Modern Slavery and Procurement: What Australian Organisations Actually Need to Do
The Modern Slavery Act 2018 (Cth) has been in force since 1 January 2019. It requires every Australian entity with annual consolidated revenue of $100 million or more to publish an annual Modern Slavery Statement describing the modern slavery risks in their operations and supply chains, and the actions they have taken to address those risks.
Seven years in, the uncomfortable truth is that most organisations are not doing this well. Over 12,500 statements have been filed on the Modern Slavery Register, representing more than 20,600 entities. Research from Monash University's Modern Slavery Research Programme consistently finds that the majority of statements are generic, surface-level, and disconnected from the organisation's actual procurement and supply chain operations. Studies suggest that 12 to 17 percent of reports are non-compliant with the Act's mandatory reporting criteria.
That gap between obligation and practice is about to narrow significantly. The statutory review of the Act, completed by Professor John McMillan AO in 2023 and responded to by the Australian Government in December 2024, recommended 30 changes. The government agreed to 25 of them. The direction is clear: civil penalties for non-compliance are coming, the reporting threshold is likely to drop from $100 million to $50 million, and mandatory human rights due diligence requirements are on the table.
For procurement teams, this is no longer a reporting exercise that gets handled once a year by the legal or sustainability team. It is becoming an operational obligation that sits squarely within the procurement function.
What the Act Actually Requires
The reporting criteria under the Modern Slavery Act are mandatory, not optional. Every Modern Slavery Statement must address seven specific criteria: the reporting entity's structure, operations, and supply chains; the risks of modern slavery practices in those operations and supply chains; the actions 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 owned or controlled entities; and any other relevant information.
The Act defines modern slavery broadly. It covers trafficking in persons, slavery and slavery-like practices (including forced labour, forced marriage, debt bondage, and deceptive recruiting), and the worst forms of child labour. These are not abstract risks. The Global Slavery Index estimates that 41,000 people are living in conditions of modern slavery in Australia. The sectors most commonly associated with modern slavery risk in Australian supply chains include construction, cleaning, security, agriculture, food processing, textiles, and electronics manufacturing.
Currently, the Act does not impose penalties for non-compliance or for filing a weak statement. That is changing. The government's response to the statutory review confirmed support for civil penalties for failing to submit a statement, providing false information, or failing to comply with remedial action requests. An Anti-Slavery Commissioner, Mr Chris Evans, has been appointed with oversight and advisory functions. The consultation process on penalty frameworks ran through mid-2025, and legislative amendments are expected to follow.
Why This Is a Procurement Problem
Modern slavery risk enters an organisation primarily through its supply chain. The goods and services an organisation procures, the suppliers it engages, and the subcontracting arrangements within those supply chains are where the risk sits.
This makes it fundamentally a procurement problem. Legal can draft the statement. Sustainability can set the policy. But procurement is the function that selects suppliers, negotiates contracts, manages supplier relationships, and has the commercial leverage to require transparency and compliance from the supply base.
In practice, most Australian organisations have not embedded modern slavery risk management into their procurement processes in any meaningful way. The typical approach is to add a modern slavery clause to the standard contract template, include a question about modern slavery in the supplier onboarding form, and write a Modern Slavery Statement that describes these steps as if they constitute a programme. They do not.
Genuine modern slavery risk management in procurement requires three things: the ability to identify which parts of your supply chain carry the highest risk, a structured process for assessing and managing that risk in supplier selection and ongoing management, and contractual and governance mechanisms that give you visibility and leverage.
Where Most Organisations Fall Short
Risk assessment is generic, not specific. Most Modern Slavery Statements describe modern slavery risk in general terms: "We recognise that modern slavery can occur in global supply chains." What they do not do is identify, with any specificity, which categories of spend, which geographies, and which supplier tiers carry the highest risk in their actual supply chain. A construction company that procures steel, glass, and fittings from Southeast Asian manufacturers faces different risks from a healthcare provider that procures cleaning and security services domestically. The risk assessment should reflect that specificity.
Procurement processes do not screen for risk. In most organisations, the supplier onboarding process includes a modern slavery declaration: a tick-box exercise where the supplier confirms compliance. This is not risk screening. It is an administrative formality that tells you nothing about the supplier's actual practices, their subcontracting arrangements, or the conditions under which their products are manufactured. Effective risk screening involves assessing the category of goods or services, the country of origin, the labour intensity of production, and the supplier's own modern slavery maturity.
