Reputational risk and damage
There is a lot of talk about reputation risk: the fear that the regulator will publicly call out an organisation’s failure to prepare a compliant statement or negative publicity about an organisation’s lacklustre approach. Those organisations that view the legislation in this light and take this approach are missing the point. Instead of viewing compliance as a means to reducing the risk of damage to the organisation’s reputation, it can view the legislation in the light of how it can use the opportunity to strengthen its reputation in the marketplace.
As all statements will be published on a public register, the public will inevitably be able to compare each organisation’s approach to the risks of modern slavery and actions with industry peers. Therefore, whether your organisation already has a strong culture of social responsibility, or is starting on this journey, you can use this platform to take control of your brand and leverage your actions to act as a competitive advantage that sends a strong message to all of your stakeholders, client and customers.
It’s a marathon; not a sprint
While the requirements under the legislation may appear intimidating, it is important to understand that the legislation does not require a radical overhaul of an organisation’s operations and supply chain by the first reporting date. The government recognises that this change will be a journey, but what is important is ensuring that you start the journey in the spirit intended by the Act and in line with the values of your organisation.
For support in the exploration of the impact of the Modern Slavery Act on your organisation, and to discuss how you can leverage the opportunities presented by this Act, please get in touch with PKF to start your journey.
If you would like more information on the requirements of the Act, see:
Modern Slavery Act 2018
Modern Slavery Act 2018: Draft guidance for reporting entities (Department of Home Affairs)