Modern Slavery committee endorses supply chain legislation

The report from the parliamentary committee looking at the draft Modern Slavery bill has recommended legislative measures to address the issue in company supply chains.

Key extracts:

169. ….The CORE Coalition warned us that the purely voluntary approach has not been effective at eliminating modern slavery.

170. We recognise the important role NGOs have played in raising awareness of the problem of modern slavery in supply chains. We also welcome the voluntary actions that have taken place at company and industry level. However, we do not believe that voluntary initiatives alone will be enough to ensure that all companies take the necessary steps to eradicate slavery from their supply chains. Legislating for supply chains

171. Companies have an economic incentive to maintain and demonstrate ethical supply chains. Matt Crossman, of Rathbone Greenbank Investments, told us that:

As an investor, I still want a company to think strategically about its supply chain and to think how it might be reducing its vulnerability to supply chain shocks and increasing the strength of its supply chain to respond to those shocks, ultimately adding to the bottom line.

IKEA told us that ethical supply chains were “absolutely” more profitable, Tesco said that a good reputation “more than pays for itself” in the long run, and Marks & Spencer told us that trust was “a key part of [their] competitive advantage”. Andrew Forrest, founder and CEO of Walk Free, added that he did not think that eliminating slave labour necessarily equated to more expensive goods.

172. We were repeatedly told legislation could serve to “level the playing field” and raise the standards of companies that failed to tackle modern slavery in their supply chains voluntarily. This would ensure that companies who take eradication of modern slavery from their supply chains seriously would not be undercut by unscrupulous or ignorant competitors. Marks & Spencer told us “legislation could have a valuable role to play in encouraging more companies to take these issues more seriously”. David Arklesssuggested that a “little stimulus” through legislation was all that was required to generate momentum for change. Amazon, IKEA, Marks & Spencer, Primark, Sainsbury’s and Tesco all told us that they could support legislation that was not unduly burdensome.

173. Legislation on supply chains does not have to be burdensome for reputable businesses to implement. Proportionate legislative action can ensure that firms no longer turn a blind eye to exploitation occurring in their names and can therefore stimulate significant improvement. We welcome the support of major businesses for appropriate legislative measures. We also call on the Government to take a responsible lead in eradicating modern slavery from its own supply chains.

….

183. We recommend that, as a proportionate and industry-supported initial step, quoted companies be required to include modern slavery in their annual strategic reports. This could be done in a straightforward way by amendment of section 414C of the Companies Act 2006 to include modern slavery among the issues which companies are required to address in the strategic report.

184. We recommend that the Secretary of State, by Order, specify the requirements for the modern slavery section of companies’ strategic report. These requirements must include explanations of how the company has, with respect to modern slavery:

a) verified its supply chains to evaluate and address risks

b) audited suppliers

c) certified goods and services purchased from suppliers

d) maintained internal accountability standards, and

e) trained staff.

The Order should also require that this information is published online.

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