Will the Modern Slavery Act (MSA) help reduce modern slavery and how can companies be really effective in reducing their risks in their supply chain?
In leading GoodCorporation’s modern slavery debate James Ewins QC was asked to interrogate the impact of the statute and consider the effectiveness of companies in reducing slavery risks in the supply chain.
Under the MSA the criminal provisions have been consolidated with increased sentencing powers, protection for victims and reparation orders against those convicted of slavery. The Act has also seen the appointment of an Anti-Slavery Commissioner to keep up the momentum.
For corporates, however, much of the focus is on Section 54 – transparency in the supply chain. According to the Home Office, Section 54 “…was designed to give campaigners, consumers, investors and others the information they need to hold business to account and call for more action. Businesses that fail to take action will face reputational damage and ultimately could suffer financially. So we expect compliance to be driven by this pressure.”
Modern Slavery Statements are the current means of testing compliance with Section 54. While the government declined to set up a register of statements, considering analysis to be the role of civil society, such registers do exist, (http://www.modernslaveryregistry.org/ and https://tiscreport.org/) so it is possible to review the statements and consider whether they meet the original objective.
At best the statements are mixed. Some give considerable detail including risk profiling of tier one suppliers, or analysis of product and/or geographical risks. Others include supplier questionnaires and analysis or supplier audits. But do they contain the information necessary to hold businesses to account? Slavery happens to people not products, so statements should show who is at risk, where the risks might be and what the organisation is doing to ensure that any risk of becoming a victim of modern slavery is mitigated. When MS statements can show that workers’ rights are being upheld to the highest standards throughout the organisation, then the MSA may be considered to be reducing slavery.
The majority felt that the MSA would help reduce modern slavery citing the following reasons:
- The Act has raised awareness of the issues and companies are already taking steps to make real change
- Some actively welcome the law as an opportunity to stand out and receive credit for efforts
- It has become a board room issue which it wasn’t previously
- Companies are starting to invest in systems and training to drive change
- Other countries are enacting similar legislation which will help drive change globally over time
However, others felt that the Act alone would not have a real impact:
- The legislation is not strong enough so companies can get away with meaningless reporting
- Companies will deprioritise according to risk, the penalties are low, so this will be seen as a low priority activity
- Fear of being publicly held to account for disclosing slavery in the supply chain will not incentivise transparency
- The Act is not strong enough to drive the culture change necessary to eradicate slavery effectively
Given that slavery is illegal across the globe, both sides felt that governments should be doing more to apply pressure in locations where enforcement is weak and the risk of slavery is high.
The debate also asked How can companies be really effective in reducing the risks in the supply chain?
The enduring denial of basic freedoms and the constant threat of violence or abuse are as real today as they have ever been in the history of human slavery. To be really effective, the systems, policies and processes being implemented need to be able to change the lives of anyone enslaved in the supply chain. This cannot therefore be done by simply expelling a factory or mine from the supply chain if enslavement is detected. This presents a real challenge for businesses, particularly if they are to be held to account for any actions taken and published in their statements.
The following examples of effective action to mitigate risks were given:
- Companies are taking a much more detailed look at the supply chain incorporating it into their code of ethics
- Training is being implemented throughout organisations not just to prevent slavery but to help spot signs of trafficking or enslavement where the organisation’s customers may be the possible victims
- Reporting lines are being implemented to allow victims to come forward
- Some are trying to collaborate by sector or by region to drive up standards
Worries were expressed around effective remedies:
- How best to work with a supplier to drive change rather than walk away and leave victims without freedoms?
- Few companies will have the necessary resources to really make a difference
- If auditing workers – how can an organisation be assured the responses are correct, fear could drive the response
In general, the law was felt to be a good start, but amendments will be needed to effect real change as is often the case with new legislation. Suggested revisions include holding companies accountable if mitigation measures and anti-slavery procedures were found inadequate; mandatory content for statements to avoid bland reporting; and requiring MS statements to be included in the annual report.
The globalisation of business has given rise to the debate about the role and responsibility of corporations with regard to human rights and in particular Modern Slavery. While every international organisation would claim to uphold these rights, not all have policies and processes in place to monitor and manage their human rights impact.
Momentum is now building behind the idea that corporates need to be proactively engaged in managing their human rights impact and the risks of slavery in the supply chain. GoodCorporation’s Framework on the Corporate Responsibility to Respect Human Rights helps companies manage their salient human rights risks and put appropriate systems and policies in place to mitigate abuses. This framework is supported by complimentary frameworks on community rights and labour rights. Organisations can use these frameworks to manage and mitigate their modern slavery and human trafficking risks. This will enable corporates to put measurement systems in place to demonstrate efficacy and complete meaningful modern slavery statements.