The Australian Retail Council (ARC) is opposing some of the recent amendment proposals by the Anti-Slavery Commissioner over the Modern Slavery Act 2018, including the introduction of mandatory due diligence and allowing the Commissioner to declare that a product, service or industry carries a high risk of modern slavery.
In its submission to a consultation on the amendment proposals, ARC shared that it does not support the introduction of mandatory modern slavery due diligence obligations. This would mean that reporting entities, including the Australian Government, will need to demonstrate that they are taking reasonable steps to identify, prevent and address modern slavery in their operations and supply chains.
Instead, the peak body supports a “voluntary, risk-based” due-diligence framework that aligns with international principles while recognising the often subjective challenges businesses face when identifying and mitigating modern slavery risks.
“A voluntary framework should encourage meaningful action and continuous improvement without imposing overly prescriptive or procedural requirements that risk diverting resources from substantive remediation and worker centred outcomes,” the peak body wrote.
“Effective reform should recognise good faith, proportionate efforts undertaken by reporting entities and support sustained, responsible engagement in higher risk markets, rather than incentivising defensive compliance, box ticking or disengagement.”
This goes against other groups that welcome the proposed framework, including the UN Committee on Economic, Social and Cultural Rights.
In its concluding observations on Australia’s sixth periodic report, the Committee has urged the Australian Government to amend the Modern Slavery Act 2018 (Cth) (Act) to introduce mandatory human rights due diligence and report back within 24 months on progress.
“The Committee remains concerned that the State Party [Australia] has not yet adopted a comprehensive national action plan on business and human rights and that business entities are not subject to a mandatory human rights due diligence obligation covering their operations and supply chains, including those abroad,” the Committee wrote.
The UN Committee then recommended Australia to enact a comprehensive national legal framework that requires business entities to conduct human rights due diligence throughout their operations and supply chains. This includes introducing mandatory human rights due diligence obligations, establishing effective monitoring and enforcement mechanisms, providing for proportionate and dissuasive penalties for non-compliance, lowering reporting thresholds where appropriate, and ensuring access to effective remedies for victims of business-related human rights abuses.
Meanwhile, the ARC has also rejected allowing the Commissioner to make high-risk declarations. Fashion business consultant and Growth Activists co-founder Rosanna Iacono said this proposal makes fashion a primary target. This is because clothing, textiles and cotton are already identified as high-risk industries globally.
“What it would essentially mean is that once a declaration is made (for example, on cotton possibly coming from the Xinjiang region of China, or around the risk of bonded workers in a Bangladeshi factory), businesses must then 'have regard to it' in their due diligence,” Iacono said. “That means it becomes a trigger for them to take action and explicitly explain how they addressed that specific risk in the due diligence process.
“While the report doesn’t mention them as a requirement, this push for transparency aligns perfectly with Digital Product Passports, as brands will need verified provenance data to prove they’ve addressed declared high-risk factors. I can certainly see that convergence happening.”
The ARC noted that while enhanced government risk guidance and shared intelligence would be valuable, formal designation regimes risk generating unintended consequences, including businesses exiting supplier relationships, reduced transparency and legal uncertainty. The ARC added this may not advance improved outcomes for vulnerable workers.
“Any strengthened compliance and enforcement framework should adopt a graduated and risk-based approach that prioritises improved practice and continuous uplift, while reserving stronger regulatory action for deliberate or persistent non-compliance.
“Consistent application of modern slavery obligations across all entities supplying Australian consumers remains critical. Obligations should apply equitably to domestic and overseas/online market participants to maintain competitive neutrality and reinforce the integrity of the regulatory framework.”
Regarding the first proposal on adding due-diligence, Iacono pointed out that reporting entities with a turnover of $100 million and operating in Australia, either locally owned or overseas, only need to describe what they are doing, “even if it's nothing.”
Some entities do tend to go above and beyond these requirements, with some tabling 30- or 40-page reports, while others stick to the bare minimum.
With the new rules, Iacono said fashion businesses especially will be pushed toward fuller supply chain mapping, beyond tier 1 suppliers, as the Commissioner’s term ‘reasonable steps’ includes identifying risks in complex global supply chains where exploitation is most prevalent.
The proposed rules will also give power to the regulator to issue infringement notices or seek civil penalties for businesses that fail to conduct due diligence or report on it, and businesses would be required to provide for or cooperate in remediation where they’ve caused or contributed to harm.
“The fact that the proposed reforms are designed to align Australia with the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) and other international standards is a huge positive,” Iacono said. “This will create efficiencies for Australian brands selling into Europe or North America. Harmonising Australian law with global expectations means businesses can take a ‘one action, many markets’ approach.”
Iacono – who has held lead managing roles at Sass & Bide, Jurlique, Mex, SABA, Sheridan, Levi Strauss and Nike – also pointed out that the Commissioner’s report cites research that shows robust human rights records correlating with better asset efficiency and investor confidence.
The Australian Institute of Company Directors also weighed in, tabling a submission that makes similar rejections the ARC has made.
The AICD highlighted the merit in a new high-risk declaration mechanism, but is unconvinced that introducing a new and complex due diligence obligation is desirable “at this time”.
The group also believes that a further, formal consultation process is required to consider a new due diligence obligation and consequent enforcement regime.
“A due diligence obligation is a significant new step that will potentially apply to approximately 3,000 entities, given the modern slavery regime currently applies at the threshold of $100 million revenue,” the group shared in its submission.
“A considered and public consultation with an accompanying detailed discussion paper is critical to support robust policy deliberations. The discussion paper should set out various options for reform, with their benefits and possible downsides, to allow for a sound policy making process to be undertaken and advice provided to government.
“This would also allow affected entities to provide feedback on the implications of a due diligence process for their operations. The only public consultation on the new due diligence obligation to date was conducted by the Commissioner in relation to the Commissioner’s Position Paper, rather than the Attorney-General’s Department as the relevant policy department.”