In May 2024, after completing my university assessments at UCL, I had the opportunity to spend the month with Ardea International as a legal intern. My main task was to write a white paper titled “Current Approaches to Forced Labour: Risk and Due Diligence”. Having started with limited knowledge of this area of law and business, this project proved an invaluable learning opportunity in understanding forced labour risks, corporate responsibility, and legislative frameworks. Alongside working on the white paper, I was involved in answering FAQs for Ardea’s clients and assisted at the Fairgame Conference 2024. A standout moment of this experience was the opportunity to have a meeting with Walk Free and learn about how they collect the data that goes into their corporate ranking and benchmarking systems.
After the summer, I returned to finalise my white paper and to present my research findings at the Ardea Conference 2024. In my presentation, I shared my insights on how businesses are approaching the issue of forced labour in their supply chains, citing the examples of a lack of disclosure on companies’ business operations and the use of flawed certification schemes as key areas of weakness in current approaches. Speaking at the conference was a unique opportunity for personal growth and to hear from organisations such as Walk Free and CCLA, who were integral to my research. Further, a powerful closing talk from a modern slavery survivor took the subject of my research out of the abstract and brought home the importance of companies like Ardea’s work in solving the issue of modern slavery worldwide.
White paper: Current Approaches to Forced Labour: Risk and Due Diligence
Forced labour remains a critical issue within global supply chains, affecting millions of workers across various industries, including agriculture, manufacturing, hospitality, and renewable energy. Evidence from my research on current approaches largely suggests that most companies, even if compliant with relevant laws, have not established proper systems for risk assessment, risk management, and due diligence, leading to the persistence, or at least an increased risk, of forced labour in supply chains. My paper examines how companies across different sectors are responding to increasing legal and ethical demands to combat forced labour in their supply chains.
Legislation Regarding Forced Labour
Laws on forced labour vary across regions, with some focusing on disclosure and others requiring action. The UK Modern Slavery Act 2015 mandates that companies with a revenue of £36m or more publish a statement on their website detailing any measures taken to address modern slavery. In contrast, the Australian Modern Slavery Act 2018 demands more rigorous annual reporting and transparency. The California Transparency in Supply Chains Act 2010 also requires disclosure for large companies, emphasising transparency.
Stricter laws, like the German Supply Chain Due Diligence Act, French Corporate Duty of Vigilance law, Norwegian Transparency Law, and the EU CS3D Directive impose due diligence obligations. The EU has also introduced regulations allowing it to prohibit the sale of goods using forced labour. These laws transform soft law frameworks, like the UN Guiding Principles, into hard law, ensuring companies report publicly on their due diligence actions and findings.
Key points
From my research, I drew out a number of key areas of importance to companies in the areas of risk, due diligence, and shareholder action in addressing forced labour. These points are critical for companies to improve their efforts to remove forced labour from their supply chains and align their policies with evolving regulations and investor pressure.
Risk
Mandated Risk Assessments: Laws like the EU CS3D, German Due Diligence Law, and Australian Modern Slavery Act require companies to systematically identify, assess, and address risks of forced labour in their operations and supply chains. These assessments help companies develop strategies to eradicate forced labour. Currently, companies engage in what CCLA calls ‘transferring responsibility’, disclosing more information on how forced labour is assessed and managed in the supply chain than about their business operations.[1] To improve their risk assessment and ensure compliance companies must also hold themselves accountable for the risk of forced labour in their business operations.
Risk Management Implementation: While many companies have policies against forced labour, the effectiveness of these policies often falls short. For example, a common approach to risk management is the prohibition of forced labour. However, a number of companies did not accompany this with due diligence mechanisms meaning that they did not have any remediation or risk management mechanisms to enforce their policies.[2] Further, few companies demonstrate how their policies are practically implemented, particularly regarding prevention measures, such as ensuring workers aren’t charged recruitment fees.
Grievance Mechanisms and Remediation: Although many companies have grievance mechanisms in place, transparency about whether these mechanisms address modern slavery issues is limited. Available grievance mechanisms and whistleblowing lines often do not account for the significant barriers to using these mechanisms faced by survivors, and that social, cultural, and gendered factors can hinder women’s access to decision-making bodies.[3] Further, remediation practices, such as contract cancellation, can exacerbate forced labour risks, highlighting the need for more worker-centred remediation strategies. Evidence shows that companies need to reform their remediation policies to ensure that they lead to plans of action to prevent future cases of modern slavery and are focused on ensuring remediation as opposed to just the setting of standards.
