Modern Slavery Act annual reporting: the risks of falling short on compliance

Posted: 10/07/2017

The Modern Slavery Act 2015 requires commercial organisations carrying out business in the UK with a global annual turnover in excess of £36 million to prepare and issue annual modern slavery and human trafficking statements.

Following the publication of the first statements, groups such as CORE, Ergon Associates and the Business and Human Rights Resource Centre (BHRRC) have been collating the documents in one place (see here) and providing commentary on them. This commentary offers an interesting insight into what businesses are including in their statements and accordingly what is being done to respond to the risks associated with modern slavery both in their business  and in their supply chains. However, the commentary also highlights what is not being done, and cites examples of businesses that the groups assert have not fully engaged with the reporting requirement or provided sufficient detail in their statements.

Last month, CORE published guidance entitled ‘Modern Slavery Reporting: Weak and Notable Practice’, the aim of which is to highlight areas for improvement in an effort to enhance standards of reporting and to increase accountability. CORE says that 84 per cent of statements uploaded to the BHRRC’s Modern Slavery Act Registry do not comply with the basic legal requirements and, overall, the general standard of reporting is low.

CORE’s guidance focuses on five areas that the Modern Slavery Act suggests businesses may report on, giving examples of weak and notable practice in relation to each. We pick out a few below:

• Under the heading ‘Structure and Supply Chains’ the guide highlights the online retailer ASOS as having notable practice. In its statement, ASOS gives a breakdown of its supply chain structure, including the five different tiers involved in its production process. It indicates the extent of its supply chain mapping and identifies areas for improvement. The guidance notes National Grid, on the other hand, as having weak practice by not providing substantive details of its supply chain operations.
• Vodafone is commended in the section headed ‘Policies’ for having developed a Code of Ethical Purchasing which applies to every supplier and specifically addresses modern slavery and human trafficking. Weaker statements merely refer to an intention to develop policies but do not give details of how they will be developed or provide any timeframes.
• An example of weak practice in the ‘Due Diligence and Risk Assessment’ section is Nandos. Despite operating in a high risk sector, the chicken restaurant chain’s statement does not indicate whether it has assessed modern slavery risk factors and reports only that it found ‘no major areas of concern’ during its risk analysis of suppliers. Oxfam GB, on the other hand, provides a comprehensive overview of its risks and specific actions to address these.

There is an increasingly clear direction of travel. The trend of publicly commenting on modern slavery statements is gaining the attention of investors, consumers and staff and, as it continues, there is a real brand and legal risk to any business that is not demonstrating year on year notable reporting practice. Whilst the business risks associated with poor practice might help encourage better business compliance, the primary driver for business leaders should be a concern of being directly or indirectly associated with human exploitation and being accused of turning a blind eye to the role their business plays in that exploitation.

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