NZ is finally moving on modern slavery law. What can we learn from Australia?

New Zealand is set to pass new laws requiring large companies to publicly report on the risk of modern slavery in their operations and supply chains. This follows a recommendation from the Parliament’s Education and Workforce Committee and could establish a new regulatory tool to address the growing global issue. Other countries have already implemented such laws, with the United Kingdom introducing supply-chain reporting requirements over a decade ago, Australia following in 2019, and Canada in 2024.

Modern slavery encompasses various forms, including slavery, servitude, child labour, human trafficking, sexual exploitation, forced marriage, and debt bondage. These situations often involve coercion, where individuals are unable to leave effectively, as employers may hold workers' passports or workers may incur significant debts to secure employment.

An estimated 1 in every 150 people worldwide is trapped in some form of modern slavery, and New Zealand is not immune to this problem. An estimated 8,000 individuals are living in modern slavery within the country, and households spend approximately $77 weekly on goods potentially produced through forced or child labour, amounting to nearly $8 billion annually.

While requiring companies to report on these risks is a step forward, the quality and effectiveness of these reports are questionable. Australia’s experience with its Modern Slavery Act provides valuable insights for New Zealand.

Under Australia’s Act, entities with at least A$100 million in consolidated revenue must annually report on modern slavery risks and the steps they are taking to address them. These reports are published on a public register. However, despite the implementation of the Act, companies often provide detailed information about their businesses, supply chains, and measures to address risks but offer little insight into whether these measures are effective.

Reporting tends to be weakest when it comes to companies' interactions with those they own or control, such as subsidiaries. Comprehensive reporting against all required criteria is found in less than 1 in 20 statements, indicating gaps in the effectiveness of the reporting regime.

The analysis of 16,999 Australian statements using artificial intelligence revealed that while companies generally describe the risks in their supply chains and the actions they have taken, they often lack comprehensive information on the effectiveness of these actions and their interactions. This suggests that while disclosure is occurring, accountability is lacking.

Guidance from the law should clarify what constitutes a substantive answer rather than generic responses. Furthermore, the effectiveness of reporting does not vary significantly across industries, indicating that industry-specific guidance may be necessary to elicit more meaningful disclosures. If New Zealand adopts this bill, the quality of the reports will depend heavily on the accompanying guidance, emphasizing the need for tailored and robust reporting standards.