Landmark EU law highlights need for stronger Australian corporate accountability laws

Australian civil society organisations have welcomed the EU Parliament’s approval of a new corporate due diligence law as a significant step forward for the protection of people and the planet and called on the Albanese Government to follow Europe's lead.

The new EU Corporate Sustainability Due Diligence Directive will require large EU companies to conduct due diligence to identify and address human rights and environmental risks in their operations and supply chains globally. Companies that fail to comply risk significant fines and civil liability.

In a recent open letter, a coalition of civil society groups and academics called on the Australian Government to introduce similar due diligence obligations into Australia’s Modern Slavery Act 2018.

An independent statutory review of the Modern Slavery Act last year recommended the introduction of mandatory due diligence obligations on companies as one of a number of measures to strengthen the law and ensure it is making a meaningful difference to workers in Australian supply chains.

The review, led by Professor John McMillan, found that there is a ''growing international conviction – a global norm – that due diligence processes must be the core strategy for addressing human rights abuses and modern slavery practices... in corporate supply chains."

Professor Justine Nolan, Director, Australian Human Rights Institute:
“Global trends are requiring companies to be more transparent about their human rights risks and to take action to address them. Australia is playing catch up and our laws need to be strengthened to ensure an even playing field for all companies on the global stage.”

Grace Forrest, Founding Director at Walk Free and Commissioner, Global Commission on Modern Slavery & Human Trafficking:
“The Directive will strengthen protection for workers across the globe. The inclusion of penalties means that companies will take this seriously. Australia’s Modern Slavery Act is inadequate – our research shows that it has been ineffective in getting companies to take real action to protect people from modern slavery. Australia is now lagging behind and we must move quickly to introduce similar standards here. Australian businesses that export to the EU (over 23bn goods in 2022) will be impacted if they can’t demonstrate how they meet these due diligence standards. Strengthening the Australian Modern Slavery Act to include due diligence does not only make good business sense, it will be essential to protect tens of million people in forced labour around the world.” 

Keren Adams, Legal Director at the Human Rights Law Centre:
”Every person should be able to work in freedom and dignity, without threats of violence, coercion and abuse. But right now there are an estimated 27.6 million people in situations of forced labour globally, including people working in the supply chains of Australian companies. The Australian Government should follow Europe's lead and require companies to take real action to address exploitation and abuse in their supply chains to ensure no Australian companies are profiting from exploitation.”

Carolyn Kitto, Co-Director, Be Slavery Free:
“In 2018 we boasted that we were leading the world in our actions on modern slavery, and we were. We can no longer make that claim. The only way we can do that is together, Government, business and civil society each playing their role. We now have a chance to make real change for victims, by strengthening our modern slavery laws so large companies have an even playing field to take real action to address their modern slavery risks, not just report on their efforts.”


The Global Slavery Index highlights that estimated 41,000 people in Australia live and work in situations of modern slavery. Australian businesses source primarily from the Asia Pacific region, which has the highest rates of modern slavery in the world, with over 15 million people thought to be working in situations of forced labour. 

After final approval, EU Member States will be required to implement the Directive into their own laws in the next two years.

The EU Directive will apply from mid-2027 to EU companies with EUR 1.5 billion global turnover and more than 5,000 employees, and then by mid-2029, to EU companies with a global turnover of EUR 450 million and more than 1,000 employees.

The EU Directive is likely to impact some Australian businesses. Companies that supply to EU companies caught by the EU Directive should expect increased scrutiny of human rights and environmental risk management. It also applies to non-EU based companies with significant turnover in the EU market. The EU is Australia’s third largest trading partner.