Executive Summary

Australia's Modern Slavery Act 2018 (Cth) requires every entity with an annual consolidated revenue of $100 million or more to submit an annual Modern Slavery Statement disclosing their risks of modern slavery in their operations and supply chains, and what they are doing about it. Since the regime commenced in 2020, more than 12,500 statements have been filed. The problem is that for most of those five years, filing a statement - regardless of its quality or the rigour of the underlying due diligence - was enough.

That era is ending.

In December 2024, the Australian Government formally responded to the independent review of the Act, agreeing in full or in principle to 25 of 30 recommendations. The most consequential of these: civil penalties for non-compliance are coming. In July 2025, the Government commenced formal consultation on introducing financial penalties for entities that fail to submit a statement, provide false or misleading information, or fail to act on remedial requests. The Attorney-General's Department has signalled it is actively developing data-matching capabilities to detect compliance failures. Australia's first Anti-Slavery Commissioner, Chris Evans - appointed in November 2024 for a five-year term - has publicly warned that reporting entities can no longer ignore or under-deliver on their obligations.

At the same time, independent research from the Monash Centre for Financial Studies has exposed the scale of the reporting quality problem: while more than half of ASX100 companies now receive an A-grade rating, five received E or F grades in FY2024, and companies outside the ASX100 routinely provide lower-quality reports, with many failing to report at all. The statutory review's own finding was blunt - there is no hard evidence yet that the Act has caused meaningful change in the lives of people living in modern slavery.

For directors, this convergence of circumstances represents a material governance risk. The statement your board signed off on may be legally filed. But if it is built on narrative assertions without evidence of actual due diligence, without genuine grievance mechanisms, without data from your supply chain - it is increasingly a document that will attract scrutiny rather than demonstrate compliance.

This article examines what the Act actually requires of directors, why the quality of current reporting represents a governance failure, what the incoming enforcement environment means for personal liability, and why the workplace culture data that Salus generates is becoming relevant evidence of an organisation's ethical operating environment under the new due diligence framework.

The Scale of the Problem: 50 Million People, $17.4 Billion in Australian Imports

Modern slavery is not a distant or abstract risk. According to the most recent Global Estimates of Modern Slavery, published jointly by the International Labour Organization (ILO), Walk Free and the International Organization for Migration (IOM), there were 50 million people living in situations of modern slavery on any given day in 2021 - 10 million more than in 2016. Of these, 27.6 million were in forced labour, with 86% of forced labour cases found in the private sector.

Critically, this is not exclusively a problem of low-income countries. More than half of all forced labour and a quarter of all forced marriages occur in upper-middle or high-income countries. Walk Free's 2023 Global Slavery Index estimated there were 41,000 individuals living in modern slavery within Australia itself. And beyond domestic exposure, Australia's supply chain risk is substantial: Walk Free's analysis found that Australia imports US$17.4 billion worth of products annually that are at risk of being produced using forced labour.

The products most at risk in Australian supply chains include electronics, garments, solar panels, palm oil and textiles - categories embedded in the procurement activities of virtually every large Australian organisation, from corporate head offices to hospitals and universities. The Walk Free analysis found that nearly two-thirds of all forced labour cases are linked to global supply chains, with most forced labour occurring in the lowest tiers of supply chains where oversight is most difficult.

This is the context in which your Modern Slavery Statement sits. When your board signs the statement, it is making a representation about what your organisation knows about these risks and what it is doing to address them. The question regulators, investors, and civil society are now asking is not whether you filed a statement - but whether the statement reflects genuine knowledge and genuine action.

What the Act Actually Requires Directors to Do

The Modern Slavery Act 2018 (Cth) requires reporting entities to submit an annual statement addressing seven mandatory criteria. The statement must be approved by the principal governing body - the board - and signed by a responsible member, typically the CEO or a director. This is not a delegation to the compliance team. It is a board-level representation.

The seven mandatory criteria require the statement to address:

• The identity and structure of the reporting entity and the entities it owns or controls

  
  

• The structure, operations and supply chains of the reporting entity

  
  

• The risks of modern slavery practices in the reporting entity's operations and supply chains, including those owned or controlled entities, and those of any entity the reporting entity has a business relationship with

  
  

• The actions the entity has taken to assess and address those risks, including due diligence and remediation processes

  
  

• How the entity assesses the effectiveness of those actions

  
  

• The process of consultation with entities owned or controlled by the reporting entity

  
  

• Any other relevant information

  
  

The critical requirement that most organisations are failing is criterion four: the description of actions taken to assess and address risks, including due diligence. A statement that describes risks in general terms, outlines policies that exist on paper, and states that supplier agreements include modern slavery clauses does not satisfy this criterion. It describes intention. It does not demonstrate action.

