KPMG Australia has teamed up with Australian Human Rights Commission to launch a guide for the financial services sector to respond to the Modern Slavery Act 2018 and other global human rights reporting obligations.
The act requires large companies to report annually on their strategies to address risks in their operations and supply chains of modern slavery, which includes human trafficking, slavery, forced marriage, forced labour, debt bondage and child labour.
Companies will be required to submit their modern slavery statement for the 2020 financial year by 31 March, following on from the December deadline for statement for the year to March 2020.
According to the Global Slavery Index, more than 40 million people around the world are living in modern slavery conditions, while up to 15,000 victims are living in Australia.
But as noted in KPMG’s report, financial services providers are exposed to the issue across their investments, in large and complex value chains, in supply chains with low transparency and with increased outsourcing and offshoring of assets and associated services.
The government’s non-exhaustive list of activities that are considered operations also explicitly includes investment and lending.
Richard Boele, partner in charge of KPMG Banarra human rights and social impact, global leader of business and Human Rights Network, KPMG Australia commented: “The financial services sector intersects with a range of modern slavery risk areas through its investments, assets, insurance and procurement supply chains.”
The spotlight on banks, super funds and insurers during the royal commission brought a barrage of public scrutiny on non-financial risks, the report added.
“It is clear that no institution can afford to ignore the risk of modern slavery in their operations and supply chain,” it stated.
The sector could also face greater risks of exploitation of workers or trafficking as a result of the economic uncertainty around the COVID-19 pandemic.
But the amplified exposure to risk across sectors can also mean players in finance can affect more change, with Mr Boele stating the industry has “significant leverage in the business community”.
“The financial sector’s connection with every industry means it has a pivotal role to play in combating modern slavery in Australia and globally,” Rosalind Croucher, commission president and emeritus professor, wrote in the report.
“Taking a rights-based approach to addressing modern slavery means placing risks to people at the heart of your response.”
The guide is a product of a two-year collaboration between the commission and KPMG. The pair are set to roll out guidance for other high-risk sectors, including health, food and beverage, and mining, in the coming months.
