Identifying modern slavery: An analysis of Australia’s largest companies.
The Monash Centre for Financial Studies has ranked the modern slavery statements of the 100 largest listed companies on the Australian Stock Exchange (ASX).
Several major companies – IDP Education, Fisher and Paykel Healthcare, Cleanaway, Resmed and Nine Entertainment – performed poorly on the modern slavery score.
The findings were based on statements available from S&P/ASX100 companies (ASX 100) from the last financial year, ending June 2021, and identified that there was a wide variation in the information disclosed relating to the modern slavery statements submitted by each of the ASX100 companies.
This is the first time ASX 100 companies have been required to report on modern slavery risk in their supply chains.
Of the ASX 100 companies examined, the most common modern slavery risks assessed and mentioned was forced labour, child labour and debt bondage.
Modern slavery currently affects 40.3 million victims globally and $354 billion at-risk products imported by G20 countries. The problem is also prevalent within Australia, with approximately 1,567 incidents nationally.
The Commonwealth Modern Slavery Act (2018) commenced operation on 1 January 2019 and requires entities based, or operating, in Australia, with an annual consolidated revenue of more than A$100 million, to report on the risks of modern slavery in their operations and supply chains and actions.
The team of researchers from the Monash Centre for Financial Studies, in the Monash Business School, included Dr Nga Pham, Dr Bei Cui and Dr Ummul Ruthbah.
Lead researcher, Dr Nga Pham says the findings identified that large companies with large employee numbers and big supply spends scored well overall on modern slavery discourse quality.
Of the top companies we identified with the best scores, these companies had made managing modern slavery risks a priority.
This meant that they were transparent in how they assess and address the risk of modern slavery practices in their operations and supply chains and monitor such actions against the mandatory criteria outlined by the Commonwealth Modern Slavery Act,” said Dr Pham.
It’s important to note that this is the first year that ASX companies have had to report on modern slavery and based on our findings we expect that majority of these companies will take action and improve their disclosure quality in the next financial year.”
The findings also identified that good modern slavery statements showed a history of continued effort in managing modern slavery and other human rights issues.
The report also outlined key recommendations for companies, investors and regulators.
We’ve presented these findings in a way which allows investors to identify priorities in engaging with their portfolio of companies in a transparent and open manner. This means that investors can communicate the possible areas of concern and modern slavery risks relevant to each company or each sector.
They can help companies to enhance their due diligence and remediation processes, while also ensuring the board has oversight of modern slavery and human rights risks,” said Dr Pham.
For companies looking to improve their management of modern slavery risks, it was recommended that their exposure to modern slavery risks in the supply chains should be assessed based on the demographics of their suppliers, the economic size of their supply spend and the nature of their transactions with each supplier.
Companies were also encouraged to strengthen their existing due diligence and remediation process, while also engaging and educating their suppliers in order to mitigate future risks within their supply chain.