It’s been more than four years since The Modern Slavery Act (2015) provided some much-needed tools for fighting modern slavery here in the UK…
Unfortunately, over 200 years on from the abolition of the slave trade in Britain, the gaps in our modern-day legislation are starting to show – and mean that large numbers of workers both here and abroad continue to suffer dangerous and dehumanising conditions. Despite the UK’s efforts to take the lead in stamping out modern slavery, the Global Slavery Index estimates there are currently 16 million victims of forced labour in the private sector.1
While most UK businesses have been quick to recognise their responsibility and keen to eradicate slavery, compliance with modern slavery legislation isn’t always easy, particularly where intricate supply chains make data gathering difficult. For those businesses who have let anti-slavery measures slip down the agenda or suspect that their supply chain needs deeper scrutiny, it may be time to strengthen strategies. Modern slavery is back in the spotlight for 2019, with more cases reaching the courts and the press, and anticipated new legislation which could increase both the burden of compliance and the risk of inaction.
The business risk of modern slavery
Although a particular issue in construction, agriculture and anywhere that high numbers of short-term contractors and second tier suppliers are used, modern slavery is something businesses from all sectors should confront without delay. Failure to act is no longer a purely ethical concern: a recent review of the 2015 legislation, growing public awareness thanks to the action of groups including Business & Human Rights Resource Centre, ShareAction, Global Witness and CORE, and a 2019 Supreme Court ruling (Vedanta Resources Plc v Lungowe2) which has broadened the duty of care imposed on businesses, have all combined to create an environment in which a business could be putting its operations, investment and reputation at risk if it fails to take modern slavery seriously.
Unfortunately, difficulties associated with ensuring compliance across complex supply chains, particularly where pockets of low visibility or limited leverage exist, has meant that even some leading global companies have failed to prioritise good practice. A recent report by the Business & Human Rights Resource Centre (BHRRC)3 has revealed that the modern slavery transparency statements provided by many FTSE100 companies were “weak… offering little or no information (on the six reporting areas defined by the 2015 Act)… changed very little from year to year and did not show progress on understanding their modern slavery risks”. The BHRRC believes that the Modern Slavery Act 2015 failed to deliver the transformational change it promised. It is just one of many voices now calling for major reform of UK law.
Recommended changes will bring new responsibilities
So, what is likely to change and how will it affect UK businesses? Australia’s 2018 Modern Slavery Act, which came into force on January 1st 2019, has gone further than UK law by defining mandatory reporting criteria. It is expected that the UK will want to stay ahead of global legislation; making mandatory reporting requirements highly likely when the Modern Slavery Act is updated. While this was not an explicit recommendation of the Independent Review of the 2015 Modern Slavery Act5, mandatory due diligence is high on the priority list for many key stakeholders who believe that legislation should be doing more to protect vulnerable workers. Additionally, during April 2019 a group of UK civil rights organisations including ClientEarth, Amnesty International and Unison, called for a mandatory human rights and due diligence law for all UK companies4.
The overriding message to businesses is that those already included within existing legislation would be wise to start preparing for more stringent reporting obligations in the imminent future; while those who fall outside the scope of the 2015 Act should be aware that they too may soon be held accountable for ‘irresponsible corporate practices’.
One explicit recommendation which did come out of the Independent Review was that businesses be made responsible for the ‘entirety’ of their supply chain. Other notable recommendations include making non-compliant companies ineligible to bid for public procurement contracts and – significantly – making ‘failure to fulfil modern slavery statement reporting requirements or to act when instances of slavery are found’, an offence under the Company Directors Disqualification Act 19865. Put simply, this would mean that a named, designated board member would be accountable for their organisation’s modern slavery statement and actions. In the future, failure to act will therefore be likely to bring consequences for businesses and the individuals who lead them.
A business is already captured within the criteria for the Modern Slavery Act 2015 if it supplies goods and/or services, has an annual turnover of £36m or more and carries on a business or part of a business in the UK. These businesses are required to produce a slavery and human trafficking statement for each financial year. They must set out ‘the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business’. If no steps have been taken, transparency requires that this be stated, although recommendations for reform include prohibiting a statement of ‘no steps’ and requiring that action be taken.
Ensuring modern slavery compliance can be a time-consuming task and is unfortunately one that often falls between departments, with no one team or individual taking ownership. However, with accountability looking set to increase, developing a clear compliance process is more important than ever before. Wherever a business sits in the supply chain, online data systems that are easily updatable are a must, while businesses with a turnover of more than £36m need seamless systems for requesting information from suppliers; one which goes further than the PQQ data requirements and which is repeated on an annual basis. These organisations should also seek evidence of procedures being followed, communicating regularly with all participants in the supply chain and using desk-top and on-site audits to ensure that suppliers are acting appropriately. Due diligence is the only way to protect your business from the risks posed by modern slavery.
For practical advice on putting greater control around your supply chain when it comes to modern slavery, speak to our compliance experts or download our guide for more information.
2. In April 2019, the Supreme Court in Vedanta Resources Plc v Lungowe determined that a UK-domiciled parent company may owe a duty of care to third parties affected by operations of its Zambian copper mine subsidiary. Vedanta is the holding company of KCM, which is the owner-operator of the Nchanga copper mine. https://www.whitecase.com/sites/whitecase/files/files/download/publications/supreme-court-finds-that-uk-domiciled-parent-company-may-owe-duty-of-care-to-third-parties-for-the-acts-of-its-foreign-subsidiaries.pdf
3. FTSE100 and the Modern Slavery Act: From Disclosure to Action https://www.business-humanrights.org/sites/default/files/FTSE%20100%20Briefing%202018.pdf