It’s time for businesses to wake up to modern slavery
June 04, 2019
The UK Home Office has published an independent review of the Modern Slavery Act 2015. What does this tell businesses? In short, businesses need to be doing more to integrate measures to combat modern slavery into their operations and reporting processes.
What is modern slavery?
Until recently, most people would probably have told you that slavery ended long ago. Some might even have known that the UK legally abolished slavery in 1833. Over the last few years, though, increasing coverage has revealed that ‘modern slavery’ persists, with agriculture and car washes shown as a couple of examples of where this practice hides. According to the International Labour Organisation (ILO), there are 40 million people trapped in modern slavery globally, including human trafficking, forced labour, domestic servitude, sexual exploitation and child labour. Modern slavery exists in almost every global supply chain.
What is the Modern Slavery Act 2015?
In an attempt to tackle this human rights abuse, the UK launched the Modern Slavery Act in 2015, the first such national legislation of its kind. Heralded as a globally leading piece of legislation, the Act mandates UK businesses (with a global turnover of £36 million or more and supplying goods and services in the UK) to produce a ‘transparency in supply chains statement’ explaining what they are doing to tackle modern slavery in both their own operations and supply chains.
What did the independent Modern Slavery Act review say?
Whilst this Act was an important first step, four years on and the incidences of modern slavery in UK businesses persist. In the UK alone, conservative estimates suggest there are at least 10,000 victims, a figure which is likely to be significantly more and appears to be rising. This prompted the government to commission an independent review of the Act. The review has revealed that, for many companies, compliance is just a tick-box exercise and an estimated 40 percent of eligible companies are not compliant with the legislation at all.
The review makes a number of specific recommendations relevant to businesses. The ‘take-home’ message is that modern slavery should be taken more seriously and should be centrally embedded into the business strategy and reporting process.
Some specific recommendations include:
- It should be mandatory for businesses to report on the six areas of reporting currently recommended (organisation structure, policies, due diligence, risk assessment, effectiveness and training);
- Businesses should consider the entirety of their supply chains in respect to modern slavery, i.e. beyond tier 1;
- Reporting should include not only how businesses have carried out due diligence, but also the steps that they intend to take in the future to reduce modern slavery;
- Businesses should refer to their modern slavery statement in their annual reports;
- Businesses should not be able to state they have taken no steps to address modern slavery in their supply chains, as they are currently able to do;
- Businesses should be required to have a named, designated board member who is personally accountable for the production of the modern slavery statement; and
- The website hosting the modern slavery statement should also clearly outline the minimum statutory reporting requirements.
The review was equally clear that Government needed to do more, both by legally enforcing this (such as introducing mandatory reporting, monitoring transparency and sanctionings for non-compliance) and setting a good example by strengthening its public procurement processes.
What should businesses be doing?
This review should be a wake up call for business, as well as Government, to consider their own practices to mitigate against modern slavery and whether they are taking modern slavery seriously enough.
Key questions businesses should be considering include:
- Are you currently compliant with the Modern Slavery Act? Does your response and disclosure statement cover the six areas recommended by the Home Office?
- Do you have a clear understanding of your modern slavery related risks, as well as measures in place to manage and mitigate these risks?
- Are your modern slavery risks being managed effectively across your supply chain, beyond tier one?
- Do you have robust reporting practices in place?
- Have you got a clear strategy going forward and future actions to take?
The review reveals that, in many cases, the answer to these questions is currently ‘no’. Societal expectations around the social, ethical and environmental performance of business are increasing all the time, though. Businesses have a responsibility to take action, and it is in their interest, from a reputational standpoint if nothing else, to do so.
PwC has a specialised human rights team within the Sustainability & Climate Change (S&CC) team, who proudly support our clients with these issues. If you would like to find out more about the work we do, please get in touch with Mark Thompson or Naomi Whitbourn.