The Monash Centre for Financial Studies' FY2024 benchmarking report - the most comprehensive annual assessment of ASX100 reporting quality - found that disclosure of supply chain structures beyond Tier 1 remains the weakest area across most sectors, representing a structural blind spot that limits companies' ability to assess and manage risk where it often matters most. Health Care companies ranked lowest of all sectors, with poor scores for supply chain descriptions, modern slavery risk identification, due diligence processes and effectiveness assessment.

The review commissioned by the Attorney-General's Department and led by Professor John McMillan AO reached the same conclusion: the Act had raised awareness but there was no hard evidence it had yet caused meaningful change in the lives of people living in modern slavery. Statements were being produced. Due diligence was not always being done.

The Enforcement Environment Is Fundamentally Changing

For the first five years of the Modern Slavery Act, the absence of penalties meant that the practical consequence of a poor-quality statement was limited to reputational risk. That calculation has changed.

Civil Penalties Are Coming

In July 2025, the Attorney-General's Department released a formal Consultation Paper proposing the introduction of civil penalties for entities that fail to submit a Modern Slavery Statement, provide false or misleading information in a statement, or fail to comply with a request for remedial action from the regulator. The Government also proposed expanded enforcement powers including infringement notices, enforceable undertakings, and civil penalty orders for repeated or unremediated non-compliance.

The Government noted explicitly that there are currently no penalties under the Act for failing to comply with mandatory reporting requirements - and that this is about to change. While the specific penalty amounts were subject to consultation, the now-repealed NSW Modern Slavery Act contained penalties of up to $1.1 million for each offence. Comparable international regimes - including Canada's modern slavery legislation - impose penalties of up to CAD$250,000 per offence.

More significantly, the proposed reforms include civil liability exposure for misleading statements. Given that modern slavery statements are signed by directors, the intersection with directors' duties under the Corporations Act - including misleading and deceptive conduct provisions - is direct. Directors who sign statements that misrepresent the extent of their organisation's due diligence face the same personal liability framework that applies to misleading financial disclosures.

The Anti-Slavery Commissioner Is Actively Escalating

Australia's first Anti-Slavery Commissioner, Chris Evans, appointed in November 2024, has moved quickly to establish an active enforcement posture. In July 2025 - just eight months after taking office - the Commissioner wrote directly to professional firms across Australia raising concerns about non-compliance with the Act, calling on firms to remind clients of their obligations, and alerting the market that the Attorney-General's Department was actively developing data-matching capabilities to detect failed compliance.

This is not regulatory throat-clearing. This is a Commissioner who has publicly described the current state of non-compliance as making Australia a destination for goods made with forced labour while the EU, Canada, and the United States enforce stricter laws. The Monash FY2024 report prompted the Commissioner to state publicly that hundreds of reporting entities continue to submit poor-quality statements or fail to report entirely, and that this underscores the urgent need to strengthen legislation, penalties, and mandatory due diligence.

The International Pressure Is Escalating

Australian organisations operating internationally, or in supply chains connected to international customers, face a second layer of pressure from offshore legislative regimes. The EU's Corporate Sustainability Due Diligence Directive (CSDDD), adopted in 2024, requires large EU and non-EU companies with EUR450 million or more in EU turnover to identify and address adverse human rights and environmental impacts in their operations. Australian subsidiaries of in-scope entities, and Australian businesses supplying in-scope entities, are subject to contractual due diligence requirements as a consequence of the CSDDD even without direct Australian legislative obligation.

The Australian Institute of Company Directors has noted that Australian entities should prepare for more stringent requirements and be aware that their supply chain conduct is increasingly visible to overseas regulators, investors, and customers who face their own legal obligations.

The Reporting Quality Problem Is a Governance Failure

The Monash Centre for Financial Studies has conducted independent annual benchmarking of modern slavery statement quality since the regime commenced. Their FY2024 findings represent the most authoritative published assessment of the gap between what the Act requires and what Australian companies are actually producing.

