When the UK Modern Slavery Act (the Act) was passed in 2015 it was regarded as an innovative and important intervention in the growing legal landscape surrounding international labour exploitation. Now, after nearly five years of implementation, we can examine the effectiveness of the legislation, particularly as it relates to global commercial supply chains.
This short article reviews the recommendations of the Independent Review of the Modern Slavery Act (published in May 2019), and briefly examines corporate accountability legislation developed by other countries. It specifically focuses on the provisions of Section 54 of the Act, which deal with transparency in supply chains.
What the Act tried to do
Section 54 of the Act requires that all companies with a UK presence and an annual global turnover in excess of £36 million, prepare and publish a statement outlining the steps they have taken to prevent modern slavery practices within their operations. The purpose of the statement was to inject a degree of transparency into the debate and to allow companies to learn from each other, encouraging a race to the top in global worker welfare.
Where it succeeded
A significant, and often under-appreciated, success of the Act was that it changed the narrative and brought much greater focus to the issue of modern slavery within corporate supply chains. Whilst labour exploitation has been a significant problem since the acceleration of globalisation in the 1970s, it was not something that many businesses considered when conducting their operations. The fact that businesses are now discussing the issue, and doing so openly, is a major step forward.
Also, the guidance accompanying the Act (subsequent to its original implementation) and the industry that has grown up around compliance statements, have helped companies to focus on some key procurement and supply chain issues as they pertain to modern slavery risks.
Where it failed
In our view, four main criticisms of the Act can be made; (i) the lack of any real penalty for non-compliance or superficial compliance, (ii) a lack of a centralised registry, making it harder for civil society groups to hold companies accountable, (iii) under-resourcing of Commissioner’s office, and (iv) framing the debate around criminal justice, particularly immigration.
The lack of penalty is a key issue; fully one third of the companies required to produce a statement have failed to do so and none has been punished. Moreover, the majority of those who have produced statements have used them as an opportunity to engage in a thinly veiled public relations exercise, rather than taking the opportunity to learn and share valuable lessons.
There is no regulator to oversee the enforcement of the Act (although there is an Independent Anti-Slavery Commissioner, about which see below). This was done intentionally as it was thought that civil society groups would step in to undertake this work.
There have indeed been some attempts to do this, notably by TiscReport, Ergon Associates and the Business and Human Rights Resource Centre (full disclosure, James Sinclair is an Advisory Board Member at TiscReport). However, the lack of a centralised, properly funded registry has hindered those efforts, as has the lack of any real guidance for companies as to what is expected of them in their statements (albeit some guidance was issued in 2017).
The establishment of the office of the Independent Anti-Slavery Commissioner was initially well received and the first incumbent in the role, Kevin Hyland, was a diligent and hard-working Commissioner. However, his office was under resourced and the brief he was given was far too broad. Ultimately, modern slavery is not one problem but a series of intersecting, overlapping, complex and dynamic problems that each require significant focus and resources. It is impossible for one person with a small team to do justice to problems as diverse as the trafficking of women and girls from Eastern Europe for the purposes of sexual exploitation in the UK, and the challenges of child workers deep in UK company supply chains in rural Nigeria. It is hard to avoid the conclusion that the Commissioner was set up to fail, and unless and until the office is given the resources it needs, it will not be effective, whomever is in the role.
A related concern is that of the dominant focus on criminal justice. The Act was the product of thinking within the UK Home Office, and it shows. There is a significant focus on modern slavery as a criminal offence, usually involving vulnerable people being trafficked into the UK for labour or sexual exploitation purposes. There is a major, and troubling, overlap with immigration policy (far too many victims have been deported and re-trafficked and too few trust the authorities not to compound their victimisation). This perception is not helped by the fact that the two Commissioners to date are former police officers. The impression is given that the systemic issues of labour rights violations in complex international supply chains are too difficult to challenge (both technically and politically) and therefore, it is better to use the Act as a proxy for tougher immigration policy. This is not entirely fair, but it is a common and not altogether inaccurate view.
Recommendations from the May 2019 Review
The Independent Review of the Act was published in May 2019 and a month later the UK government responded to the findings of the report, indicating that action would be taken on some areas.
They will proceed with creating a centrally managed report database for compliance statements, which should promote increased accountability and transparency. Additionally, the government is issuing guidance on compliance standards and conducting an audit to see which companies are meeting the standards as required by the law. Other actions include the government committing to publish its own modern slavery statement, undertaking a consultation to identify ways to strengthen the law, and funding several new research areas intended to improve the UK’s response to modern slavery in the longer term.
Lessons from Australia
The lessons learned from the development and implementation of the Act were closely considered by Australian legislators, who introduced several innovations.
Unlike the UK Act, the Australian Act requires companies to measure the effectiveness of their reports and allows the government or private citizens to request further information about particular reports they deem insufficient.
Critically, it also mandates that companies report on all six criteria listed in the Act, as opposed to suggesting which criteria companies may choose to report on as is done in the UK model. The Australian Act also incorporates enhanced systems of accountability, in which adherence to the law is monitored directly by the government. Together these elements have the potential to increase the quality of reports and therefore introduce greater transparency and accountability.
Lessons from France
Interestingly, neither the UK nor the Australian Acts go as far as some other forms of legislation that have been passed, or are being considered, throughout Europe, most notably the French Duty of Vigilance Law. This requires companies to not only to issue reports, but to demonstrate that meaningful action was taken to avoid modern slavery abuses, not just in their companies but within their contracting supply chains. Similar iterations of the French Law have been passed in the Netherlands and are being considered in Germany, Italy, Finland, Sweden, and Switzerland.
The impetus for greater ethical accountability in corporate supply chains have grown rapidly over the past decade. Companies are increasingly being held to account for the acts that occur within their supply chains. As this trend continues to grow, it is essential for all companies to seriously consider the ways they conduct business.
It is for this reason that the FLA was created. While it can be extremely difficult to implement practical improvements in supply chains, our alliance program is designed to provide members with the opportunity to learn from each other. We seek to understand the benefits and challenges of new technologies and to tap into experts with years of experience in implementation of such practices. Find out more about the FLA and how you might get involved here.