In late June 2018 Assistant Minister for Home Affairs, Alex Hawke, introduced a Modern Slavery Bill into the House of Representatives in Australia. Modelled after the UK Modern Slavery Act, the Australian Modern Slavery Act will make steps towards combatting Modern Slavery in Australia and our surrounding region. The legislation introduced into parliament is widely expected to pass and will likely be built upon over time.
Here we will discuss the implications of the Modern Slavery Bill, the impact it will have on investment decision making, reporting requirements and stakeholder demands, as well as provide a timeline of events leading to the bill’s introduction.
What is Modern Slavery?
‘Modern slavery’ is a contested term because it has no legal definition under International Law. Modern slavery can be broadly defined as forms of slavery, servitude, forced or compulsory labour and human trafficking.
International conventions, such as the 1956 UN Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery and the 1930 Forced Labour Convention, do however define and classify slavery-like practices. The 1956 UN Supplementary Convention includes definitions of debt bondage, serfdom, forced marriage and child labour as slavery-like practices and require criminalisation and abolishment. The 1930 Forced Labour Convention defines forced labour as “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily”.
The reason for the adoption of the term “modern slavery” is unclear. It may be because it is easier for the broader public to picture and sympathise with the image of slavery, and associate that as being intolerable. Modern Slavery Acts’ have been introduced in the United Kingdom, and Australia is in the final stages of introducing their own Modern Slavery Act. Further, there have been calls to support modern slavery legislation in New Zealand and Canada.
In Australia, there have been movements to include orphanage trafficking and cybersex trafficking in addition to the international definitions of slavery-like practices and forced labour in their judicial responses to modern slavery.
A Modern Slavery Act For Australia
In late June 2018, Minister Hawke introduced the Modern Slavery Bill into the House of Representatives. The Bill was for an ‘Act to require some entities to report on the risks of modern slavery in their operations and supply chains and actions to address those risks, and for related purposes’. Other recommendations from the Hidden in Plain Sight Report (a comprehensive document that suggests eight key themes to be considered in order for Australia to implement regulatory and legislative change under a Modern Slavery Act discussed in greater detail below) are slated to be introduced into Parliament at a later date.
The current bill stipulates mandatory criteria for Modern Slavery Statements as summarised in Figure 1. Other mandatory criteria include having the statement approved by the principal governing body of the reporting entity.
Figure 1 Part of the Mandatory Criteria for Modern Slavery Statements
In contrast to the UK law, in Australia Commonwealth Corporations will also have to report if they reach the revenue threshold. Furthermore, the Modern Slavery Statement reporting requirements are more stringent in the proposed Commonwealth Modern Slavery Bill.
There are some key differences between the recommendations made by the Joint Standing Committee in the Hidden in Plain Sight Report and the Modern Slavery Bill that was introduced into Parliament in late June 2018. For example, the revenue threshold for the reporting requirement has been set at 100 million dollars, rather than the suggested 50 million in the Hidden in Plain Sight report. The Government estimates that this threshold will cover approximately 3,000 entities. Figure 2 outlines some key proposed features of a Commonwealth Modern Slavery Act compared to the current government’s commitments and proposed legislation, and the Hidden in Plain Sight recommendations.
Figure 2 – Comparison of government commitments, including the drafted Modern Slavery Bill and the Hidden in Plain Sight Recommendations
The Journey to Australia’s Modern Slavery Act
The below figure details the developments leading up to the introduction of a Modern Slavery Bill in Australia. For further information on each of these developments as well as an outline of some of the suggested mechanisms to be introduced to help combat and prevent modern slavery in Australia click here or download the full report.
Figure 3 – Timeline leading to an Australian Modern Slavery Act
How Will a Modern Slavery Act Impact Investors?
The Modern Slavery Act may impact investors in the following ways:
- Once a Supply Chain Reporting Requirement is legislated, most ASX-listed companies will be required to disclose Modern Slavery Statements. This will mean that there will be an increase in reporting disclosures related to human rights due diligence and how companies ensure they monitor and reduce the risk of modern slavery in their own operations and their supply chain. Investors should consider whether and how they will take these disclosures into consideration when making investment decisions, and understand how reducing exposure to modern slavery through their investments is consistent with prudent ESG practice.
- More clients and stakeholders will be asking questions relating to modern slavery. It is important to understand the nuances of the issue and be able to communicate these to stakeholders. Furthermore, investors should monitor leaders and laggards – not just with regards to the quality of companies Modern Slavery Statements, but also with regards to their other human-rights related disclosures and exposure to controversies.
- Some investors will be exposed to the reporting requirement. Be prepared to understand the risk of modern slavery within both your own operations and throughout your supply chain. Assessing your risk exposure could include considering your procurement processes – which can be as local as considering who cleans your offices, to considering your investment processes – which can include how you screen for controversies relating modern slavery in your portfolios, or implement a best-in-practice human rights approach.
Interested in discussing this issue further? Feel free to get in touch.
 Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery, Entry into Force: 30 April 1957, United Nations Human Rights Office of the High Commissioner Website, <https://www.ohchr.org/EN/ProfessionalInterest/Pages/SupplementaryConventionAbolitionOfSlavery.aspx>.
 Article 2, C029 – Forced Labour Convention, 1930 (No. 29), Entry into Force: 01 May 1932, International Labour Organization Website, <http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:C029>.
 Modern Slavery Bill 2018, Parliament of Australia Website, <http://parlinfo.aph.gov.au/parlInfo/download/legislation/bills/r6148_first-reps/toc_pdf/18134b01.pdf;fileType=application%2Fpdf>.
 Ibid., p12.
 Fact Sheet: Modern Slavery Reporting Requirement, Department of Home Affairs Website, <https://www.homeaffairs.gov.au/consultations/Documents/modern-slavery/modern-slavery-reporting-requirement.pdf>.
Author: Nina Haysler
Research Project Manager