Modern Slavery in Supply Chains
The presence of slavery and forced labour in the operations and supply chains of many businesses internationally and in the UK is a grave problem. According to the International Labour Organization, there are as many as 21 million people in forced labour around the world, which is estimated to generate a profit of $150 billion per annum.
We would be shocked that our decisions could in any way be contributing to slavery, yet the nature of business today can create conditions where slavery and forced labour flourish. Organisations can be implicated in modern slavery both directly and indirectly in a variety of ways: in their own operations, through their global supply chains and through their involvement with business partners. It has increasingly become apparent that the scope of modern slavery is far wider than previously assumed.
The Modern Slavery Act & transparency in supply chains clause
In 2015, the UK government passed the Modern Slavery Act in an effort to combat these abuses, with the ‘Transparency in Supply Chains’ (TISC) clause of the Act specifically targeting companies.
The TISC clause has been described as a potential ‘game changer’ on supply chains. It requires every company with a turnover of more than £36 million operating in the UK – not only those registered here – to publish an annual ‘slavery and human trafficking statement’ for each financial year of the organisation, setting out what they’re doing to address those issues in their supply chains and business operations. In this way, the Act has a decidedly global reach, covering some 12,000 companies. Organisations are required to publish this statement on their website and must include a link to the statement in a prominent place on the website’s homepage.
Implementing the new requirement: scope & guidance
While the Act does not prescribe on the exact contents of this statement it does provide some guidance on what might be included. The Home Office published guidance on TISC in November 2015, providing useful pointers on producing reports and a list of other relevant international standards and sources of advice on supply chain transparency. While the Home Office guidance gives a helpful basic overview of the TISC clause, civil society organisations felt that more detailed information was needed for companies already engaging with labour rights issues in their supply chains.
In March 2016, CORE and our partner organisations published Beyond Compliance: Effective Reporting Under the Modern Slavery Act, setting out our initial thinking on how companies can use the new provision to link reporting to the wider due diligence needed to eradicate human trafficking, forced labour and slavery from their supply chains.
The campaign for Transparency in Supply Chains clause
During the development of the Modern Slavery Bill, CORE was instrumental in securing the inclusion of a clause on Transparency in Supply Chains (TISC).
The Bill was introduced to the House of Commons in draft form in October 2014, later receiving Royal Assent and entering UK law as the Modern Slavery Act on March 26 2015.
The draft Bill contained no mention of company supply chains, despite recommendations from the evidence review and the Bill committee that a requirement on businesses to make their supply chains more transparent be included in the legislation. In response to this gap, CORE established the Transparency in Supply Chains (TISC) Coalition with a number of corporate accountability, fair trade, development and anti-slavery groups to campaign for the inclusion of effective measures on supply chain transparency in the Bill.
The campaign for greater transparency in supply chains was also supported by many prominent businesses such as Unilever and Ikea, as well as members of the Ethical Trading Initiative. Leading investors such as Hermes and the Alliance Trust praised the law for giving certainty and clarity to businesses. Church Leaders were also supportive, as was the Designate Independent Anti-Slavery Commissioner, Kevin Hyland.
The government included the supply chains provision at Report stage in the House of Commons. Thanks to several excellent debates in the House of Lords, the provision was strengthened and clarified.
Following a public consultation on the threshold for reporting to which CORE responded, the government announced in July that all companies with a turnover of more than £36m operating in the UK would be covered by the new requirement.