Contracts lack meaningful obligations. A standard modern slavery clause that requires the supplier to "comply with all applicable laws relating to modern slavery" is a legal placeholder, not a compliance mechanism. Meaningful contractual provisions include obligations for the supplier to conduct their own due diligence on their supply chain, to provide transparency on subcontracting arrangements, to allow audit rights, to maintain and make available grievance mechanisms for workers, and to report any known or suspected modern slavery incidents.
Monitoring is absent. Filing the Modern Slavery Statement is treated as the end point, not the beginning. Most organisations do not monitor their suppliers' modern slavery practices on an ongoing basis. They do not audit high-risk suppliers. They do not track whether contractual obligations are being met. They do not assess whether their actions are actually reducing risk. The Act specifically requires organisations to describe how they assess the effectiveness of their actions. Most statements either skip this criterion or address it with vague language.
The procurement team is not involved. In many organisations, the Modern Slavery Statement is prepared by the legal, company secretarial, or sustainability team with minimal input from procurement. The people who actually select and manage suppliers, who understand the supply chain's structure and risk profile, are not part of the process. This disconnection between the reporting obligation and the operational function that manages supplier risk is the single most common reason why statements are weak.
What Good Looks Like
Organisations that are leading in modern slavery compliance, and there are a small number in Australia doing this well, share several characteristics.
A risk-based approach to supply chain mapping. They have mapped their supply chain, at least to Tier 1 and selectively to Tier 2, against modern slavery risk indicators: geography, sector, labour intensity, subcontracting depth, and product type. They have identified their highest-risk categories and focused their due diligence effort there. This does not require mapping every supplier. It requires prioritising the categories and suppliers where the risk is highest and the organisation's leverage is greatest.
Procurement processes that embed modern slavery assessment. Their supplier onboarding, tender evaluation, and contract management processes include structured modern slavery risk assessment. For high-risk procurements, this includes a detailed supplier questionnaire that goes beyond self-declaration, evaluation criteria that weight modern slavery risk management alongside price and capability, and contract provisions that create real obligations.
Active supplier engagement. Rather than treating modern slavery as a compliance burden to push onto suppliers, leading organisations engage their suppliers on the topic. They communicate their expectations, provide guidance, and work collaboratively with suppliers to improve practices. This is particularly important for SME suppliers, who may lack the resources and expertise to develop sophisticated modern slavery programmes on their own.
Grievance mechanisms and incident response. They have established or participate in mechanisms through which workers in their supply chain can raise concerns. They have an incident response protocol for when modern slavery is identified or suspected. And they have a remediation framework that prioritises the welfare of affected people, not just the organisation's legal exposure.
Annual improvement. Their Modern Slavery Statement demonstrates year-on-year progress. Each statement builds on the previous one, reporting on what was done, what was found, what changed as a result, and what will be done next. The Anti-Slavery Commissioner has made it clear that static, repetitive statements will face increasing scrutiny.
The Government Procurement Dimension
For organisations that sell to government, modern slavery compliance is increasingly a competitive requirement.
The Commonwealth Government's procurement framework now includes modern slavery considerations as a standard element of tender evaluation for contracts involving goods manufactured overseas, labour-intensive services, or supply chains with exposure to high-risk geographies. The Department of Finance has published model modern slavery contract clauses and a procurement risk screening toolkit for use by Commonwealth procurement officers.
NSW has gone further. The Modern Slavery Act 2018 (NSW) applies a reporting obligation to NSW government agencies, local councils, and state-owned corporations. The NSW Anti-Slavery Commissioner oversees compliance and maintains a public register of non-compliant agencies. The NSW Procurement Board's policies require agencies to take reasonable steps to ensure that goods and services procured are not the product of modern slavery.
Queensland's Supplier Code of Conduct requires suppliers to make all reasonable efforts to ensure their supply chains are free from modern slavery. Victoria, the ACT, and other jurisdictions are at various stages of embedding similar requirements into their procurement frameworks.
For suppliers bidding on government work, the practical implication is that modern slavery compliance is no longer a background requirement. It is a scored evaluation criterion that directly affects whether you win work. Organisations that can demonstrate a mature, operational modern slavery programme, not just a statement on a register, will have a genuine competitive advantage in government procurement.
What the Reforms Mean for Procurement Teams
The legislative reforms signalled by the government's response to the statutory review will change the compliance landscape in several ways that directly affect procurement.
