Australia’s Modern Slavery Act: what businesses need to know
Letizia La Sorte
Solutions Expert
11 Jun 2026
About 10 mins
Australia’s Modern Slavery Act requires certain entities operating in Australia to report each year on modern slavery risks in their operations and supply chains. The core obligation is to prepare and submit an annual Modern Slavery Statement that explains the risks identified, the actions taken to assess and address them, and how the business measures effectiveness.
For procurement, sustainability and compliance teams, this is more than a reporting requirement. It is also a framework for improving supply chain visibility, strengthening governance, supporting supplier engagement, and building a more evidence-based approach to risk management.
As expectations around reporting quality continue to increase, businesses should treat compliance as an ongoing process rather than a one-off disclosure exercise.
What is Australia’s Modern Slavery Act?
Australia’s Modern Slavery Act 2018 established a national reporting requirement for modern slavery risks. Its purpose is to improve transparency and encourage businesses to understand and address risk across their operations and supply chains.
Modern slavery is an umbrella term that can include forced labour, debt bondage, human trafficking, forced marriage, servitude, and other slavery-like practices. These risks can arise in direct operations, supplier sites, labour recruitment, subcontracting, and raw material sourcing.
The Act does not prescribe one fixed compliance model for every business. Instead, it requires reporting entities to explain how they identify, assess, address, and monitor modern slavery risks. This makes the quality of the statement heavily dependent on the quality of the underlying governance, data, and risk management process.
Who does the Act apply to?
The Act applies to entities operating in Australia with annual consolidated revenue of at least AUD 100 million. This can include both Australian entities and foreign entities that carry on business in Australia.
This means multinational organisations may be in scope even if their headquarters are outside Australia. Businesses should review revenue, legal structure, Australian operations, and group reporting arrangements carefully to determine whether they are required to report.
Suppliers below the reporting threshold may not need to submit their own statement. However, they can still be affected by the Act because customers that must report often request supplier information to support their own Modern Slavery Statements.
What must businesses report under section 16?
Section 16 of the Act sets out the mandatory reporting criteria for Modern Slavery Statements.
These criteria are designed to ensure that statements explain both risk and response, rather than relying only on broad policy commitments.
A Modern Slavery Statement must:
- Identify the reporting entity.
- Describe the entity’s structure, operations, and supply chains.
- Describe modern slavery risks in those operations and supply chains.
- Describe actions taken to assess and address those risks.
- Explain how the entity assesses the effectiveness of those actions.
- Describe consultation with owned or controlled entities.
- Include any other information considered relevant.
A strong statement should do more than list policies. It should explain where risk exists, what action was taken, and how the business measures progress over time.
How should businesses assess risk, take action, and measure effectiveness?
Effective modern slavery reporting depends on a clear, structured approach to risk management. Businesses should describe risk in a way that is specific, prioritised, and evidence-based. This usually means explaining where risk may be more likely or more severe across operations and supply chains, rather than making broad general statements.
Risk may increase where supply chains are complex, workers are vulnerable, recruitment practices are unclear, or subcontracting is common. It may also be linked to country, sector, product, workforce profile, or sourcing model. Good reporting helps stakeholders understand how the business prioritises action and where additional scrutiny is needed.
Statements should also describe the practical actions taken during the reporting period. These may include supplier due diligence, risk screening, audits, training, contract updates, worker engagement, grievance channels, and remediation processes. The strongest statements connect these actions directly to identified risks and explain why they were prioritised.
The Act also requires businesses to explain how they assess the effectiveness of their actions. This means going beyond activity reporting and showing whether the business is improving its ability to identify and address risk. Useful measures may include the number of suppliers assessed, the proportion of higher-risk suppliers reviewed, audit findings, corrective action completion rates, training completion, grievance cases, and evidence of improvement over time.
What are the approval, publication, and compliance requirements?
A Modern Slavery Statement must be approved by the entity’s principal governing body. In practice, this usually means board-level review and formal approval. The statement must also include details of that approval, which helps connect modern slavery reporting to governance, accountability, and senior oversight.
Once approved, statements are submitted to the Australian Government’s Modern Slavery Statements Register. This public register makes statements searchable and accessible to customers, investors, civil society, business partners, and other stakeholders.
This public disclosure is important because Australia’s current regime is transparency-based. The main compliance pressure comes from public reporting, stakeholder scrutiny, and government follow-up. Businesses should therefore prepare statements that are clear, accurate, and ready for external review.
At present, the Attorney-General can request explanations or remedial action in response to certain failures to comply. Non-compliance can also be made public, which can create reputational and commercial risk. Although the Act does not currently operate as a full mandatory due diligence law with broad civil penalties for ordinary reporting failures, reform proposals are under active consideration.
What changed in 2025 and what reforms may follow?
Australia’s modern slavery reporting framework is under active review, and businesses should treat current compliance as a baseline rather than a finished standard.
