Modern Slavery Disclosure Quality Report shows jump in Australian reporting standards

Eighty of the ASX100 companies have elevated their ratings in FY2022, compared to FY2020, new report finds.

Some of the largest companies listed on the Australian Securities Exchange (ASX) have entered a new phase of maturity in relation to Australian Modern Slavery reporting, according to a new report by Monash Business School’s Centre for Financial Studies. 

The Modern Slavery Disclosure Quality Report, now in its third year, is an independent assessment of the reporting quality of ASX100 companies’ Modern Slavery Statement and shows 80 of the ASX100 companies have elevated their ratings in FY2022, compared to FY2020.

The Commonwealth Modern Slavery Act 2018 established a compulsory national Modern Slavery Reporting Requirement to review operations and supply chains in respect to modern slavery.

Modern slavery describes situations where business owners use coercion, threats or deception to exploit workers and undermine their freedom.

Senior Research Fellow at Monash Centre for Financial Studies, Dr Nga Pham said the improvements in reporting standards underscore a growing dedication and commitment of resources to combating modern slavery among ASX100 companies.

“Enhancements were evident in the disclosure of internal and external expertise, more refined risk identification and assessment processes, the development of robust key performance indicators and an increased focus on fostering external collaborations,” said Dr Pham.

The report also outlines that many companies have still neglected to provide important information such as an explanation of the connection between the reporting entity and the identified risks and how the reporting entity monitors the effectiveness of its efforts. 

“The results show that modern slavery disclosure quality correlates with size and compensation structure and companies linking Environmental Social and Governance to executive compensation tend to have better commitment of resources and better disclosure on the effectiveness of their modern slavery action,” said Dr Pham.

“Five of the ASX100 companies’ statements were downgraded for FY2022. This serves as a reminder that evolving and comprehensive strategies in addressing and disclosing modern slavery practices are essential.” 

Dr Pham said it is crucial reporting entities remain vigilant to modern slavery risks in their operations and supply chains and understand their reporting responsibilities.

“Although the MSA Review Report suggests modern slavery reporting should follow a three-year reporting cycle with interim reports, the government has not made a decision. Until then, it remains essential for statements to provide comprehensive disclosure in their entirety.”

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