In an age of global interconnectedness and growing awareness of human rights issues, governments around the world are taking significant steps to combat modern slavery and uphold human rights. One such stride is the introduction of new legislation that places reporting requirements on businesses.
This legislation aims to create a more transparent and accountable business landscape by compelling companies to disclose their efforts in eradicating modern slavery and safeguarding human rights from within their operations and supply chains. Here’s what businesses should know about these critical developments.
Modern Slavery and Human Rights reporting laws
To address the critical need for corporate accountability, several countries have embarked on the journey of creating legislation that mandates businesses to report on their actions to combat modern slavery and uphold human rights. Below is a list of some of the current and pending disclosure legislation around the world:
- UK Modern Slavery Act 2015
- Australia Commonwealth Modern Slavery Act 2018
- California Transparency in Supply Chains Act 2010
- Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act 2023
- French Corporate Duty of Vigilance Law 2017
- German Act on Corporate Due Diligence in Supply Chains 2021
- Norway Transparency Act 2021
- Swiss CO Arts. 964a-c, 964j-l 2020
- EU Corporate Sustainability Reporting Directive (CSRD)
- Netherlands Bill on Responsible and Sustainable International Business Conduct 2021
- EU Corporate Sustainability Due Diligence Directive (CS3D)
Which businesses are affected?
The scope of these reporting requirements often depends on factors such as revenue, location, and industry. While larger companies are more likely to be targeted, smaller businesses that operate in sectors vulnerable to modern slavery should also be vigilant. More frequently, larger businesses are passing off their due diligence requirements down to the smaller businesses in their supply chains to ensure transparency and mitigation of risk.
Modern slavery reporting legislation, while varying in specific details from country to country, often shares common themes and principles. These common elements reflect the global consensus on the need for transparency, accountability, and ethical supply chain practices. Here are some key themes commonly found across the legislation:
- Transparency and Disclosure: Modern slavery reporting legislation universally emphasizes transparency. Businesses are required to disclose information about their efforts to combat modern slavery within their operations and supply chains.
- Risk Assessments: Businesses are usually required to conduct comprehensive risk assessments or at the very least disclose known risks. This involves identifying areas within their operations and supply chains where modern slavery risks may exist.
- Due Diligence: Companies often are required to demonstrate that they have established robust due diligence procedures to identify, prevent, and mitigate modern slavery risks in their operations and supply chain.
- Remediation: In cases where modern slavery risks are identified, legislation often mandates that companies take corrective actions and provide remediation to affected individuals.
- Global Reach: Reporting requirements often have a global reach. Companies with international operations must comply with these regulations in all the countries where they operate, ensuring consistency in reporting.
- Penalties for Non-compliance: Legislation typically includes penalties for non-compliance, such as fines or legal consequences.
Challenges for Businesses
The introduction of new human rights and modern slavery reporting legislation in countries around the world brings about both opportunities and challenges for businesses. While these regulations aim to enhance transparency, accountability, and ethical practices, there are several key areas of concern that businesses need to address:
- Compliance complexity: Businesses must familiarise themselves with the specific requirements and guidelines of the new legislation. Understanding what information needs to be disclosed, the reporting frequency and the scope of supply chain assessment can be complex, particularly if a company operates in multiple jurisdictions with varying regulations.
- Global consistency: Many businesses operate on a global scale and need to adapt to various reporting frameworks across different jurisdictions. Businesses must ensure they can harmonize these requirements in either joint or separate reports while still ensuring compliance in each region.
- Supply chain visibility: Achieving transparency across intricate supply chains requires businesses to trace the origin of materials, components, and labour used in their products and services. This often involves collaborating with numerous suppliers, some of whom may be reluctant to disclose information.
- Risk assessment and mitigation: Identifying potential human rights and modern slavery risks within operations and supply chains requires careful analysis. Implementing effective risk assessment and mitigation strategies demands expertise and resources.
- Continuous improvement: Compliance is not a one-time effort – it requires ongoing commitment to continuously improve supply chain transparency, ethical practices, and human rights protection.
Despite these challenges, embracing the new legislation and taking proactive steps to address human rights and modern slavery concerns can lead to positive outcomes. Businesses that prioritize transparency, ethical practices, and human rights protection are more likely to gain consumer trust, attract responsible investors, and contribute to a more sustainable global economy.
Ardea International is currently supporting a global business (the Client) to address its approach to reporting and navigating the complex landscape of modern slavery reporting laws. The Client has subsidiaries around the world. Ardea is providing a comprehensive analysis of possible applicable modern slavery legislation and human rights due diligence requirements across the different jurisdictions where the Client operates to determine which regulations apply to the Client based on factors such as size, industry, and location. Ardea has also reviewed the Client’s current Modern Slavery Statement in light of the possible applicable modern slavery reporting laws and is advising on the best procedures for compliance across all jurisdictions and recommendations for improvement in the next reporting year, including determining the gaps in their current reporting approach. Ardea is also helping assess the gaps in their due diligence approach so that they can meet the mandatory due diligence requirements.
How can Ardea International help?
Ardea International understands that businesses must ensure that they establish robust due diligence procedures. We support our clients by helping them identify how to manage human rights impacts and risks, ensuring they meet legal compliance obligations and integrate best practices into their policies and procedures.
Ardea International has developed a number of effective compliance solutions, including a human rights and environmental disclosure legal register. The legal compliance due diligence register allows businesses to track incoming legislation as well as current laws they may be subject to. We can also assess your business’s compliance with human rights regulations, including preparedness to comply with new legislation. In addition, Ardea can examine your business’ due diligence procedures and provide priority steps to improve performance.
We run bespoke workshops and training on these issues. Get in touch if you would like to know more!
We also have a range of free and paid resources on our website and we hope that you will enjoy browsing!
Sign up for our quarterly news bulletin and receive the occasional communication from us about pertinent issues.
You can also get in touch with us at: firstname.lastname@example.org
We are a specialist sustainability, business and human rights consultancy with expertise in modern slavery.
If you’d like to know more about this report, or other reports we create, give us a call on: +44 (0) 1273 491423 or drop us a line: email@example.com
Fieldview • 21 Staples • Barn
Henfield • West Sussex • BN5 9PP
T +44 (0) 1273 491423
Contact us to see how we can support you.