The headline improvement is genuine: more than half of ASX100 companies received an A-grade rating in FY2024, up from just 3% in the inaugural FY2020 reporting year. But the Monash researchers were explicit that this improvement conceals persistent and material failures:

• Five ASX100 companies received E or F grades in FY2024, illustrating that compliance alone does not guarantee quality

  
  

• Disclosure on supply chains beyond Tier 1 remains the weakest area across most sectors - a structural weakness, particularly in Industrials and Healthcare

  
  

• Many statements report activities rather than measurable outcomes or impact, raising the question of whether improvements reflect real change for people or simply better documentation

  
  

• Companies outside the ASX100 routinely provide lower-quality reports, and many are still failing to report at all

  
  

• Health Care companies ranked lowest of all ASX100 sectors across supply chain description, risk identification, due diligence and effectiveness assessment

  
  

The Commissioner's response to the Monash findings was categorical: the persistence of poor-quality statements and non-reporting among hundreds of entities underscores the urgent need for stronger legislation, penalties, and mandatory due diligence requirements.

For directors, the Monash research is important not just as a benchmarking tool but as a signal of what 'good' looks like in practice. Companies receiving A-grade ratings are not just describing policies - they are demonstrating evidence of impact through grievance mechanisms, audit follow-up and supplier engagement. They treat the reporting regime as a platform for accountability, not a compliance burden. This is the standard against which your statement will increasingly be measured.

The Due Diligence Obligation: Moving From Statement to Evidence

The incoming reforms to the Modern Slavery Act include, in principle, the introduction of a mandatory due diligence system - requiring entities to implement processes to identify and mitigate modern slavery risks in their operations and supply chains, not merely to describe those risks in a statement. This aligns Australia with the direction of travel in the EU and reflects the conclusion of the McMillan Review that a reporting obligation alone is insufficient to drive meaningful change.

For directors, this shift has a specific governance implication. Due diligence - real due diligence - requires data. It requires evidence that your organisation has asked questions of suppliers, received responses, assessed the responses, identified risks, implemented controls, and verified their effectiveness. A statement asserting that your procurement contracts include modern slavery clauses is not evidence of due diligence. It is evidence that your lawyers have reviewed your contracts.

The question boards need to be asking their management teams is not "have we filed our statement?" but "what evidence do we have of actual due diligence?" Three categories of evidence matter most:

1. Supply Chain Mapping Beyond Tier 1

The Monash research consistently identifies Tier 1 supply chain visibility as a minimum standard that most companies meet, while visibility into Tier 2 and beyond remains the dominant failure. Modern slavery risk is highest at the extraction and production stages of supply chains - precisely where most organisations have the least visibility. Directors need to understand what proportion of their supply chain spend is mapped beyond immediate suppliers, and what processes exist to identify risk in indirect relationships.

2. Grievance Mechanisms That Workers Can Actually Use

A modern slavery grievance mechanism is only as effective as the extent to which workers in at-risk supply chains trust it and can access it. The leading practice highlighted in the Monash research involves companies that can demonstrate actual use of grievance channels: that workers have reported concerns, that those concerns have been investigated, and that outcomes have been tracked. A grievance mechanism that has never received a complaint is not evidence of safety - it is evidence of inaccessibility or distrust.

This is directly analogous to the psychosocial hazard reporting data that Salus manages for Australian workplaces. An organisation that has 200 employees and zero reported incidents is not demonstrating a safe workplace - it is demonstrating a reporting failure. The same logic applies to supply chain grievance mechanisms: zero reports is a red flag, not a clean bill of health.

3. Internal Culture as Evidence of Ethical Governance

The emerging due diligence framework - aligned with the UN Guiding Principles on Business and Human Rights, which the McMillan Review endorsed as the appropriate standard - requires organisations to demonstrate that their internal governance structures are consistent with their ethical claims. An organisation that signs a Modern Slavery Statement asserting its commitment to human rights while its own workplace has unresolved reports of exploitation, harassment, or coercion faces a fundamental credibility problem.

Regulators and investors conducting enhanced scrutiny of modern slavery compliance will increasingly look at the consistency between an organisation's external statements and its internal culture. The data that Salus generates - capturing psychosocial risk signals, incident patterns, and reporting trends across the workforce - provides objective evidence of how an organisation actually treats its own people. For directors seeking to demonstrate genuine governance alignment, this is the kind of verified internal data that supports a credible modern slavery statement, rather than undermining it.

What Directors Need to Do Now

The window between the current penalty-free environment and the incoming civil penalty regime is the time to act. Directors of entities with $100 million or more in annual consolidated revenue - and directors of smaller entities that supply or are owned by in-scope entities - face a consistent set of governance obligations.

