The Modern Slavery Act – a catalyst for meaningful change?
By Cherie Blair CBE, QC and the Rt Hon. John Gummer, Lord Deben.
During an outing to buy a new television, the Simpson golden calf, Marge memorably declares that the family cannot “afford to shop at any store that has a philosophy”. A lot has changed since that episode was first aired in 1996. Today we ask what company can afford not to have a responsible philosophy and practice what it preaches?
Slowly but surely, we have seen the legal landscape change as law-makers, civil society and companies have started to get to grips with the social and environmental impacts of global business. The latest addition is the Government’s new Modern Slavery Act.
Of course, there is nothing “modern” about slavery. The Slave Trade Act of 1807 marked the beginning of the end of the legal slave trade. So it is galling to learn that today an estimated 21 million people remain trapped in some form of slavery or forced labour.
Leading multinationals, with market capitalisations dwarfing the GDP of many countries, have faced allegations that their supply chains breach basic human rights. Many companies recognise the risk – in a recent survey of leading businesses, 71% admitted that there is a high likelihood of slavery at some stage of their supply chains.
However, acknowledging the problem is one thing – implementing meaningful change is quite another.
While you might think party politics would divide a lifelong Labour supporter and a Conservative Peer, we are united in our belief that the time has come for a fundamental shift.
Recent high-profile lawsuits and criminal investigations – including in the UK, Ireland, US and Brazil – and a wave of new legislation have focused the attention of boardrooms on the legal and reputational risks of corporate malpractice and inaction.
A landmark provision of the Modern Slavery Act, now in force, seeks to reverse the lack of transparency in supply chains.
Commercial organisations that supply goods and services in the UK, with turnovers exceeding £36m, must publish an annual statement explaining what they are doing to eliminate slavery from their businesses and supply chains. These statements will begin to emerge from Spring next year and will be seized upon by consumer groups and civil society.
The law and recent official guidance will no doubt frustrate some employers who were hoping for certainty about what, if anything, is required of them. In reality, businesses have been afforded a great deal of flexibility to decide if they are affected and what to report.
Companies may simply state that they have taken no steps to identify and tackle illicit practices. However, these statements must be approved and signed at the very highest levels within businesses, and neither of us knows any executives who would want to put their name to such a damaging declaration.
Reputational harm can quickly tarnish brands and wipe value off corporate balance sheets, particularly in the face of public boycotts, shareholder activism, and exclusion from Government contracts.
Already, major companies are demonstrating how to tackle supply chain issues head-on. Unilever has led the way by publishing its first human rights report. Swedish giant IKEA has openly addressed historic problems with child and forced labour and has actively supported the new law.
We all have a part in helping to manage and deliver this change. This was a major theme of last week’s UN Forum on Business and Human Rights in Geneva, where Omnia Strategy and Sancroft set out the business case for human rights.
Change will be incremental, but we expect to see more and more companies adopting a responsible philosophy. For the sake of the world’s most vulnerable people, let’s also ensure they are practising what they preach.
Cherie Blair CBE, QC is Chair of Omnia Strategy LLP, a pioneering international law firm that provides strategic counsel to governments, corporates and individuals. The Rt. Hon. John Gummer, Lord Deben is Founder of Sancroft, an international sustainability consultancy.