The 2023 statutory review recommended several changes to strengthen the regime. These included possible penalties for non-compliance, a lower reporting threshold, stronger expectations around incidents and risk reporting, and due diligence-style requirements. On 2 December 2024, the Australian Government responded to the review and accepted most recommendations in full, in part, or in principle.
In 2025, the Government also released updated official guidance for reporting entities. This guidance reinforced expectations around practical compliance and stronger quality reporting. A 2025 consultation paper went further by proposing stronger enforcement powers, clearer reporting criteria, possible civil penalties, and a revised group reporting model.
These proposals are not all current law. However, they are important because they show where expectations are moving. Businesses that improve supplier data, governance, internal coordination, and evidence collection now will be better prepared if the regime becomes more demanding.
Practical steps for businesses
Businesses should treat modern slavery reporting as an annual cycle rather than a one-off drafting exercise. This cycle should include scope assessment, risk identification, action, review, approval, and public disclosure.
A practical approach usually includes the following steps:
1. Confirm whether your entity is in scope
Review annual consolidated revenue, Australian business presence, and group reporting arrangements.
2. Map operations and supply chains
Identify key suppliers, subsidiaries, sourcing locations, products, services, and business relationships.
3. Assess modern slavery risks
Use geography, sector, product, workforce, recruitment, and supplier data to prioritise higher-risk areas.
4. Document actions taken
Record due diligence, supplier engagement, audits, training, grievance processes, and remediation activity.
5. Assess effectiveness
Track indicators that show whether actions are improving risk management and supplier performance.
6. Consult owned or controlled entities
Ensure relevant subsidiaries or controlled entities contribute to the statement where required.
7. Prepare the statement for public review
Make the statement clear, specific, evidence-based, and linked to the reporting period.
8. Secure governing body approval
Build in enough time for board review, formal approval, and submission.
These steps can help businesses move from basic disclosure to more effective risk management and stronger annual reporting.
Practical steps for suppliers
Suppliers may receive detailed information requests from customers that need supplier data for their own Modern Slavery Statements. These requests may cover site data, labour practices, recruitment models, subcontracting, policies, grievance channels, audit findings, and corrective actions.
A practical starting point is to maintain clear records that reflect actual practice rather than relying only on general policy commitments. This may include workforce and site information, recruitment procedures, training records, audit results, grievance process details, and corrective action updates.
A simple evidence file can make this process easier. It can help suppliers respond more efficiently, reduce repeated requests from different customers, and support better engagement on modern slavery risk.
Common reporting gaps to avoid
Many Modern Slavery Statements remain too general. This can reduce their value for stakeholders and limit their usefulness for internal decision-making.
Common weaknesses include:
- Listing policies without explaining how they are implemented
- Describing suppliers or countries without explaining risk levels
- Reporting actions without showing outcomes or effectiveness
- Providing limited detail on consultation with controlled entities
- Treating reporting as a legal task rather than a cross-functional process
- Reusing previous wording without showing progress during the reporting period
A stronger statement is specific, balanced, and evidence-based. It explains what the business found, what it did, and what it will improve next.
How Sedex can support Modern Slavery risk management and reporting
Preparing a strong Modern Slavery Statement depends on having reliable supplier information, a clear view of higher-risk areas, and a consistent way to track action over time. Sedex can support this process by helping businesses improve supply chain visibility, collect structured supplier data, identify higher-risk areas, and strengthen the evidence base behind reporting.
Supply chain mapping
Sedex can help businesses organise supplier information in one place, supporting greater visibility across supplier sites, workforce profiles, sourcing locations, and business relationships.
Supplier data collection
Sedex tools can support supplier self-assessment and structured information gathering. This helps businesses collect more consistent information across their supply base and reduce fragmented manual processes.
Risk assessment
Sedex risk assessment tools can help businesses identify higher-risk countries, sectors, sites, and worker groups. These insights support more focused and proportionate action. Where businesses need deeper site-level visibility, SMETA audits can also provide additional insight into labour practices, management controls, and areas that may require follow-up.
Reporting support
Sedex reporting capabilities can help businesses track supplier information, risk indicators, and follow-up activity over time. This can support stronger internal reporting and more evidence-based public disclosure.
For procurement and sustainability teams, the value is practical. Better visibility, more consistent supplier data, and stronger evidence can make it easier to prioritise risk, coordinate internal stakeholders, and prepare more credible Modern Slavery Statements.
Key takeaways
Australia’s Modern Slavery Act requires in-scope entities operating in Australia to publish annual statements on modern slavery risks in their operations and supply chains. The current reporting threshold is annual consolidated revenue of at least AUD 100 million.
The regime remains transparency-based today, but reform momentum is increasing. Businesses should prepare for stronger expectations around reporting quality, accountability, governance, and measurable action.
For procurement and sustainability professionals, effective compliance depends on supply chain mapping, structured supplier data, focused risk assessment, evidence collection, internal coordination, and board oversight. Sedex can support this work by helping businesses improve visibility, gather supplier information, assess risk, track actions, and strengthen reporting.
