From reporting to action: Managing modern slavery risks in a changing regulatory landscape

Modern slavery is no longer just a compliance issue

For many organisations, modern slavery has traditionally been viewed through the lens of reporting obligations. However, as stakeholder expectations evolve and scrutiny intensifies, organisations are being challenged to demonstrate not only what they disclose, but how they actively identify, manage and respond to modern slavery risks.

Modern slavery remains one of the most significant human rights issues affecting global supply chains and business operations. It is estimated to impact millions of people worldwide and can occur in industries and locations that many organisations may not immediately consider high risk.

For boards, executives and business leaders, the question is no longer whether modern slavery risks exist within their value chain, but whether their organisation can demonstrate it is taking meaningful action to address them.

What is modern slavery and why does it matter?

Modern slavery refers to serious forms of exploitation where individuals cannot refuse or leave work because of coercion, threats, deception or abuse of power. It can take many forms, including:

• Forced labour
• Human trafficking
• Debt bondage
• Forced marriage
• The worst forms of child labour.

While often associated with overseas supply chains, modern slavery risks can also exist within domestic operations and local labour markets.

Beyond the human impact, organisations are increasingly recognising that modern slavery creates broader business risks, including regulatory exposure, reputational damage, supply chain disruption and loss of stakeholder trust. Investors, customers, employees and regulators are all placing greater emphasis on how organisations manage human rights risks across their operations and supply chains.

Why modern slavery is becoming a boardroom issue

The conversation around modern slavery has shifted significantly since the introduction of Australia's Modern Slavery Act.

Today, modern slavery risks are increasingly being viewed as part of a broader governance, environmental, social and governance (ESG) and risk management agenda. Several factors are driving this shift:

• Increased regulatory scrutiny in Australia and internationally
• Growing investor focus on environmental, social and governance performance
• Higher expectations from customers and procurement teams
• Increased reliance on complex global supply chains
• Greater public visibility of labour practices and supplier conduct.

As a result, boards and executive leadership teams are being asked to demonstrate stronger oversight of supply chain risks and provide evidence that appropriate due diligence processes are in place.

Understanding obligations under the Modern Slavery Act

The Modern Slavery Act 2018 (Cth) requires Australian entities with consolidated annual revenue of $100 million or more to prepare and submit an annual Modern Slavery Statement.

The statement must address:

• The organisation's structure, operations and supply chains
• Modern slavery risks within those operations and supply chains
• Actions taken to assess and address identified risks
• Due diligence and remediation processes
• How the effectiveness of those actions is measured.

Statements are published on a public register, increasing transparency and enabling stakeholders to compare organisations' approaches to managing modern slavery risks.

What has changed since the introduction of the Act?

The modern slavery landscape has evolved considerably since the first reporting cycle.

Key developments include:

• The establishment of the Australian Anti-Slavery Commissioner
• Increased focus on the quality and effectiveness of reporting
• Proposed reforms that may introduce penalties for non-compliance
• Growing expectations regarding due diligence and governance practices.

Importantly, organisations are finding that stakeholders are looking beyond the annual statement itself. Regulators, investors and customers increasingly want to understand whether organisations can demonstrate genuine risk management outcomes rather than simply describing policies and processes.

This reflects a broader shift from compliance-driven reporting towards proactive risk identification, mitigation and accountability.

Modern slavery risks are often hidden in plain sight

One of the most significant challenges organisations face is identifying where modern slavery risks may exist.

Unlike many operational risks, modern slavery is not always visible. Risks often emerge deeper within supply chains where organisations have limited direct oversight of labour practices.

Common risk indicators include:

• Complex, multi-tier supply chains
• Operations in higher-risk jurisdictions
• Reliance on vulnerable or migrant workforces
• Labour hire arrangements
• Outsourced services and offshore contractors.

Certain industries may also experience heightened exposure, particularly those involving manufacturing, construction, agriculture, logistics, cleaning services and raw material extraction.

Warning signs can include:

• Workers having limited freedom of movement
• Recruitment-related debt arrangements
• Retention of passports or identity documents
• Excessive working hours
• Unlawful withholding of wages.

Identifying these indicators requires more than a desktop assessment. It requires organisations to understand who is performing the work within their supply chain and under what conditions.

What leading organisations are doing differently

Leading organisations are moving beyond annual reporting exercises and embedding modern slavery considerations into everyday business decisions.

Rather than treating modern slavery as a standalone compliance obligation, they are integrating it into procurement, governance and enterprise risk management processes.

Common leading practices include:

• Incorporating modern slavery assessments into supplier onboarding
• Applying risk-based supplier segmentation and due diligence
• Strengthening supplier engagement and education initiatives
• Embedding modern slavery considerations into procurement frameworks
• Establishing escalation pathways and remediation processes
• Providing regular reporting to boards and executive committees
• Delivering training and awareness programs for employees.

This approach enables organisations to focus resources on higher-risk areas while demonstrating a genuine commitment to continuous improvement.

Moving beyond reporting: What organisations should be doing now

As expectations continue to evolve, organisations should consider whether their current approach remains fit for purpose. Key priorities may include:

• Understanding risk exposure: Conduct risk-based assessments across operations and supply chains to identify where modern slavery risks are most likely to arise.
• Strengthening due diligence: Embed modern slavery considerations within procurement, supplier management and third-party risk processes.
• Improving governance: Ensure accountability for modern slavery risks is clearly assigned and supported by appropriate oversight mechanisms.
• Building awareness: Provide practical training to employees, procurement functions and business leaders to improve risk identification and response capabilities.
• Measuring effectiveness: Develop meaningful metrics to assess whether mitigation strategies are delivering the intended outcomes rather than relying solely on activity-based reporting.

Looking ahead: Preparing for future expectations

The direction of regulatory and stakeholder expectations is clear. Organisations will increasingly be expected to demonstrate:

• Stronger due diligence processes
• Effective governance and board oversight
• Transparent supply chain management
• Meaningful remediation efforts
• Evidence-based reporting and continuous improvement.

The organisations that invest in mature modern slavery risk management frameworks today will be better positioned to respond to future regulatory developments and stakeholder scrutiny.

How BDO can help

Managing modern slavery risks requires a practical and proportionate approach that aligns with an organisation's size, operations and risk profile.

BDO supports organisations to:

• Understand modern slavery obligations and emerging expectations
• Conduct modern slavery risk assessments
• Review supply chains and supplier due diligence processes
• Prepare and review Modern Slavery Statements
• Develop governance frameworks, policies and controls
• Implement training and awareness programs
• Strengthen remediation and risk management processes
• Align modern slavery initiatives with broader ESG and sustainability objectives.

Furthermore, BDO can review and enhance procurement and supplier management processes to help organisations embed modern slavery considerations into day-to-day operations, while aligning practices with industry better practice, regulatory expectations and the organisation's broader governance and sustainability objectives. Contact us to discuss your organisations approach to managing modern slavery risks.