On July 1, 2015, the new Modern Slavery Act came into force in the UK. It is one of the toughest laws in the world that tackles the brutal crime of slavery.
Section 54 of the Act requires every organization with a total global annual turnover of £36 million ($48 million) that carries out some business in the UK to produce a slavery and human trafficking statement for each financial year.
The statement must contain details of the steps that the organization has taken in that year to identify and eradicate modern slavery from both its own business and its supply chain.
Independent research conducted by VinciWorks, a compliance training provider, has found that only 8 percent of the FTSE 500 have complied with the Act and published slavery and human trafficking statements so far.
The requirement for organisations to publish a statement commenced on October 29, 2015. However the government provided a grace period for businesses with a financial year-end date between October 29,
and March 30, 2016.
It seems that many companies are waiting for the last minute to publish their guidance. The provision only begins to become mandatory in September this year, and even then, only for organizations with a financial year ending March 31.
This cautious wait-and-see approach by most firms creates a unique opportunity for early movers to differentiate themselves as leaders in corporate responsibility.
In the words of Home Secretary (now PM) Theresa May:
The transparency measure will increase competition to drive up standards. More workers will be protected and consumers will have greater confidence in the goods and services they buy.
The government guidance goes on to enumerate the many benefits of a well written modern slavery statement, including: enhanced reputation and expanded customer-base. As more consumers seek out higher ethical standards, a robust modern slavery initiative could emerge as a competitive advantage.
Recent analysis by the CORE Coalition reveals that a majority of statements published to date do not comply with the Act’s mandatory requirements.
Furthermore only 13 percent of the statements reviewed covered all six of the suggested areas in the government’s guidance including a key requirement to list training available to staff.
If your organization conducts any of its business in the UK, you should be taking immediate steps to comply with the Modern Slavery Act.
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Yehuda Solomont is the Director of Marketing at VinciWorks. The firm provides compliance training to over 40,000 solicitors. VinciWorks released a free guide to compliance with the Modern slavery Act and a new online course. To learn more please visit www.vinciworks.com/modernslavery.
2 Comments
My perspective is that until human trafficking issues in London, New York, Toronto, Vancouver are dealt with seriously by law enforcement, companies will not take the issue of reporting seriously.
The acid test for the Modern Slavery Act will be to what extent it is effective in driving a wave of pressure up the supply chain which identifies and remediates incidents of 'slavery'. To this extent the simple publishing of statements is likely to be ineffective, based on the evidence of 15+ years of corporates pledging to make supply chains more 'responsible'.
It has become normal practice now for large consumer facing companies, with reputations to lose, to publish policies on responsible sourcing, together with business codes of practice setting out what is expected of their suppliers across issues including labour conditions, occupational health and safety, human rights, environmental pollution and so on. Many of these companies run fairly heavy duty supplier compliance audit programmes and summarise the progress made in terms of numbers of factories audited, numbers of 'red flags' and warnings issued, corrective actions completed, training courses completed, and so on. However, we rarely see examples of suppliers being de-listed.
Neither can we be assured that these corporates are aware of ongoing non-compliances which escape the notice of auditors or which take place on any of the typically 363 days of the year when the supplier is not being audited. Given the invariably hidden nature of slavery, it is even less likely that auditors will be able to identify it during their visits, relative to more tangible problems like poor health and safety, environmental pollution or community grievances.
So, the success of the Modern Slavery Act, will depend upon the transparency of supply chains and the availability of information relating to slavery, or at least its precursors and symptoms. One approach is to relay upon the eyes and ears of the web, where employees, communities, NGOs and news channels are increasingly connected, voicing concerns and allegations via what we might envisage as a world wide whistleblowing network.
InvestAssure has been monitoring the www in Asia-Pacific since 2009, using a combination of web scanning software and local researchers. Tracking over 10,000 companies, the NIMBUS database now holds over 8,000 risk alerts relating to incidents, accidents and allegations across the spectrum sustainability and responsible business issues. We are now recording 150-200 risk alerts every month. We can offer some key basic data points of relevance to responsible sourcing and the likely incidence of slavery in supply chains across Asia.
About 15% of companies we monitor are involved in at least one 'allegation' or incident which gets reported on web media. In our view, over half of these incidents warrant further investigation from the viewpoint of business risk management.
About 40% of the alerts on NIMBUS relate to 'occupational health and safety' (including fatalities) or the 'environment'. Most of these can be attributed to poor governance/operational control, but a significant number stem from intentional neglect by management.
Although only about 6% of NIMBUS alerts relate explicitly to 'human rights', 10% relate to poor 'labour conditions' (working hours, wages, discrimination) which is often an indicator of underlying human rights abuse.
In 2015 incidence of 'governance' and poor 'business ethics' alerts were about 50% higher than the 2009-2014 average, indicating a growing focus by society and the media across the Asia-Pacific region.
China remains the biggest challenge for quantifying trends because the huge influence of the state on media and internet usage. Until 2013 our monitoring data for China were dominated by occupational health and safety and environmental incidents, whereas reports of corruption and fraud were suspiciously low. In recent years, however, we have seen almost a reversal, with corruption inquisitions spreading like wildfire, whilst health, safety and environmental reports have decreased. We believe this is a clear reflection of Xi Jinping's desire to impress upon both domestic and international audiences that China is serious about corruption, whilst at the same time trying to take attention away from the dire state of China's environment and the continued suffering of millions of workers in unhealthy and unsafe working environments.
Please contact [email protected] for further discussion.
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