AICD submission on strengthening Australia’s response to modern slavery in supply chains

On 24 September 2026, the AICD made a submission to the Attorney General’s Consultation on strengthening Australia’s response to modern slavery in supply chains, including the proposal to introduce a new ‘failure to prevent modern slavery’ criminal offence in the Criminal Code Act 1995 (Criminal Code). 

The AICD opposes the introduction of a ‘failure to prevent modern slavery’ criminal offence in the Criminal Code.

We consider the proposed criminal offence will create significant unintended consequences that will undermine the core objectives of Australia’s Modern Slavery reporting regime. The AICD is concerned that the proposal will disincentivise transparency, collaboration and the lifting of standards while placing a high compliance burden on organisations.

The AICD recommends that Government re-engage with the policy development of a risk-based, mandatory due diligence obligation, as proposed by the Australian Anti-Slavery Commissioner^[1], as an alternative policy response.

The key points in opposition to the proposed ‘failure to prevent’ offence were:

• Practical challenges with a ‘failure to prevent’ offence applying to supply chains: Modern slavery is a significant human rights risk in complex, multi-tiered global supply chains, where organisations may have limited visibility or engagement beyond their direct or ‘Tier 1’suppliers. It would be highly problematic to impose criminal liability on organisations for third party conduct several tiers removed from direct suppliers, and in regions where due diligence efforts can be constrained by factors outside of an organisation’s ability to influence.

• Material differences with the ‘failure to prevent foreign bribery’ offence: There are material differences with the existing ‘failure to prevent foreign bribery offence’ and the proposed criminal offence applying in a modern slavery context.

• Chilling effect on transparency and remediation: A ‘failure to prevent modern slavery’ criminal offence would have a significant ‘chilling effect’ on transparency in reporting and remediation of modern slavery risks.

• Inconsistency with international regimes: A ‘failure to prevent modern slavery’ criminal offence would put Australia out of step with international practice.

• Disproportionate impact on SMEs and NFP organisations: The regulatory and cost burden of the proposed offence will not be limited to organisations captured by the $100M revenue threshold. It will have a whole-of-economy impact, cascading through supply chains and increasing resourcing demands for domestic small and medium-sized enterprises suppliers. It will also have a disproportionate impact on not-for-profit and smaller organisations, diverting limited resources away from core activities and towards managing the legal, compliance and reputational risks associated with potential criminal liability.

Instead, the AICD suggested considering introducing a due diligence obligation as an alternative approach as detailed below:

• Preserve transparency objectives and international regulatory coherence: A risk-based due diligence obligation informed by well-established international human rights frameworks could provide a more proportionate framework.

• Collaboration and focus on high-risk sectors and supply chains: Addressing modern slavery requires a coordinated effort between business, Government, civil society and other stakeholders. We recommend that regulatory settings consider a coordinated focus on regions, locations, products, services, industries, suppliers or supply chains that carry a high risk of modern slavery, consistent with the McMillan Review recommendation.^[2]

• Guidance and support: The AICD recommends that any new obligations be accompanied by comprehensive and practical supporting guidance and capacity building initiatives for reporting entities and suppliers, particularly in high-risk sectors and supply chains.

• Enforcement and civil penalties: A due diligence obligation accompanied by enforcement options, including a civil penalty regime, would create significant incentives for organisations to strengthen due diligence.

While the AICD opposes the introduction of a ‘failure to prevent modern slavery’ criminal offence, the submission sets out safeguards that should be applied if Government proceeds with the proposal, including:

• Limiting the scope of the offence to Tier 1 suppliers only;

• Limiting the application of the offence to larger entities with an annual revenue threshold significantly higher than the current $100M revenue threshold used for the purposes of reporting under the Act;

• Requiring a clear nexus whereby an organisation’s conduct ‘caused or significantly contributed’ to the underlying criminal conduct;

• Developing comprehensive guidance on a ‘reasonable steps’ defence that is published well in advance of the commencement of any criminal offence.

• Requiring a minimum fault element of ‘recklessness’ and an ‘evidential burden of proof’; and

• Introducing a Deferred Prosecution Agreement scheme as an alternative enforcement mechanism that incentives self-reporting and cooperation by organisations.

[1] Office of the Australian Anti-Slavery Commissioner, Recommendations to strengthen Australia’s modern slavery laws: Initial position paper, (January 2026), p. 13, available here.

[2] Report of the Statutory Review of the Modern Slavery Act 2018 (Cth), (May 2023), p. 99 and Recommendation 27, available here; and Office of the Australian Anti-Slavery Commissioner, Recommendations to strengthen Australia’s modern slavery laws: Initial position paper, (January 2026), p. 22, available here.