KPMG Senate Submission: will public reporting change the modern slavery conversation?

Last week the new Global Slavery Index (GSI) figures were released. It would be easy to feel complacent from our Australian vantage point: we are considered a low prevalence country, and on the back of new legislative change, we are regarded as having a strong response to modern slavery. However, the raw figures should give us all pause. The GSI estimates that 15,000 people exist in conditions of modern slavery in Australia, including forced labour, forced sexual exploitation of adults and children, and forced marriage. The map of the Asia Pacific region, where 73 percent of our trade happens, is awash with high risk.

Knowing the rate at which modern slavery risk exists in the goods and services Australians consume makes the final passage of the Commonwealth Modern Slavery Bill a crucial task for the Parliament. KPMG has made a submission to the Senate’s Committee inquiring into the Bill. We commend the Australian Parliament for its efforts in addressing modern slavery in the operations and supply chains of entities conducting business in Australia, and the important and influential step of including Commonwealth procurement.

In our submission we offer some brief reflections to assist the Committee’s deliberations based on our extensive practical experience of working with companies across diverse sectors to identify and manage their human rights risks. We consider three primary areas: accountability, definitions of key terms and operationalising the mandatory reporting criteria.

First, accountability – both regulatory and personal – will drive leading practice. The Bill strikes a good balance between encouraging action and requiring it, including elevating responsibility for sign off on annual public modern slavery statements to boards. The government has signalled in consultations that its preference is to introduce persuasive measures to socialise change.

Nevertheless, we find ourselves in a position where the recently passed state-based Modern Slavery Act 2018 (NSW) imposes fines of up to $1 million for failing to submit an annual modern slavery statement and misleading statements. It also establishes an independent Anti-Slavery Commissioner. With this in mind, we encourage the Senate to consider what resources and accountability will best support meaningful compliance, awareness raising, clear guidance and harmonisation between Australian jurisdictions.

Second, the definitions of key terms in the Bill should be clear, inclusive and help focus reporting entities’ time and resources on taking practical action to manage modern slavery risk. The Bill and accompanying Explanatory Memorandum provide definitions to clarify which entities will have reporting obligations under the Act. We agree that detailed definitions are important to give entities and those advising them certainty. However, we also encourage clear guidance to reduce the need for companies to spend their time and resources determining which entities must report. This would be to the detriment of focusing on the real work of identifying and managing modern slavery risk.

Third, real change will happen when understanding, identifying and managing modern slavery risk becomes business as usual. In our experience working with companies on modern slavery readiness, many will use the mandatory reporting criteria set out in the Bill to guide how they mature their risk systems and controls. With continued government guidance and a strong message from the parliament, the criteria’s focus on actions, effectiveness and consultation in complex corporate structures will help to put implementation of measures to prevent and address modern slavery at the front of the minds of directors and executives.

KPMG research indicates that the human rights reporting profile of Australian businesses lags behind its international peers. The Australian modern slavery reporting requirement will contribute favourably to the overall quality and quantity of reporting, and increase the visibility and incorporation of human rights into core business practice. This is a very important step in increasing corporate competence in understanding and responding to rights-based risks. Our clients are telling us that there is a notable difference in engagement and a sense of ownership over change once they commence a modern slavery readiness journey. Businesses know that Australians should be able to trust that the goods and services they consume do not harm vulnerable people. Public reporting on modern slavery will transform the conversation.

Senate Committee Inquiry – Modern Slavery Bill 2018 – KPMG Submission

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