Are you ready to go public about modern slavery? Time to get prepared
Today representatives from business, government, civil society, investors and academia will gather for the fourth Australian Dialogue on Business and Human Rights. The focus of this year’s forum is on human rights due diligence. It is a timely emphasis as Australian businesses prepare for regulation that requires them to understand a lot more about the impact on human rights of their operations and supply chains.
On 16 August 2017, the Minister for Justice released a consultation paper on the Australian Government’s proposed model for a Modern Slavery in Supply Chains Reporting Requirement. KPMG Banarra has made a public submission. The current paper proposes that by 2018 entities which conduct business in Australia with an annual global revenue of AUD $100 million and above, will need to publicly report on their efforts to address the potential incidence of modern slavery in their operations and supply chains.
Our global clients tell us that aside from regulation like this, it is also reputation, investor scrutiny and company values that drive businesses to address human rights risk.
With all these drivers present in Australia, companies are lagging behind their global counterparts on human rights reporting. KPMG’s 2017 International Survey of Corporate Responsibility Reporting indicates that of nearly 5000 companies – including the top 100 companies by revenue in 49 countries – only 55 percent of Australia’s top 100 companies acknowledged human rights in their Corporate Responsibility reports as compared to almost 9 out of 10 (89 percent) Corporate Responsibility reporters in the top global group of organisations.
The introduction of modern slavery regulatory reporting in Australia will help those entities, which have not previously considered their human rights risks and impacts, to commence the journey and examine their practices and processes in light of their responsibility to respect human rights.
In our submission Attorney-General’s consultation we advised:
- The underlying transparency objective of the proposed legislation should guide how key terms are defined to encourage open reporting. Simple, unambiguous definitions will reduce the need for entities to rely on legal advice, and allow them to focus on the practical implications of assessing and responding to the potential risks of modern slavery in their operations and supply chains.
- While there will be a regulatory impact on business, a regulatory regime will incentivise action and level the commercial playing field for those businesses committed to responding to their actual or potential human rights impacts.
- The introduction of a modern slavery reporting requirement which require Board sign off will encourage leadership to interrogate and understand their current practices, driving internal change.
- A central repository of Modern Slavery Statements is a critical step in providing a platform for comparable and transparent reporting. It offers business a way of benchmarking their performance against their peers, greater certainty about how public statements will be collated and a point of reference as they develop their annual responses.
Australia learned in recent weeks that a much discussed National Action Plan on Business and Human Rights is currently off the Federal Government’s agenda. In the absence of more comprehensive guidance on what business should expect in the future, they will have to respond to each reform as it arises.
Human rights due diligence is about to become mainstream in Australia business. When the proposed legislation is passed, 100s of Australian businesses will, for the first time, need to have a process to identify where the risks of modern slavery are in their operations and supply chains. Those businesses that start preparing now will be able to do so in a measured and cost effective way. For example, by retrofitting their approach to human rights due diligence into existing company processes.
There is no good business case for ignoring the risk of modern slavery. Getting ready to report is the best response.