It is now two years since the UK’s Modern Slavery Act came into force. Let me explain how the Act could affect your business and how effective it has been to date.
I spent more than 30 years with West Yorkshire Police, investigating serious crimes, including murders, armed robberies and major drugs conspiracies. After I left the police I worked closely with the families of murder victims to provide emotional and practical support. I also managed intelligence around crime risk on behalf of the Post Office before I eventually ran the operational activity of an organisation that investigated and rescued victims of modern day slavery.
During this time, my team of experienced investigators rescued more than 200 victims of slavery. We also trained more than 5,000 frontline professionals, such as the police and social services, to spot the signs of human trafficking. Many people think that slavery is something that happens in foreign places and does not affect them. Nothing could be further from the truth.
In 2014 our team began to rescue a number of men in West Yorkshire and it soon became clear that they had all been trafficked by the same gang. After many months of painstaking work, we took our evidence to the police and a major investigation was launched. Over the next few months, more than 30 victims were identified and rescued by us and the police, many of the men were working in a bed factory in Dewsbury. This factory supplied beds for Next and John Lewis among others.
Two traffickers were eventually arrested, and later sent to prison for their crimes. The misery inflicted upon their victims was among the worse I had ever seen throughout my career. It was clear to us that the traffickers had not been acting alone and that the management at the factory must have had knowledge of their activities; cheap labour is cheap for a reason and turning a blind eye is not an option.
A second investigation was launched, this time targeting the directors and management of the bed factory involved. This investigation resulted in the arrest and conviction of the factory owner who was sentenced (at Leeds Crown Court in February 2016) to 27 months in custody. Sadly, the factory also closed, resulting in the loss of more than 180 jobs to the local community.
Tackling supply chain transparency
So why should all this concern you? Well, in March 2015, the government introduced the Modern Slavery Act and made it a legal obligation for certain businesses to be transparent regarding the steps taken to prevent modern slavery, both in its own organisation and across its supply chains.
Such transparency is aimed at allowing the public, consumers, employees and investors to know what is being done to tackle modern slavery. This will open up all organisations to greater scrutiny from the media, pressure groups and potential business partners. Failing to comply with the legislation may result in severe pressure not to engage with an organisation who is seen to be not taking the issue of modern slavery seriously and thus there is the risk of becoming an organisational pariah. Ultimately, failure to comply may result in legal punishment and serious reputational damage, which in turn may affect profits and even the organisation’s survival in an increasingly ethical trading environment.
The legislation is not simply a one-off tick box exercise. It is intended that organisations will build on the steps they are taking on a year-on-year basis, indeed the government seeks to create a ‘race to the top’ and those who do not engage may find finishing at the bottom of the table an uncomfortable place to be with many difficult questions to answer.
Compliance with the legislation requires an organisation to produce and publish an annual statement. The guidance issued by the government suggests the statement may include information on the organisation’s structure, business and supply chains, its policies and due diligence processes in relation to slavery and human trafficking, an assessment of the risk of slavery and human trafficking taking place and of the effectiveness of the prevention measures employed, evaluated by appropriate performance indicators.
It should also highlight the training and capacity building measures that have been provided to ensure everyone in its organisation is alive to the risks and able to effectively identify and combat modern day slavery.
Scant reporting
Many organisations have been slow to publish their slavery statements, this is due in part to confusion around the requirement and the date by which the statements must be produced and made public.
In simple terms, any business with a global turnover in excess of £36million must publish a statement within six months of each financial year end from 31 March 2015 onwards. Therefore, if your business financial year ended anytime between 31/3/2016 and 30/9/2016 and you have not yet published your statement, you are already in breach of the Act.
Many of the published statements we have seen so far lack meaningful quality, substance and detail, and many simply point out that the business will not tolerate modern slavery. Very few set out the real detail that might reassure investors and consumers that effective measures are in place. Many fail to meet the minimum requirements, such as sign-off from senior leadership and placement in a prominent position on the homepage of the company’s website, let alone provide any in-depth analysis of supply chain risks.
