The UK's Modern Slavery Act, which took effect from 29 October 2015, promised to consolidate and toughen existing anti-trafficking legislation in the UK. The bill enforced transparency in supply chains, making an annual 'slavery and human trafficking statement' a legal requirement for large businesses. However, an Ergon report of the first 100 statements has revealed shortcomings.
Ergon Associates has released a report that analysed one hundred of the first modern slavery statements published up to mid-February 2016. The report, which is framed in terms of statutory obligations and Government guidance, shows that these statements focus on compliance, rather than action.
The first companies to release Modern Slavery Act statements voluntarily shared their findings ahead of the statutory commencement of the reporting requirement (financial year-ends of 31st March 2016 or later) however, the report found these statements were short, vague and composed of general comments. All of the statements were less than 1000 words, with half less than 500 and a quarter failing to reach 250 words. Though statements are expected to grow longer as reporting becomes mandatory and companies build a history of due diligence activities, a significant number of companies failed to report in any real detail or describe risk assessment processes in relation to modern slavery.
Many of the statements simply refer to auditing suppliers and training staff. Few mention the outcome of due diligence assessments, or which locations, suppliers, or supply chains were identified as high-risk. Reporting on specific KPIs used to monitor effectiveness is the least well covered issue in the first set of statements.
The transparency and reporting clause (section 54 - Transparency in Supply Chains) of the Modern Slavery Act requires organisations with a turnover of more than £36 million to publish an annual 'slavery and human trafficking report'. The provision aims to bring accountability to large businesses, requiring transparency in the efforts companies are making to remove slavery and human trafficking from supply chains and operations. Statements must set out what steps have been taken to ensure that a business, and any part of its supply chain, is free from slavery and human trafficking. The statement is supposed to include detailed information about what due diligence steps have been taken to mitigate the risks of crimes being committed.
Although supply chains were the primary focus of the first statements, contractors and individuals directly employed carried less focus. Despite carrying significant risk, contractor behaviour is mentioned in just 43% of statements, and rarely in great detail.
The Act does provide companies with considerable freedom regarding the contents of the statement. Given the time and resources needed for detailed reporting, and interest from the government, wider public, and the media, information should be comprehensive and relevant, as well as accurate.
Research by the Ethical Trading Initiative and the Ashridge Centre for Business and Sustainability found that of the companies assessing their supply chains before the introduction of the law, 71% believed there was an issue of modern slavery occurring at some stage. The Modern Slavery Act enables companies to provide evidence of their investigations – and subsequent actions – to address identified issues.
The February 2016 Human Trafficking Awareness Index for the UK shows 711 trafficking-related articles were published by the British and Irish media during February 2016.
This high level of media interest in human trafficking should also encourage companies – regardless of the legal implications for failing to produce a statement. A breach of the new legislation will be big news, causing significant reputational damage to a company's brand and organisation.
Companies that have not yet met their obligations to produce an annual slavery and human trafficking statement need to start now. Those that already have must ensure a detailed report is created – not one that simply pays lip service to the legislation. The first wave of company statements revealed shortcomings in risk assessing, investigation outcomes and due diligence processes.
To provide consumers, potential customers, suppliers, NGOs and the media with assurance, companies must provide a statement that details their dedication to combating modern slavery and human trafficking all year round.