The deadline for businesses to publish their first slavery and human trafficking statements in accordance with the UK’s Modern Slavery Act has recently passed. For the past year, the duration in which the Modern Slavery Act has been in force, there has been speculation around the fact that businesses may try to avoid publishing a statement for a number of reasons. Firstly there is no concrete list of companies who should be complying with the act, so even if a company is aware that they have an annual turnover of over £36 million, they can act as though they were uninformed of the terms of compliance – which is improbable due to the high coverage the act has received, including by Government. Secondly, there are no penalties for non-compliance which is most likely the main reason for ignoring the statement deadline – a ‘why bother’ attitude can be the case when it’s not a legal requirement.
Business & Human Rights Resource Centre have created a Modern Slavery Act Registry which collates the majority of published 2016 statements. Companies that are currently not on the registry can get in contact with them to get their statement added. The registry currently holds 980 statements which has us thinking – is this because the remaining 11,000 from the estimated 12,000 that meet the requirements to comply have been missed/have not contacted to be a part of the registry, or is it because the remaining 11,000 failed to produce a statement?
The low turnout of statements isn’t the most concerning point to have surfaced; according to some NGOs, many published statements are showing evidence of identical wording, which, if true, represents a worryingly blasé attitude towards a critical issue which aims to improve modern supply chains. Which is worse, those companies who highly plagiarised or those who did not submit a statement?
It raises the question as to whether the Act needs to define statement requirements rather than having the brief recommendations that it currently has. Could this plagiarism be due to the fact that companies were unsure of how to structure and what to include in their statements that they sought guidance from other statements?
On the flip side, this year’s Modern Slavery act has seen some very positive responses to compliance. There were several companies who embraced the legislation and went on to state their actions in eliminating slavery in their supply chains. These companies carried out appropriate risk assessments and due diligence of at least their tier 1 suppliers if not more – exactly what the Act is aiming for.
We’re confident that these organisations who have taken measurable steps to understand their deeper supply chain operations, will benefit as differentiation in their marketplace, especially when bidding for new and renewing contracts. No doubt there will be further payoffs in the form of reduced risk of scandal, higher engagement, lower turnover and a new angle in their retailer’s promotion to consumers. As for the expense involved (time and resource), and possible decreased margins, those are yet to be fully known. We’ll be attempting to drill further into the tangible business case for Modern Slavery Act compliance in future posts.
Although there seems to be a number of weaknesses of the act, we are starting to see acknowledgement of these drawbacks and developments in overcoming these. Theresa May, the UK’s prime minister, has recently pledged to ensure stronger adherence to regulation from businesses in the next couple of years. This makes us hopeful that we will not only see compliance from more companies but also more appropriate due diligence and an increased effort in fighting forced labour and human trafficking within their supply chains.
Now is a great time to start preparing and implementing activities to ensure next year’s statements meet, and ideally exceed, the recommendations.