2017 marks the first year when all companies covered by the UK Modern Slavery Act 2015 must publish a statement.
Under section 54 of the Act – which is similar to the California Transparency in Supply Chains Act – commercial organizations that do business in the UK and have a global turnover of at least £36 million in any financial year are required to publish a slavery and human trafficking statement. The statement must state the steps they have taken to eradicate slavery and human trafficking in their operations and supply chains for each financial year. The statement must be published on the organization’s website, with a link to the statement in a prominent place on their homepage.
When is the ‘deadline’?
The Act does not specify a deadline for publishing the statement, but the Government has encouraged organizations to publish statements within six months of their financial year-end. The first Businesses with a financial year-end on or after March 31, 2016 were the first to publish statements, for the financial year 2015-2016. Businesses with a financial year-end between October 29 and March 30, 2016 were not required to publish a statement for that financial year of the organization under the transitional provisions of the Act. This year marks the first year when all companies covered by the Act must publish a statement.
What needs to be included?
The Act does not contain specific requirements, but states that the following information may be included:
- the organization’s structure, its business and its supply chains;
- its policies in relation to slavery and human trafficking;
- its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
- the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
- its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against performance indicators as it considers appropriate; and
- the training about slavery and human trafficking available to its staff.
The Practical Guidance provided by the Government states that it expects organizations to build on their statements year on year, and it expects the statements to evolve and improve over time.
There are no direct sanctions for failure to publish a statement under the Act. However, if a business fails to produce a slavery and human trafficking statement for a financial year, the Secretary of State may seek an injunction requiring the organization to comply. If the organization fails to comply with the injunction, it will be in contempt of a court order, which is punishable by an unlimited fine.
The Government states that it will be for consumers, investors and NGOs to engage or apply pressure where they believe a business has not taken sufficient steps to eradicate slavery and human trafficking from its operations and supply chains. In response to this, the Business & Human Rights Resource Centre runs a dedicated online registry of statements where investors, NGOs, journalists and other stakeholders can scrutinize the quality of statements by industry sector. An organization should therefore consider the potential reputation risk in not publishing a statement on time or disclosing that it has taken no steps to eradicate slavery and human trafficking from its operations and supply chains.
The UK Parliament is in the midst of discussing the Modern Slavery (Transparency in Supply Chains) Bill [HL] 2016-17. The Bill, which is set to have its second reading in the House of Commons this month, will extend the requirements in section 54 of the Act to public bodies and will require commercial organizations and public bodies to include a statement on slavery and human trafficking in their annual report and accounts. The Bill also requires contracting authorities to exclude from procurement procedures economic operators who have not provided such a statement. If the Bill is approved, this would put further pressure on companies to produce timely and adequate slavery and human trafficking statements.