What do you need to know about a beefed up Modern Slavery Act?

CIPS published our blog on what organisations need to know about a beefed up Modern Slavery Act. Here is the text of the blog:

The UK prime minister announced a review of the Modern Slavery Act 2015 in July 2018.

The independent review focused on four areas of the Act, including Section 54, Transparency in Supply Chains.

Expert advisers were asked to gather and collate evidence from a range of sectors. I was privileged to have provided evidence to Sir Anthony Steen alongside Anti-Slavery International, the CORE Coalition, Business and Human Rights Resource Centre, Oxfam and Unseen.

The report reflects that Section 54 was intended to encourage the private sector to increase transparency and whilst it was regarded as groundbreaking legislation, the impact of the section has been limited to date. General agreement from business and civil society has been that the core reasons for this has been a lack of enforcement and penalties, as well as confusion surrounding reporting obligations.

The report also recognises that the new Modern Slavery Act passed by the Australian Parliament has gone much farther in its requirements, although it does not have enforcement penalties either.

What is clear from the findings in this report is that the recommendations are moving towards more stringent reporting requirements and possibly the introduction of penalties for directors where instances of slavery are found.

The seven key issues tabled for change are set out below:

1. An internal list should be established by the government of the companies that fall within the scope of the Act.

2. The quality of statements should be improved by removing the qualification that companies can state they are taking ‘no steps’ and by amending the six reporting areas from being voluntary reporting requirements to mandatory requirements.

3. The Companies Act 2006 should be amended to include a requirement for companies to refer in annual reports to modern slavery statements. Section 54 should be amended to impose a similar duty on non-listed companies. Businesses should also have a named designated board member who is personally accountable for producing the statement. The legislation should also be amended to require companies to consider the entirety of their supply chains.

4. Organisations should be entitled to upload their statements, free of charge, to a central government-run repository, setting out the minimum reporting requirements.

5. The independent anti-slavery commissioner should monitor compliance and the government should strengthen its approach to tackling non-compliance, including initial warnings, fines (as a percentage of turnover), court summons and director disqualifications.

6. Section 54 should be extended to the public sector and the government should strengthen its public procurement processes to make sure that non-compliant companies in scope are not eligible for public contracts.

7. Research should be commissioned on how consumer attitudes to modern slavery can be influenced.

What is interesting is the renewed focus on changes to the current company reporting regime under the Companies Act. When I was a director of Finance against Trafficking, in 2014 we lobbied for this position during discussions around the Bill. Our report sets out the reasons for this. At the time the government was not prepared to consider amending the current reporting regime. Perhaps it will reconsider based on the findings in this report.

What is clear from the report is organisations are going to have to be more transparent about how they are tackling modern slavery risk, especially if the legislation is amended so that organisations have to consider the entirety of their supply chains. Those organisations that have become corporate laggards in this area should be considering how they are going to develop their due diligence procedures to ensure they can meet the legislative requirements if these proposals are introduced.