AICD submission to the Modern Slavery Act Review

On 22 November 2022, the AICD made a submission to Professor McMillan AO and the Attorney-General’s Department in response to the Modern Slavery Act review.

The AICD in our submission recognised that the introduction of Australia’s modern slavery reporting regime has had a positive impact across organisations, Government and civil society. This has been felt acutely at the board level, with Australian directors citing the significant time and resources spent on modern slavery due diligence and reporting. That said, members have cited particular challenges with gaining access to, and visibility of, their suppliers in certain countries and the complexities involved with attempting to identify risks in extended supply chains.

For the Act to be effective in strengthening due diligence and reporting practices, it must be in partnership with Government, civil society, and industry. The AICD strongly encourages the development of further resources and guidance for reporting entities, with a particular focus on NFPs, Aboriginal and Torres Strait Islander organisations and small and medium enterprises (SMEs) who have limited time and resources, as well as organisations operating in industries with a high risk of modern slavery in their operations and/or supply chains.

The AICD made the following other key points in our submission:

• • The existing AU$100m annual consolidated revenue reporting threshold should be retained. With reporting practices not yet at the desired level, albeit improving, the focus following this Review should be on lifting compliance and the quality of reporting by Australia’s largest entities, rather than increasing the number of entities required to report.

  • In recognition of concerns with the quality of reporting over the last two reporting cycles the AICD supported, in principle, consideration of a range of additional enforcement measures. If the Review concludes that the introduction of civil penalties for non-compliance is a necessary next step to address inadequate reporting, we strongly urge that:

    • any penalties are confined to the entity level and for conduct such as a failure to submit a statement, submission of a materially false or misleading statement or clear failure to satisfactorily address all mandatory reporting criteria;

    • a ‘reasonable steps’ style defence attach to ensure that organisations that take appropriate measures to fulfil their due diligence obligations under the Act are not subject to liability;

    • a graduated approach to enforcement be taken, ranging from ‘soft corrective’ measures initially to more ‘punitive sanctions’ that could be reserved for recalcitrant conduct; and

    • the imposition of penalties should be subject to judicial exclusivity (not applied by an Anti-Slavery Commissioner or Ministerial direction).

  • The AICD supports the establishment of an independent Anti-Slavery Commissioner to oversee the administration of the Act, with a clearly defined focus on education, awareness raising, monitoring and compliance activities.