Interrogate Your Current Statement

Read your most recently submitted Modern Slavery Statement as if you were the Anti-Slavery Commissioner's enforcement team. For each of the seven mandatory criteria, ask: is this assertion supported by evidence? Can we produce documentation that demonstrates we have actually done the things we have described? If the answer is "not confidently," the statement represents a governance risk. The Commissioner has stated publicly that the Department is developing data-matching capabilities to detect compliance failures. Statements that describe processes that cannot be evidenced are potential targets for remedial action requests - and under the incoming framework, failure to respond to those requests is itself a penalty-attracting offence.

Map Your Supply Chain Risk Honestly

Tier 1 suppliers are a starting point, not an endpoint. Agriculture, construction, healthcare consumables, electronics, garments, and professional cleaning services are among the highest-risk procurement categories for Australian organisations. Directors need to understand what proportion of their supply chain spend in these categories has been subject to meaningful due diligence, what the results showed, and what actions were taken in response. The Monash research is explicit that Tier 1 visibility without meaningful beyond-Tier-1 engagement is insufficient for A-grade compliance under the current voluntary standard - and will be insufficient for mandatory due diligence compliance under the incoming reforms.

Establish Evidence-Based Grievance Mechanisms

A modern slavery grievance mechanism that has not generated any complaints since inception should be treated as a signal failure, not a success. Workers in at-risk supply chains face significant barriers to raising concerns - language, visa status, fear of retaliation, and lack of accessible channels. Effective grievance mechanisms are designed to be accessible to vulnerable workers, available in relevant languages, confidential, and trusted enough to actually be used. Directors should be asking management: how many complaints has our modern slavery grievance mechanism received? What was done with them? How do we know workers in our supply chains know it exists?

Align Internal Culture With External Statements

The UN Guiding Principles on Business and Human Rights - which the McMillan Review endorsed as the appropriate standard for Australian due diligence obligations - require organisations to conduct due diligence across their entire sphere of influence, including their own operations. An organisation that is demonstrably failing to protect its own workers from exploitation, harassment, or coercive work practices cannot credibly assert that it is committed to eliminating modern slavery in its supply chains.

Directors of organisations using Salus have access to verified, longitudinal data on how their organisation's workforce actually experiences the workplace - including reporting trends, psychosocial risk signals, and the effectiveness of internal grievance channels. This data is increasingly relevant to modern slavery governance because it demonstrates, with evidence, whether the organisation's ethical commitments are reflected in lived experience rather than aspirational policy.

Key Takeaways

• Australia's Modern Slavery Act requires entities with $100M+ annual revenue to submit annual statements signed off by the board. More than 12,500 statements have been filed since 2020 - but the statutory review found no hard evidence the Act has yet caused meaningful change in the lives of people living in modern slavery.

  
  

• Civil penalties are coming. The Australian Government commenced formal consultation in July 2025 on introducing financial penalties for failing to submit a statement, providing false or misleading information, or failing to comply with remedial action requests.

  
  

• The Anti-Slavery Commissioner, appointed November 2024, has moved quickly to an active enforcement posture - alerting professional firms to non-compliance, calling out poor-quality statements, and signalling that data-matching capabilities are being developed to detect failures.

  
  

• The Monash Centre for Financial Studies' FY2024 benchmarking of ASX100 companies found that supply chain disclosure beyond Tier 1 remains the weakest area across most sectors. Five companies received E or F grades, and companies outside the ASX100 routinely submit poor-quality statements or fail to report at all.

  
  

• Walk Free's 2023 Global Slavery Index estimates 41,000 individuals in modern slavery in Australia, and that Australia imports US$17.4 billion in products annually at risk of being made using forced labour. The global figure is 50 million people, 86% of whom are in private sector forced labour.

  
  

• The incoming mandatory due diligence framework - aligned with the UN Guiding Principles on Business and Human Rights - will require evidence of actual risk identification and mitigation, not just narrative assertions. Statements built on policies rather than evidence will attract regulatory scrutiny.

  
  

• Internal culture data - including psychosocial risk signals, incident reporting trends, and grievance mechanism effectiveness - is becoming relevant evidence of an organisation's ethical governance alignment. Organisations using Salus can demonstrate, with verified data, that their internal commitments match their external statements.

  
  

If your board is signing a Modern Slavery Statement that is built on policy descriptions rather than evidence of actual due diligence, the incoming enforcement environment represents a material governance risk. Safe Work Tech's Salus platform - which captures verified, longitudinal data on workplace culture, incident reporting and grievance channel effectiveness - provides the kind of evidence-based internal governance data that supports credible modern slavery compliance. Contact Safe Work Tech to understand how Salus can strengthen both your workplace safety framework and your ethical governance foundation.