Due Diligence
Comprehensive Supply Chain Due Diligence: Companies must implement thorough due diligence processes that address both human rights and environmental risks, particularly in upstream operations (suppliers). Rightsholders should be involved in the due diligence process, with affected individuals able to share concerns about a company’s practices to prevent key insights being missed. Further, companies must not rely entirely on certification schemes for supplier due diligence, given the increasing evidence that malicious suppliers are finding ways to obtain these certifications whilst continuing to use forced labour. Legislation such as the EU CS3D mandates clear reporting and monitoring to identify and mitigate risks.
Beyond Tier 1 Transparency: Due diligence should extend beyond the first tier of suppliers. In Walk Free’s research, the majority of apparel companies did not have a modern slavery policy that applied to stakeholders beyond the first tier of their supply chains; in 2023, KnowTheChain found that only ‘three companies disclosed supplier lists for their second or third tiers for the first time’.[4] Businesses need to trace raw materials back to their source to ensure compliance with laws such as the Uyghur Forced Labour Prevention Act (UFLPA) and EU forced labour regulations and avoid forced labour risks in deeper supply chain levels. Addressing gaps in supply chain transparency is crucial for better risk mitigation.
Impact of Purchasing Practices: Responsible procurement practices play a critical role in ethical supply chains. Purchasing practices are particularly significant as they can influence the working conditions and labour standards in the supply chain. Businesses should ensure that pricing, payment terms, and supplier negotiations do not unintentionally create conditions that enable poor labour standards or forced labour, thus making it harder for suppliers to comply with regulations.
Shareholder Action
Risk of Legal and Financial Repercussions: Companies failing to comply with forced labour regulations face potential shareholder litigation. A group litigation claim filed 17 Map 2024 by Fox Williams on behalf of shareholders against Boohoo seeking to recover damages for their losses, as well as interests and costs, following the revelation of forced labour in Boohoo’s supply chain exemplifies this.[5] Businesses should ensure transparency and compliance to avoid legal actions, financial losses, and reputational damage driven by shareholders seeking accountability.
Investor Pressure and Engagement: Institutional investors and stock exchanges are increasingly holding companies accountable for forced labour practices through measures like shareholder proposals, voting rights, and divestment. For instance, the Government Pension Fund Global of Norway provides guidance for exclusions, while the Thai Stock Exchange has developed specific guidance on modern slavery.[6] Companies should prioritise proactive dialogue with investors, enhance transparency, and strengthen due diligence to meet evolving shareholder expectations and avoid legal repercussions.
Conclusion
While modern slavery laws are evolving, significant gaps remain in how companies manage risk and due diligence. Global supply chains make detecting and eliminating forced labour difficult, especially beyond tier-one suppliers. Despite compliance with laws like the EU CS3D and the Australian Modern Slavery Act, many companies still lack effective risk assessment, management, and remediation systems. Forced labour persists in industries such as agriculture and manufacturing, highlighting weaknesses in both legal frameworks and corporate policies. Risk management often focuses on superficial checks, with inadequate supply chain mapping and ineffective grievance mechanisms. Investor and shareholder actions, like the Boohoo case, are increasing pressure on businesses to address forced labour. Companies must move beyond basic compliance to implement robust due diligence processes that protect workers and prevent forced labour throughout their supply chains. Without these reforms, forced labour will continue, damaging ethical standards and corporate reputations.
[1] CCLA 2023, “Modern Slavery Benchmark”. https://www.ccla.co.uk/documents/ccla-modern-slavery-uk-benchmark-2023/download?inline
[2] Walk Free 2022, “Beyond Compliance in the Garment Industry”, p.18
[3] CCLA 2023, “Modern Slavery Benchmark”, p.25. https://www.ccla.co.uk/documents/ccla-modern-slavery-uk-benchmark-2023/download?inline
[4] Walk Free 2022, “Beyond Compliance in the Garment Industry”, p.19. https://cdn.walkfree.org/content/uploads/2022/02/22150956/Walk-Free-Beyond-Compliance-Garment-Industry.pdf; KnowTheChain 2023, “Apparel & Footwear Benchmark Findings Report”, p.32. https://knowthechain.org/wp-content/uploads/KTC-2023-AF-Benchmark-Report-1.pdf
[5] The Telegraph 2023, “Boohoo faces £100m modern slavery class action”. https://www.telegraph.co.uk/business/2023/10/26/boohoo-faces-100m-modern-slavery-class-action-from-investor/ ; Fox Williams 2024, “Fox Williams filed a group litigation claim against Boohoo on behalf of investors who suffered losses”. https://www.foxwilliams.com/2024/06/06/fox-williams-files-a-group-litigation-claim-against-boohoo-on-behalf-of-investors-who-suffered-losses/
[6] Modern Slavery & Human Rights Policy & Evidence Centre 2021, “Data for investor action on modern slavery.” https://www.biicl.org/documents/139_investors-data-report.pdf
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