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Modern slavery compliance: the time to act is now
Australia’s Modern Slavery Act 2018 (Cth) requires thousands of companies to report annually on how they identify and manage risks of modern slavery in their operations and supply chains. More than 3,000 entities are already publishing statements on the public register and a government review has recommended tightening obligations by introducing penalties and strengthening reporting standards.
For Australian businesses, the risks and opportunities are amplified by the country’s export dependency, growing investor scrutiny, and a high level of public accountability. Trading partners in the US, UK, and EU are entrenching stricter due diligence laws, investors are integrating modern slavery into ESG assessments, and NGOs and media are actively benchmarking company statements.
In this environment, robust due diligence is not only about avoiding penalties—it is becoming a competitive differentiator.
1. Reputation
Even without heavy penalties, substandard or non-compliant modern slavery reporting carries significant financial and reputational risk. In July 2025, the Australian Anti-slavery Commissioner announced that the Attorney-General’s Department had commenced data matching to detect and identify entities that have failed to comply with the requirement to report under the Modern Slavery Act 2018 (Cth). The Commissioner stated that “in light of these developments, and in an effort to increase compliance with the Act in advance of the introduction of any new penalties, it would be helpful if entities who may have an obligation to report and have not done so, were reminded of their obligations and potential risks to their enterprise of failing to report”.
A joint report by civil-society groups have found that 66% of statements failed to address all mandatory reporting criteria in their statements, creating fuel for media scrutiny, investor questions, and stakeholder distrust.
- Public visibility: Statements are published on an open register. Gaps, vague commitments and overstatements are easy for watchdogs and media to highlight, prompting customer and investor concern.
- Procurement fallout: Large buyers have suspended or dropped suppliers after exposés of labour risks and inadequate remediation, citing ESG and responsible-sourcing standards.
- Investor action: Institutional investors have escalated governance interventions when companies under-report or fail to address material risks, raising the cost of capital and management time.
- Trade exposure: In the US, shipments linked to forced labour have been detained at the border pursuant to the Uyghur Forced Labor Prevention Act (UFLPA), causing costly re-sourcing and negative headlines that also impact Australian-linked brands.
In a transparency regime where disclosures are public and benchmarked, reputation is at risk long before penalties are imposed under any regime.
2. Operational and strategic value
Effective due diligence isn’t just risk control, it’s an operating advantage. Mapping and monitoring human-rights risks across tiers often reveals hidden inefficiencies, single points of failure, and opportunities to improve supplier performance.
- Resilience: Sub-tier visibility highlights single-point dependencies. Companies can pre-qualify alternates, hold buffer stock strategically, and shorten rerouting times when risks emerge. Jurisdictional risks can be identified.
- Smarter sourcing: Combining risk heatmaps with cost and lead-time data supports strategic supplier segmentation and informs near-shoring or multi-sourcing decisions.
- Commercial advantage: Public-sector frameworks and large buyers increasingly weight responsible sourcing. Demonstrable due diligence can improve Request for Proposal (RFP) scores, while robust environmental, social and governance (ESG) practices are rewarded with better financing terms.
3. Investor and customer expectations
Responsible sourcing has shifted from “nice-to-have” to “must-have.” ESG mandates, shareholder activism, and procurement frameworks now carry explicit human-rights criteria.
- Investor perspective: Weak disclosures are treated as governance red flags. Some firms have faced capital reallocation or ESG rating downgrades due to inadequate modern slavery reporting.
- Customer procurement: Major enterprise buyers require suppliers to complete human-rights due diligence questionnaires. Suppliers without credible data are often excluded from tenders, even if price competitive.
- Market recognition: Companies with clear, credible statements and evidence of policies and controls, including remediation frameworks, are frequently highlighted in sustainability rankings and ESG indexes, boosting access to capital and talent.
4. Global supply chain pressures
Australia does not operate in isolation. Global buyers cascade compliance obligations to suppliers worldwide, regardless of domestic enforcement.
- United States: The UFLPA has triggered shipment detentions across sectors, affecting even indirect suppliers.
- European Union: The forthcoming Corporate Sustainability Due Diligence Directive (CSDDD) will mandate human-rights due diligence with penalties and civil liability. A sanctions regime in relation to forced labour has also adopted, which will take effect at the end of 2027. The Australian Anti-Slavery Commissioner has published a summary of the EU laws: EU regulatory developments on human rights: Implications for Australian businesses
- United Kingdom: The Modern Slavery Act is currently the subject of review, arising from a detailed review by a House of Lords Committee, which recommended strengthening the Modern Slavery Act, including by way of introduction of mandatory due diligence.
For Australian exporters, failing to align with these standards risks contract exclusion, shipment delays, and reputational spillovers.
5. Futureproofing
Law reform in Australia is underway. The statutory review of the Modern Slavery Act 2018 (Cth) recommended the introduction of civil penalties and stronger reporting standards amongst other recommendations. Companies that take action now will be better prepared, avoiding the scramble and higher costs and inefficiencies of last-minute compliance measures.
- Early movers can position themselves as “preferred suppliers” in global value chains.
- Resilience and efficiency come from embedding due diligence in sourcing and operations.
- Reputation and trust accrue to those seen leading, not lagging, on mitigating modern slavery.
The benefits of being proactive
- Resilient supply chains: Identify vulnerabilities and remediate effectively.
- Operational efficiency: Reduce duplication and streamline oversight.
- Trusted relationships: Strengthen ties with suppliers that share your standards.
- Strategic advantage: Lead, rather than follow, as compliance tightens worldwide. Become a supplier of choice.
How Ethixbase360 can help
Ethixbase360 provides the tools to simplify and strengthen compliance:
- Modern Slavery Questionnaire (MSQ): Developed with Norton Rose Fulbright to increase supply chain visibility in preparation for regulatory reporting obligations.
- Prioritisation: Identify the salient risks requiring further due diligence and supplier engagement.
- Centralized monitoring: Manage internal reporting, due diligence, and supplier engagement in one secure platform.
With Ethixbase360, Australian companies can unlock strategic value and stay ahead of global change.
Join our webinar on 6 November 2025, led by Norton Rose Fulbright, to explore the latest developments in modern slavery and human rights compliance in Australia.