The six areas, suggested by the government, that businesses should cover in their statements are nothing more than suggestions, there is no legal stipulation. Indeed, it is quite legal for a company to simply publish a statement stating it has carried out no steps to prevent modern slavery although any such statement would be likely to attract adverse media attention and we should not rely on the media to police and enforce such a critical piece of legislation.
The UK Anti-Slavery Commissioner is Kevin Hyland, a former inspector with the Metropolitan Police. The Commissioner has had a series of discussions with CEOs and directors from some of the UK’s largest companies to ensure they understand what is required and produce statements that both comply with the Act’s obligations and point to decisive action being taken.
In order to promote strong reporting and anti-slavery efforts, the Commissioner has: communicated with more than 1,000 companies operating in the UK; written to them detailing his expectations of companies in relation to their reporting requirements under Section 54 of the Modern Slavery Act 2015 (Transparency in Supply Chains); met with sustainability leaders from the big five supermarkets to discuss their commitments to respond to the risks of modern slavery in supply chains; led private sector roundtables on supply chain transparency; and is working with trade bodies to tackle modern slavery in high risk sectors.
“MANY ORGANISATIONS HAVE BEEN SLOW TO PUBLISH THEIR SLAVERY STATEMENTS, THIS IS DUE IN PART TO CONFUSION AROUND THE REQUIREMENT AND THE DATE BY WHICH THE STATEMENTS MUST BE PRODUCED AND MADE PUBLIC”
At the moment, no action has been taken against any organisation that has failed to produce its statement. It’s fair to say the government is allowing plenty of time for organisations to come to terms with their obligations and to comply.
Better policing
Many people believe the transparency in the supply chain section of the Act must be better policed and that some action must be taken against businesses who fail to comply. The threat of a prison sentence may seem excessive but would certainly focus the attention of a director responsible for preventing vulnerable people being placed in modern slavery at the end of a long and seemingly distant supply chain.
Recently, a proposal to amend the Modern Slavery Act received a second reading in the House of Lords. Under the amendment, companies would be required to report on slavery and human trafficking in their annual reports and accounts. Currently the requirement is limited to a statement on company websites. Those who fail to comply would be excluded from procurement practices by contracting authorities.
Our own efforts in checking for compliance has revealed many examples of no statements published and a real difficulty in getting people to actually speak about the issue. Many organisations hide behind a ‘no names policy’ to obstruct any attempt to speak with the person responsible for the issue. Those people who campaign for a more stringent enforcement policy make it their business to monitor compliance and produce articles naming and shaming when possible, but as yet these have not surfaced beyond professional publications.
Supply chain software provider Segura recently conducted research and found that of 34 retailers who should have produced statements on their websites by 31 January 2017, 11 had failed to do so. Segura named five of the most recognisable brands included in the 11, causing some avoidable embarrassment and dented reputations.
During our conversations with the business community, we found many people were only vaguely aware of the Act, or that their company has a modern slavery policy. Most believe that any policy has not been communicated effectively and many can see no evidence of it being put into practice. Many members of staff have reported their senior team needs to do more to enforce compliance to the Modern Slavery Act. Modern slavery is a big challenge, far beyond the responsibilities of the compliance manager alone.
The need to allocate more time and resources to up-skilling staff is key. Many corporate buyers, and even professional auditors, lack the specialist knowledge to understand and identify modern slavery issues and many acknowledged that current processes are ill equipped to deal with them.
Critics argue it is little more than a box-ticking exercise for some businesses and that it is difficult for the government and the public to keep track of who has published a statement, who has not and – more importantly – who is up to scratch. A key issue in ensuring compliance is the introduction of a government-administered central repository that lists which companies must comply with the Act. This repository should be accessible to the public and should contain a link to the statements published.
The government has estimated that more than 12,000 companies in the UK should be complying with the Modern Slavery Act, the two-year anniversary will provide an opportunity for some to expose the weakness of the current legislation and the organisations that are merely paying lip service to it. It will be interesting to see when and how the government will begin turning the screws to ensure full compliance.