Penalties will create accountability. Civil penalties for non-compliance with reporting requirements, for providing false or misleading information, and for failing to comply with remedial action requests will elevate modern slavery from a voluntary transparency exercise to a compliance obligation with financial consequences. Procurement teams that have been treating modern slavery as a low-priority annual reporting task will need to take it seriously.
Due diligence may become mandatory. The statutory review recommended mandatory human rights due diligence requirements, aligning Australia with the direction of the EU Corporate Sustainability Due Diligence Directive. If implemented, this would require organisations to identify, prevent, mitigate, and account for human rights impacts in their operations and supply chains. This is a fundamentally different obligation from the current reporting requirement. It shifts the focus from describing what you do to demonstrating that you are actively managing risk.
The threshold will drop. If the reporting threshold is lowered from $100 million to $50 million in consolidated revenue, approximately twice as many organisations will be required to report. Many of these organisations are mid-market businesses that currently have no modern slavery programme at all. They will need to build one from scratch.
Scrutiny will increase. The Anti-Slavery Commissioner has made it clear that the era of filing a boilerplate statement and moving on is ending. The Commissioner has powers to identify higher-risk sectors, locations, and suppliers, and to issue guidance that sets expectations for the quality and substance of reporting. Organisations that file weak statements will face reputational risk and, eventually, regulatory consequences.
A Practical Framework for Getting Started
For procurement teams that need to move from minimal compliance to genuine modern slavery risk management, here is a practical starting framework.
Step 1: Map your supply chain against risk. Start with your top 50 suppliers by spend. Assess each against the key risk indicators: country of origin of goods or services, labour intensity of the category, depth of subcontracting, and sector risk profile. The Australian Border Force's guidance and the Global Slavery Index provide country and sector risk ratings that can inform this assessment. The output is a heat map that tells you where to focus your effort.
Step 2: Strengthen your procurement processes. For high-risk categories, embed modern slavery assessment into your supplier selection and onboarding processes. This means moving beyond a self-declaration form to a structured questionnaire that asks specific questions about the supplier's labour practices, subcontracting arrangements, and their own modern slavery due diligence. For tender evaluations in high-risk categories, include modern slavery risk management as a weighted evaluation criterion.
Step 3: Upgrade your contracts. Review your standard contract templates and ensure they include meaningful modern slavery provisions: obligations for the supplier to conduct due diligence on their own supply chain, transparency on subcontracting, audit rights, grievance mechanism requirements, and incident reporting obligations. The Department of Finance's model clauses provide a useful starting point for government contracts, and the principles translate to commercial contracts.
Step 4: Build internal capability. Procurement staff need to understand what modern slavery is, what the risk indicators are, and what to do when they identify a concern. This does not require every buyer to become a human rights expert. It requires basic awareness training, clear escalation protocols, and access to specialist support when needed.
Step 5: Monitor and report. Establish a process for monitoring high-risk suppliers on an ongoing basis. This might include annual supplier self-assessments, periodic desktop audits, or participation in industry-wide audit programmes. Track your actions and their outcomes, because that is what your Modern Slavery Statement needs to report on. And involve procurement in the preparation of the statement, because procurement is where the knowledge sits.
How Trace Consultants Can Help
Trace Consultants works with Australian organisations to embed modern slavery risk management into their procurement and supply chain operations, moving beyond reporting compliance to genuine operational capability.
Supply chain risk mapping. We map your supply chain against modern slavery risk indicators, identifying the categories, suppliers, and geographies that carry the highest risk and require focused due diligence.
Procurement process design. We design supplier onboarding, tender evaluation, and contract management processes that embed modern slavery assessment as a standard element of procurement operations, not a standalone compliance exercise.
Contract review and clause development. We review existing contract templates and develop modern slavery provisions that create meaningful supplier obligations, audit rights, and incident reporting mechanisms.
Modern Slavery Statement support. We work with procurement, legal, and sustainability teams to prepare Modern Slavery Statements that meet the Act's mandatory reporting criteria, reflect the organisation's actual supply chain risk profile, and demonstrate genuine year-on-year improvement.
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Where to Begin
If your organisation's modern slavery compliance currently consists of a contract clause and an annual statement prepared without procurement input, the reforms ahead will require a different approach. The good news is that the starting point is straightforward: map your highest-risk spend, assess your current procurement processes against the gaps described in this article, and build a plan to close them.
The organisations that start now will be prepared when penalties arrive. The ones that wait will be scrambling to build a compliance programme under pressure, which is always more expensive and less effective than doing it properly the first time.
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