The Australian Government is considering changes to Australia’s legislative framework for addressing modern slavery in supply chains, including a proposed new criminal offence for corporations that fail to prevent certain modern slavery offences.

In its recent submission, CA ANZ supports the objective of strengthening Australia’s response to modern slavery, while raising concerns about the proposed criminal offence and its potential impact on how organisations identify, disclose and respond to modern slavery risks.

A risk-based approach

The proposed offence would represent a significant shift from the transparency and reporting framework established by the Modern Slavery Act. The submission supports stronger compliance and enforcement, including civil penalties for existing reporting obligations, but does not support the proposed criminal offence.

A mandatory, risk-based due diligence obligation is considered a more proportionate approach to requiring organisations to identify, mitigate and address modern slavery risks. This is also consistent with the statutory review of the Modern Slavery Act, which recommended introducing mandatory due diligence for reporting entities.

Encouraging disclosure and remediation

Modern slavery risks can occur several tiers removed from a corporation, particularly in complex and multi-tiered supply chains. The response highlights the importance of ensuring the regulatory framework encourages organisations to identify and disclose risks, engage with suppliers and support remediation.

There is a risk that criminal liability could encourage more cautious disclosure, defensive compliance or disengagement from higher-risk suppliers. Organisations that identify and address modern slavery risks should not be placed in a worse position than those that fail to identify or disclose them.

Considering impacts across supply chains

Reform will also affect businesses beyond those directly captured by the legislation. Smaller businesses may face additional information, due diligence and contractual requirements from larger customers.

Requirements should therefore be proportionate to an organisation’s size, resources, risk profile, operating context and influence over the relevant supply chain. The response also highlights the importance of reducing duplicated information requests and considering practical approaches that allow information to be used across multiple business relationships where appropriate.

Supporting implementation

Clear, practical guidance will be important to help organisations understand what reasonable and proportionate due diligence looks like in practice. Guidance should build on existing Australian and international resources and help organisations understand how expectations should scale according to risk and circumstances.

The effectiveness of reform will depend not only on the obligations introduced, but on whether the framework encourages organisations to identify risks, engage constructively with suppliers and address and remediate modern slavery.