B. How well are companies disclosing modern slavery risks?

Below: 15 November 2020: Sanitation Operations at Top Glove Factory were carried out by Hazmat Special Team due to the increase in COVID-19 cases in the factory (Tok Anas/ Shutterstock.com)

While nearly all companies (96%) now ‘tick the box’ on mentioning supply chain risks in their statements (up from 79%), there continues to be a failure to more deeply engage with salient and obvious risks relevant to the sector within which they operate. 43% of companies still fail to identify obvious risks, with two in five companies (40%) failing describe sector specific risks in any detail (compared with 53% last year). Overall, risk analysis remains poor with an average score of just 31% for awareness of modern slavery risks (up from 24%). Just under a third of companies reviewed disclosed the countries of suppliers (up from 25%), with only 16% disclosing supplier lists, and 13% disclosing the countries of suppliers beyond Tier 1 or to raw materials stage. If companies have inadequate visibility of their high-risk supply chains, then meaningfully addressing modern slavery risks becomes incredibly difficult. One area of improvement was in relation to companies disclosing actual instances or allegations of modern slavery, and responding to those instances. 14% of companies disclosed such instances in the second round of reporting, up from 8% in the first round. While the overall proportion of companies remains low, this demonstrates some improved efforts in transparency about risk identification, as well as a growing number of companies actually uncovering and addressing exploitation in their supply chains. Across sectors, however, there continues to be a lack of engagement with underlying drivers of modern slavery risk, with minimal change in sector-specific scoring between reporting rounds. Factors such as low wages, downward cost pressures and lack of independent oversight are still rarely identified, with just 8% of companies (up from 6%) disclosing risks regarding lack of freedom of association or union coverage of workers. Somewhat surprisingly, given the vast amount of media coverage in recent years of state repression in the Xinjiang Uyghur Autonomous Region of China, including systemic programs of forced labour, 72% of the garment companies we assessed (down slightly from 75%) still fail to disclose the risk of modern slavery linked to possible Uyghur forced labour in their supply chains. While it is apparent that there may be political or commercial reasons for failing to mention this risk in a company’s statement, the failure to disclose this key risk again highlights weaknesses in the MSA’s focus on transparency as Australia’s primary way to tackle supply chain modern slavery risks.