In March 2015 the Modern Slavery Act became law. Its effect on UK businesses will be significant. The first of its kind in Europe, and one of the first in the world, to specifically address slavery and human trafficking in the 21st century, the Modern Slavery Act is poised to become one of the most significant pieces of legislation for supply chain due diligence processes.
What does this mean for businesses?
From October 2015 a company carrying out any part of its business in the UK that produces a total turnover of more than £36 million must publish an annual 'slavery and human trafficking statement'. The statement will disclose the steps a company has taken to ensure its supply-chain is free from slavery. If a company has taken no steps to combat slavery, this must also be disclosed.
The detailed statement must be prominently displayed on the company's website and, should it be requested, a full copy will need to be produced within 30 days of request.
Large global chains are particularly at risk as they can often lose sight of the conditions under which goods are produced. Sectors which have large numbers of low paid unskilled workers will be most vulnerable to slavery and trafficking issues, and LexisNexis has looked in detail at the chocolate and UK car wash industries.
David Noble, chief executive of the Chartered Institute of Procurement & Supply, said: "With 11% of British business leaders saying it is likely that modern slavery already plays a role in their supply chains, this is clearly a pervasive issue that concerns us all."
Despite the requirement for businesses to publish a statement becoming law on 29 October 2015, due to the timing of the Act's introduction, the government has agreed that businesses with a financial year-end date between 29 October and 30 March 2016 will not be required to publish a statement for this financial year. Businesses with a year-end of 31 March 2016 will be the first required to publish a statement.
What are the consequences of failing to issue a statement?
The UK Home Secretary can seek a High Court Injunction for an organisation failing to issue a statement, however the risk of significant reputational damage should mean that this is unlikely.
Guidance and enforcement of the Modern Slavery Act
The introduction of the legislation has enhanced the visibility of slavery in Britain and increased media and public scrutiny of large supply chains. While the government has resisted proposals to produce an official repository for slavery and human trafficking statements, it is encouraging NGOs, the press and other interested organisations to monitor compliance for their personal records and benefit.
The UK government has published official guidance through the Home Office department to help companies comply with the Modern Slavery Act. This includes advice on preparing and publishing a slavery and human trafficking corporate statement, due diligence processes, and case studies.
Modern Slavery Due Diligence
Due diligence is an essential practice for any business; companies must consistently monitor their prospects, customers, employees, cash flow, assets, insurance policies and third party suppliers. With the introduction of Modern Slavery Act, organisations must now build a series of statements to demonstrate to the government, the public, customers, and investors that they are being transparent – not just because they are required to do so but because they consider it important.
Lexis Diligence is proven to help companies conduct checks on their suppliers, agents, distributors and other third-parties to mitigate reputational, financial, regulatory and strategic risks. Companies' dedication to due diligence will help with the inspection of supply chains and in time, help to eradicate slavery and human trafficking from global supply chains.