Maximising Effectiveness: Leveraging the Full Reporting Year to Address Modern Slavery

The Modern Slavery Act 2018 (Cth) allows subject entities six months from the end of their financial year to lodge their disclosure with the Attorney General's office. Given the pressure executives face during the financial year-end, many companies make full use of the post EOFY six month’s grace. As a result, they unintentionally divide their year into two halves - six months for writing the statement which inherently involves documenting commitments for the next year and beyond and another six months for delivering those commitments to stakeholders. This approach creates stress for teams across Australia and results in missed opportunities and suboptimal outcomes.

A more effective approach is for companies to take a longer-term view, separating their action roadmap from their disclosure statements. By doing so, they can keep a continuous eye to the horizon and make use of their full reporting year, enabling them to deliver commitments efficiently while reducing the anxiety associated with reporting. In this article, we will explore the significance of starting the year off right; creating a plan, and leveraging the full reporting year to fulfill commitments. By adopting this approach, businesses can enhance their effectiveness in addressing modern slavery and achieve better outcomes for all stakeholders. In this article, we’ll discuss how to start this financial year off right.

The "Broken Promises: Two years of corporate reporting under Australia’s Modern Slavery Act" report examined the second-year corporate statements submitted to the Government's Modern Slavery Register. The findings indicated many areas of concern, including:

• 66% of reviewed companies failing to comply with the basic reporting requirements mandated by the legislation
• 56% of commitments made by companies remained unfulfilled based on their second-year statements
• 43% of reviewed companies failing to identify obvious modern slavery risks in their supply chains, and
• Two-thirds of companies not addressing modern slavery risks adequately. 

The statutory review of the Modern Slavery Act 2018 has recommended 30 changes to the Act to accelerate Australia’s actions to address modern slavery, including:

Addition of new mandatory reporting criteria:

• Modern slavery incidents or risks identified by the organisation during the reporting year,
• Grievance and complaint mechanisms made available by the organisation to staff members and other people (undefined); and
• Internal and external consultation undertaken by the organisation during the reporting year on modern slavery risk management.
• Introduction of a mandatory due diligence requirement – this should effectively identify and assess modern slavery risks and track the performance in addressing them and will not apply to organisations that sit within the $50-100 million threshold for 2 years.
• A mechanism for the Minister or the Anti-Slavery Commissioner to declare high-risk regions, industries, products, suppliers, or supply chains. Reporting organisations will need to consider these declarations during the reporting process.
• Introduction of penalties for non-compliance. Areas of non-compliance highlighted in the report include non-submission, knowingly submitting materially false information, failing to comply with a request from the Minister and not having a due diligence system in place that meets the Act’s requirements.

The common practice of dividing the financial year into two halves—reporting achievements and meeting commitments — hinders progress in addressing modern slavery. This approach often results in delayed alignment on the current year’s activities, leaving limited time for meaningful action. A well-crafted disclosure statement results from consistent efforts throughout the reporting period – companies who use less than the full twelve months are hamstringing what their teams could otherwise achieve.

Prepare and review your baseline data: Collect and analyse relevant data from the previous year, such as training statistics, SAQ response rates, and audit summaries. These statistics serve as a baseline for measuring progress and identifying areas for improvement. By reviewing these numbers now you will have them ready when you go to write your report but you can start your activities to improve on them today. If every year you find yourself scratching your head on what evidence to provide in your statement; this is the year to establish your effectiveness measurement framework (formal KPI’s with clear metrics, broken out to test the effectiveness of each stage of your due diligence framework).

Document your achievements: Review key accomplishments and lessons learned that have influenced your approach to combating modern slavery. Case studies highlighting positive steps taken and their impact add credibility to your reporting. By documenting these achievements while they are fresh, you reduce the anxiety of trying to remember them later. If you are lucky enough to work somewhere with a robust quality systems framework, consider asking your quality manager to add a tag for 3rd Party Social Risks in your Corrective Action/Preventative Action quality management system. Provided this system is well used and confidential information can be maintained within it this allows for an excellent repository of learning for you to make use of next year.

Review your commitments: Review last year’s commitments and evaluate the progress achieved in each area. Take detailed notes on the steps taken, challenges faced, and outcomes achieved. This review provides a foundation for setting new goals and strategies for the current year.

Develop a Plan: Convene your Modern Slavery Working Group together and set your objectives for the current year. Identify any existing gaps and develop strategies to address them. A comprehensive plan sets clear objectives, outlines actions, and establishes measurable targets. It ensures that all relevant stakeholders are aligned, resources are allocated appropriately, and progress is regularly monitored.

Extend your plan: Set your sights beyond this year and challenge your team to write a three-year future focussed modern slavery action plan. Doing so will mean that next year you already have a good sense for your next steps and will help foster a culture of continuous improvement in your approaches. Recognise your limitations – if your team are unclear on your long-term goals or where to take your approaches this year, you might be in need of external perspectives.

Write this year’s statement with purpose: Many companies write their statements from a blank sheet of paper each year. Challenge your team to take a more formulaic approach that allows you to next year pick-up where you left off, make the necessary adjustments to reflect current practice, update your key performance indicators and case studies and sign it off efficiently. Challenge your team to build internal consensus early on your statement, have it approved by your Board and socialised as early as possible to help you leverage the commitments into meaningful action.

In the past three years, the two-half mentality of Australian businesses has constrained corporate effectiveness in combatting modern slavery. To keep up with rising legislative and stakeholder expectations, companies must make better use of the full twelve months available. By starting early, planning effectively, and utilising the entire reporting year, organisations can maximise their efforts in addressing modern slavery, promoting a more ethical and sustainable business environment.