Those of us who thought slavery was an unsavoury historical remnant would do well to think again following the enactment of the UK government’s new Modern Slavery Act 2015, which has significant implications for international organisations who annual sales revenues in the UK are greater than $54M need to act now…
The element of the new legislation most relevant to international organisations is Part 6, ‘Transparency in Supply Chains’, which seeks to address the role of businesses in preventing modern slavery from occurring in their supply chains and organisations.
From April ’16 Part 6 of the UK Modern Slavery Act mandates organisation’s to produce an annual statement setting out the steps they have taken in the financial year to ensure there is no modern slavery and human trafficking in any part of their business or anywhere else in their supply chains.
If a business fails to produce a Slavery and Human Trafficking statement for a particular financial year the Secretary of State may seek an injunction through the High Court requiring the organisation to comply. If the organisation fails to comply with the injunction, it could be held in contempt of a court order, which is punishable by an unlimited fine.
Any organisation that is an autonomous part of a group structure will have to meet the requirements and is legally required to produce a statement. In the case of a parent company with one or more subsidiaries in the same group, the parent may produce a single compliance statement that subsidiaries can use to meet this requirement (provided that the statement fully covers the steps that each individual operation has taken in the relevant financial year). A non-UK based organisation or a foreign parent company carrying on a business or part of a business in the UK, it will be required to produce a statement.
According to the new legislation a statement must be written in simple English (but may be translated into alternative languages as required) and set out the steps an organisation has taken to prevent modern slavery in its supply chains and its own business. It does not however dictate in precise detail what other information a statement must include or how it should be structured. That said there seems an expectation that a statement should for instance include information about: (a) the organisation’s structure, its business and its supply chains; (b) its policies in relation to slavery and human trafficking; (c) its due diligence processes in relation to slavery and human trafficking in its business and supply chains; (d) the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk; (e) its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; (f) the training and capacity building about slavery and human trafficking available to its staff.
The completed statement must be signed by a director or partner of the organisation. In a limited company it must be approved by the board of directors and be signed by a director. The expectation is that compliant organisations will build upon their statements year on year and evolve and improve on them over time. However, companies that fail to comply with the provision, or submit a statement that indicates that they have taken insufficient steps towards compliance, risk serious damage to their commercial reputation. It will be for consumers, investors and Non-Governmental Organisations to engage and/or apply pressure where they believe an organisation business has not taken sufficient steps.
Among the key objectives of the new legislation is to increase transparency and it is therefore imperative that an organisation’s statement can be easily accessible by anyone who wants to see it – the public, consumers, employees, NGOs or investors. Accordingly organisations are mandated to publish their slavery and human trafficking statement on their company website and include a link in a prominent place on the homepage.
Additional Information:
https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide
– About the author: Adam Fletcher is an established business leader with cultural exposure to business practice and process in Europe, USA and Japan in the semiconductor and electronic systems markets.