It is now six years since the Modern Slavery Act (MSA) was passed by the UK government to prevent the severe exploitation of other people for personal or commercial gain. Beyond these shores, the task of trying to mitigate modern slavery in international supply chains falls primarily on British businesses: those that trade with and import from countries where this behaviour is prevalent. The problem is widespread. Take China, for example; as Britain’s second-largest trading partner, it is estimated to have at least 3.4 million workers who are victims of modern slavery.
A combination of factors makes certain industries magnets for slavery, according to Kevin Hyland, the outgoing anti-slavery commissioner. Low-skilled work for which customers pay in cash makes it easier to keep workers off the books.
Human trafficking, which relies on contract substitution, is also commonplace – recruiters lure people abroad with a lucrative contract that is subsequently redrafted, sometimes in a language the individual does not understand. In total, the International Labour Organization (ILO) estimates that 21 million people are currently victims of forced labour.
No British company that trades internationally can claim to be unaware of the scale of the problem. Notably, a recent report by Hult Ashridge revealed that 71 per cent of companies believe there is some likelihood of modern slavery in their supply chain. Even more significantly, a 2017 survey by the Chartered Institute of Procurement and Supply (CIPS) found that just 6 per cent of managers at British firms were certain that their supply chains are untainted by modern slavery.
While the MSA outlines a range of measures on how modern slavery and human trafficking should be dealt with in the UK, its jurisdiction largely ends at Dover. Nevertheless, section 54 of the MSA – 'transparency in supply chains' – does impact UK businesses, requiring them to publish a 'slavery and human trafficking statement' for each financial year. This must disclose the steps they have taken to ensure that slavery and human trafficking are not taking place – either in their own operations, or in their supply chains.
This applies to businesses with a turnover above £36m, who are required by the MSA to publish plans to prevent abuses in their supply chain. Although every obligated company needs to comply, most do not. In 2017, CIPS concluded that companies were “woefully unprepared” to make the required statements.
According to the Business & Human Rights Resource Centre, 73 per cent of FTSE 100 companies are still failing to report sufficient measures to comply with the MSA – most notably in anti-slavery risk assessments, due diligence, training and policies.
How should companies address the problem?
Transparency is key. Making full disclosures, such as the mandatory annual statement, is imperative. In practical terms, companies could publish this simultaneously with the annual report and accounts, so that both documents can follow the same governance approval process at their AGM.
It is self-evident that companies need to comply with the law and engage fully with every compliance requirement. Wherever possible, they should also conduct appropriate due diligence into their global supply chains and enforce mandatory exclusion of particular suppliers from public procurement when they become aware that they have either been engaged in any form of slavery, or condoned it in their suppliers.
Relevant protocols exist, such as the ILO, which has a legally-binding protocol on forced labour that aims to strengthen global efforts towards combating trafficking and slavery-like practices. Guidelines are also published by the OECD and as part of the UN Guiding Principles on Business and Human Rights. Companies can also take practical steps, such as affording slavery victims easy access to appropriate remedies.
Hina Belitz is a senior employment lawyer at Excello Law