News and insights

Cherie Blair and Miriam González: why companies must act on slavery law

Nearly 46 million people are enslaved globally – an estimated 12,000 of them in the UK – generating illegal profits of $150bn (£114bn). However unwittingly, British consumers and businesses are sustaining this cruel exploitation, with slavery likely to exist in the overseas supply chains of most large UK companies.

As home secretary, Theresa May saw the Modern Slavery Act on to the Statute book, the first legislation of its kind in Europe. Now as prime minister she has established a government task force (with £33m in funding) which, together with the independent anti-slavery commissioner she appointed, is tasked with clamping down on what she described as “the greatest human rights issue of our time”.

The initiative recognises that national efforts by governments and law enforcement agencies, while vital, are not enough. Because most forced labour and human trafficking networks operate on a cross-jurisdictional basis, tackling this global challenge also requires action by businesses operating internationally.

The act seeks to address this, not by threatening legal penalties on companies but rather by generating pressure from civil society, consumers and investors to initiate a substantial change in corporate behaviour.

All organisations with a turnover of more than £36m doing business in the UK are required to publish an annual statement setting out the steps they have taken to prevent slavery in their businesses and supply chains in the UK and overseas. But the government has left businesses free to decide for themselves what, if any, such steps to take and subject only to the judgement of the court of public opinion if they fail to take action.

The success of this light touch approach will depend on companies that fail to take meaningful steps being named and shamed, and seen to suffer tangible reputational damage that causes customers and investors to turn away. Only the genuine threat of a severe hit to their bottom lines is likely to force less responsible businesses to take the necessary action.

Whether the act makes a big difference will also depend on companies looking beyond their businesses and supply chains in the UK to their operations and suppliers overseas.

Leading companies have developed broad frameworks to conduct deep due diligence focusing not only on their direct suppliers but examining all parts of their supply chain, right down to who picks the cotton, who sews the shirt and who mines the ore. Just as companies are already required to take all reasonable steps to know whether there is money laundering in their supply chain, they should do the same for slavery.

The government must keep the actions of companies under close review and be ready to dictate more specifically what they must do and to impose tougher legal penalties if companies fail to act.

The media and NGOs have a crucial role to play in highlighting serious shortcomings. A valuable starting point is the Transparency in the Supply Chain data bank to which businesses are encouraged voluntarily to submit their reports. This enables companies confidentially to admit when they find that their suppliers are using enslaved workers, facilitates comparisons of what companies are doing and will help to identify and reward best practice.

But the early signs are not promising: to date only about 100 of the 12,000 companies required to produce a statement under the act have submitted it to the data bank. And it is clear from the first statements to be published that there remains – to interpret their shortcomings generously – a widespread lack of awareness of exactly what businesses need to do to comply with the law and effectively to combat modern slavery.

This raises hard-edged legal and practical questions. There is no one-size-fits-all easy fix. Organisations, including those headquartered outside the UK, need first to establish whether the law applies to them or to their subsidiaries, and to ensure that their statements are approved and published in accordance with the specific requirements of the act. They need to consider questions such as where to focus their resources, what changes may be needed to their policies and contracts with suppliers, what training should be provided to their staff, suppliers and agents, and how they can measure progress.

More fundamentally, organisations need to consider how best to respond in the event that they find slavery in one of their suppliers (and, if they don’t, whether they are looking hard enough). What would be the consequences of breaking the contract, not only for the organisation itself but for the workers of the supplier? If the contract was continued, how could the slavery be eliminated and what is their legal exposure for as long as the slavery continues?

Previously, these may have been questions to which many companies could turn a blind eye. But that has changed. The new law, with the active backing of the prime minister, has significantly raised the reputational stakes. The business case for taking action is now compelling and urgent.

Source: The Guardian