Organizational Governance Organizational Governance

The Modern Slavery Act:
Why Inaction May Be Commercial Suicide

‘Forced labour affects roughly 21 million people around the globe, of whom 68% are exploited for private economic gain.’ These chastening figures, produced by the International Labour Organisation, are spurring governments around the world to bring in tough new measures to deal with this $150 billion industry.

By Adam Gerschel-Clarke | Published 8 years ago | About a 5 minute read

‘Forced labour affects roughly 21 million people around the globe, of whom 68% are exploited for private economic gain.’

These chastening figures, produced by the International Labour Organisation, are spurring governments around the world to bring in tough new measures to deal with this $150 billion industry.

In the UK, the Modern Day Slavery Act passed into law in March last year. It introduced harsher penalties on individuals convicted of slavery offences and offered better provision for victims. Crucially, from October the Act has required all commercial organisations with turnovers greater than £36 million, and with a presence in the UK, to publish an annual statement on their websites detailing the steps they are taking to ensure that slavery and human trafficking are not occurring within the business itself, or in its supply chain.

The new law has not escaped criticism, however. Many feel that the legislation still does not go far enough, as it is lawful under the Act for a business to issue a statement saying it is taking no steps at all to identify or combat slavery.

With that in mind, I joined a panel debate with Kevin Hyland, the UK’s first Independent Anti-Slavery Commissioner; Colleen Theron, founder of CLT Environmental Law; James Swenson, Head of Reputational Risk Management Services at Thomson Reuters; and Sedex Stakeholder Relations Executive Marianne Voss at the Sedex Simplifying Supply Chain Sustainability conference in London last week, to find out why this remains a pivotal law for brands operating in the UK, and how businesses can best address the issues of slavery within their own supply chains.

Why should businesses take heed?

“Consumers are now aware that slavery may contribute to the food they eat, the clothes they wear and the products they buy,” Voss said.

“Consumers want companies to be more forthcoming on the subject of slavery,” Swenson added. “They want answers to how much brands know about slavery within their businesses and what they are doing to combat it.”

“The requirements to produce a public statement are probably the most innovative and effective part of the Act,” Hyland remarked, explaining that this desire for greater knowledge and transparency will form the key pressure on businesses to actively tackle slavery. “The statement empowers the public: It empowers consumers and it empowers investors. They will use this knowledge to start scrutinising company practices.”

Why is it important to get the statement right?

Businesses cannot approach this simply as a marketing exercise, Voss cautioned. “Take Costco, for example: They were sued by a consumer in California for making false claims regarding the use of slave labour in their seafood products. As a result, they had to pull stock from supermarkets across the USA. Can you imagine the cost of that?”

Nor can businesses afford to treat this as a tick-box exercise, the panel warned.

“Many businesses think that because they operate in certain industries or locations they have no exposure to slavery issues,” Swenson commented. “Nonetheless, issues can occur further down the supply chain. A restaurant chain, for example, can’t simply report that they pay their employees a fair wage - they also need to investigate where their ingredients are coming from.”

“It is true that the Act permits you to make a statement saying that you’re taking no action,” Hyland cautioned, “but that could very well be commercial suicide.”

So, how can businesses start identifying and combating slavery in their supply chains?

“The key thing is to understand your supply chain,” Swenson advised. “Who are your suppliers working with? Are they located in high-risk areas? Are they using labour brokers? When you have limited resources, you need to start where the risks are.”
“Build on existing corporate policy,” Swenson continued. “Many businesses will have some sort of risk-management system in place, such as health and safety, or policies to address existing legislation such as the UK Bribery Act. Look at how these can be expanded to incorporate the Modern Slavery Act. It isn’t practical in many organisations to start something new that isn’t aligned with the existing business.”
The panel highlighted collaboration as a vital step. As Theron urged: “This is where the competitive element of business needs to be pushed to one side. You need to share knowledge, insights and best practice with competitors in a way that you perhaps wouldn’t on other issues.”
“Work with your suppliers, too,” Swenson said. “Many of you will have undertaken training modules on topics like procurement, and preventing bribery or money-laundering. We’ve seen a lot of organisations share that learning with suppliers and say, ‘In order to work with us, we’d like you to complete these modules on a yearly basis.’”
“The data is out there,” Voss said. “We’ve noticed that many of the audits companies already do are identifying signs of forced labour but not recognising it as such. They are seeing non-payment of wages, withholding of passports, excessive charges around housing but they’re flagging it up as a wage issue, or a discipline issue.”
“Finally, one of the most important things is to have an internal champion,” Theron added. “If you look at instances of change within businesses, the most successful have been because somebody was championing it. Give somebody that mantle and let them carry it forward.”