We are delighted to share a huge win which is hot off the press. Last night, the Australian Senate passed the Modern Slavery Act. This is the culmination of many years of advocacy by UCA Funds Management with our partners, the Justice and International Mission unit and the Responsible Investment Association Australasia.
As a result, reporting of modern slavery risks in cross-border supply chains is now mandatory for Australia's largest organisations. The threshold for reporting is $100 million in revenue and covers around 3,000 private, not-for-profit and public sector organisations.
Although the Act does not include the appointment of an independent commissioner nor financial penalties, organisations will be required to publish annual Modern Slavery Statements against six mandated criteria. This will improve accountability, transparency and comparability, highlighting industries and organisations most at risk of enabling modern slavery. The new law is expected to come into force on 1 January 2019 and means organisations will need to:
Introduce or revise policies and practices, map suppliers and review contract terms
Conduct due diligence risk assessments
Train and engage contractors and staff
Implement grievance and remediation plans where modern slavery is identified.
In addition to advocating for the Modern Slavery Act to be passed here in Australia, we have engaged directly with companies within our portfolio on the issue. For example, we recently engaged with Wesfarmers (Coles) on improvements to their Ethical Sourcing Charter and a review of their supply chain processes.
As a result of mitigating modern slavery risks we expect that companies will improve the quality of work practices, even by insourcing jobs. Moves such as this contribute to the UN Sustainable Development Goals which aim to end all child labour by 2025, and eliminate forced labour, modern slavery and human trafficking by 2030. From an ethical investment perspective, improved transparency of the human, social and relationship capital of businesses and their supply chains may contribute to higher environmental, social and governance (ESG) ratings, lower cost of capital and higher company valuations.