CIPS News


Understanding the Australian Modern Slavery Act & the CIPS position

CIPS 16 January 2019

Many would assume that modern slavery is a relic of the past or a devastating abuse only experienced in the far corners of underdeveloped impoverished communities. The reality is, more than 40 million people worldwide are believed to be victims of modern slavery, including 15,000 in Australia. From every perspective – reputational, financial and ethical – this is not acceptable in the 21st century.

In November 2018, the Australian Federal Government passed the Modern Slavery Act into law.

CIPS strongly welcomes this milestone as a timely and necessary step to prevent, address and ultimately eliminate abuses in supply chains.

This Bill will help the Australian business community to take proactive and effective action to address modern slavery and help mitigate the risk of modern slavery practices occurring in the supply chains of goods and services in the Australian market. But what does it all mean?

What’s does it mean?

The Bill creates an ongoing obligation for ‘Reporting Entities’ to file a modern slavery statement (Statement) - being a report on the steps the entity has taken to assess and address risks of modern slavery in its operations and its supply chains during a reporting period whether national or international. It will affect roughly 3,000 companies, and their annual slavery statements will have to be signed off at board level, to be published within six months of the publication of their annual reports.

Why is it necessary?

Evidence from CIPS and others suggests that the risk of modern slavery affects almost every industry: electronics and high tech, steel and automobiles, agriculture and seafood, mining and minerals, garments and textiles and shipping and transportation. While modern slavery is illegal in every country in the world, it still occurs in every country in the world under the radar. Procurement professionals have an important role to play in sourcing in a manner that enables and rewards suppliers for good employment practices, and support organisations seeking to improve due diligence on ethical aspects across their entire supply chains.

CIPS leadership and position

CIPS has provided global leadership and guidance to markets, companies, governments and individuals around the world to develop, introduce and effectively implement practices to address modern slavery risks.

CIPS was deeply involved in the development of the 2015 UK Modern Slavery Act. In May 2018, we conducted (May 2018) a survey across our supply chain and procurement community to investigate the level of understanding and preparedness for a Modern Slavery Act in Australia and what support procurement professionals need to comply with the upcoming regulation and to act in the best possible way. It revealed that while 80 per cent of procurement managers in Australia support the introduction of legislation, one in five haven’t taken any measure at all to secure their supply chains against slavery and more than half lack confidence that the current skill-set and expertise of their staff is sufficient to tackle the issue.

CIPS is leading the way on raising awareness of modern slavery in supply chain, as well as equipping procurement and supply management professionals with the necessary tools and guidance to address this issue in their own organisations.

Read more about CIPS’ first Australian Modern Slavery Survey here.

Will the ACT have a real impact in the short-term?

No one can deny that Act is a significant step in the right direction. The government’s inquiry provoked widespread interest, with leaders from business, civil society, and government from across the political aisles coming together in support of its introduction.

Rome wasn’t built in a day. Provision has also been made in the Bill for a three-year review which will enable the Federal Government to assess the impact and effectiveness of the Act. In the meantime, the legislation is expected to enter into force in January 2019. Most reporting entities will be required to prepare and publish their first modern slavery in 2020, covering the 2019/20 financial year.

This is a crucial time. As mentioned, many procurement managers have reported they will require greater skills training and support to meet these obligations. The Government is preparing detailed guidance on the reporting requirement, which is expected to be made available in the early part of next year. This will provide greater clarity for businesses ahead of the first round of reporting.

While an historic milestone, legislation alone will not be enough.  Ethical and sustainable business also relies on competitive forces and voluntary adoption of responsible CSR practices to drive more transparent behaviours, increase awareness on modern slavery issues and allow greater visibility in organisations’ supply chains.

Consumers are increasingly favouring companies which behave responsibly. Earlier this year, New YouGov Omnibus research found that that nearly 90 per cent of Aussies think businesses have a responsibility to do social good, suggesting that corporate social responsibility (CSR) remains an important consideration for Australian brands.

It is also hoped that buying power of conscientious customers and market self-regulating dynamics will be major incentives for businesses below the threshold to voluntarily submit statements to the government’s public registry.

What can businesses start doing, today?

We believe that in the months that follow, companies of all sizes will increasingly become educated about the importance of due diligence and adopt practices to play a direct and constructive role in safeguarding their supply chains – to ultimately protect the entire organisation.

CIPS has developed some guidance to help procurement and supply management professionals increase visibility on modern slavery risks, implement ethical and sustainable practices and keep their supply chains slavery free. This will assist organisations develop a more accurate risk profile and feed critical intelligence to device business-wide risk management strategies.

Learn more about how you can safeguard your supply chain today by taking our Ethical Procurement and Supply e-Learning module or do some further reading from our extensive knowledge library. Procurement professionals can test their knowledge by undertaking the CIPS ethics test and, upon successful completion, be recognised on the CIPS Professional Register as trained in ethics. A current ethics test is also a requirement for practitioners who want to obtain the Chartered status.

For more information: 

If you have any questions about this article or would like to speak to a representative from CIPS Australasia regarding our position or available resources for your organisation, please contact Giovanni Ferrante, Marketing Manager on +613 8611 0320 or email marketing@cipsa.com.au 

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