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Five Things You Need to Know About Modern Slavery Statements
31 March 2021 is the date by when most large organisations will be required to have submitted their first modern slavery statement under the Modern Slavery Act 2018 (Cth) (the “Act”). With that deadline fast approaching, here are the five things you need to know about modern slavery statements.
1. Reporting period and deadline
If your organisation accounts in accordance with the Australian Financial Year, it will be required to submit its modern slavery statements by:
- 31 March 2021, with respect to the reporting period from 1 July 2019 – 30 June 2020; and
- 31 December 2021, with respect to the reporting period from 1 July 2020 – 30 June 2021.
This nine-month turnaround between reporting dates is due to the initial reporting deadline being extended by three months due to COVID-19 related issues. Moving forward, organisations must report within six-months of the end of the reporting entity’s annual accounting period.
2. Reporting entities
By way of summary, the Act requires entities based, or operating, in Australia, which have an annual consolidated revenue of more than $100 million, to submit modern slavery statements. Other entities based, or operating, in Australia may report voluntarily.
If multiple entities in the same corporate group are reporting entities, a “joint statement” can be submitted that covers each reporting entity, provided that statement is prepared in consultation with each entity covered by the joint statement.
In situations where it is difficult to determine whether the amount of consolidated revenue will meet the threshold, entities are required to estimate expected consolidated revenue at the beginning of the reporting period. If an entity unexpectedly reaches the threshold, the entity is still required to submit a modern slavery statement and should explain these circumstances and how they impacted on the ability of the entity to report (for example, the entity may not have been progressively assessing modern slavery risks during the reporting period but will use provide further information in future statements).
3. What to include
The mandatory criteria under the Act sets out that modern slavery statements need to identify the reporting entity, describe the reporting entity’s structure, operations and supply chains, describe the risk of modern slavery and the corresponding actions taken to address these risks and analyse the effectiveness of these measures. It is also necessary to describe consultations with reporting entities and provide any other relevant information.
An entity can submit the same modern slavery statement in multiple countries so long as the statement meets all the requirements in the Act.
4. Best practice
An effective way of ensuring an organisation’s modern slavery statement complies with the Act is to use each of the above mandatory criteria as topic headings.
Best practice modern slavery statements:
- clearly address the mandatory criteria under the Act by way of topic headings;
- assess risks of modern slavery beyond merely the first tier of their supply chain or operations and provide a more in-depth evaluation;
- address the impact of the COVID-19 pandemic on the entity’s operations and supply chains;
- are future-focused and establish frameworks for tracking the effectiveness of the entity’s response to the risks of modern slavery; and
- are honest about the reporting entity’s current situation and risk profile and enable future statements to demonstrate improvement.
Once submitted, Modern Slavery Statements are accessible by the public, free of charge, on the internet. To this end, organisations should note the potential for reputational and commercial risk as their modern slavery statement may be read by a wide range of key stakeholders, including customers, investors, suppliers and competitors.
If an entity fails to comply with the Act, the entity may receive a written request to provide an explanation and/or undertake specified remedial action, within 28 days. If the entity fails to comply with the request, information may be published about the identity’s failure to comply (including the identity of the entity).
In addition to these five things you need to know about modern slavery statements, the Commonwealth has published general guidance for reporting entities here.
PCS can assist your organisation with preparing a modern slavery statement that complies with the Act.