Procurement managers not ready for Modern Slavery Act

A garment factory in Kabul relies on a steady supply of electricity to operate.Most procurement managers aren’t prepared for new regulation that will force large businesses to prepare reports on modern slavery in their supply chains and the work they are undertaking to address it, according to new research.

The Federal Government unveiled plans earlier this month to push a Modern Slavery Act through parliament, which will require businesses turning over more than $100 million to comply with a range of new regulations related to supply chain slavery.

The new legislation could be enacted from 1 July if it passes parliament, but the Chartered Institute of Procurement & Supply (CIPS) has said 40 per cent of procurement managers don’t think current monitoring policies would support the production of a report, based on an online survey.

The statement will be required to report on modern slavery risks within the structure, operation and supply chain of more than 3,000 Australian businesses, as well as actions being taken to address risks.

A further 28.8 per cent of procurement managers surveyed by CIPS said they don’t know if their organisation could produce a report, while one in five organisations are yet to take any measures to ensure their supply chains are free of modern slavery.

The findings, based on a survey of 195 procurement managers, 72.3 per cent of which work for companies with turnovers higher than $100 million, are a worrying sign that industry might be caught out by the new law.

CIPS general manager Mark Lamb said that there was overwhelming support for the legislation, with 45 per cent of respondents saying the legislation was timely and necessary, although a lack of awareness and training had stifled industry readiness.

“Our research shows that more than half (54.9 per cent) of managers lack confidence that their supply chain managers have sufficient skills and expertise to minimise the occurrence of modern slavery in their supply chains,” Lamb said.

“Accountability for inadequate or exposed supply chains sits firmly with procurement professionals.”

The Modern Slavery Act has in-principle bipartisan support and is the product of more than a year of industry consultation.

Australian Retailers Association executive director Russell Zimmerman said that many leading retailers are already compliant with most of the requirements under the Act, with the likes of Coles and Woolworths having already indicated their support for the legislation.

80 per cent of respondents to the CIPS survey said reputational risk was the most concerning factor in finding modern slavery within their organisation’s supply chain.

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