The last few months have seen a flurry of activity as businesses have been publishing their modern slavery statements. As our internal reporting period comes to a close, Lyons Davidson and STOP THE TRAFFIK reflect on the Modern Slavery Act, looking towards changes on the horizon for future statements.
Modern Slavery Act 2015 to present day
In 2015, the UK became the first country in the world to require businesses to report on modern slavery, through Section 54 of its Modern Slavery Act 2015. This landmark legislation was a welcome step towards increasing business transparency – with businesses expected to report on anti-modern slavery efforts in their supply chains.
Despite this, many criticised the Act for the voluntary nature of its reporting and its insufficient attempts at enforcement – soon earning itself the tagline, the ‘toothless tiger’. In 2019, the Government held a public consultation on Section 54, leading to a Government response which promised to strengthen the Act, hinting at several potential legislative changes.
Yet with Covid-19 dominating parliamentary priorities and the Government only committing to formal changes once ‘parliamentary time allows’, much of the conversation about the new Act died down. However, with amendments in the pipeline, it’s essential to keep an eye on the new legislation – which may be just around the corner.
Broadening scope and mandatory reporting
The proposed amendments certainly seem to have more ‘teeth’ than the 2015 Act. To start, all voluntary areas of reporting will soon become mandatory. This means all statements will need to contain information on:
- The organisation’s structure and supply chains;
- Policies in relation to slavery and human trafficking;
- Due diligence processes in their businesses in relation to supply chains;
- The assessment and management of the risk of slavery and human trafficking
- Its effectiveness in ensuring slavery is not taking place, as expressed through performance indicators;
- The training available to staff on slavery and human trafficking.
If companies have not covered any of the above topics in their statements, they will soon be required to explain why. The new statements will also require an obligatory sign off from the company Director and Board, ahead of a new single reporting deadline; with all statements due for publishing by 30 September in respect of the period 1 April – 31 March.
A particularly intriguing amendment is the expansion of Section 54 to public bodies that have a budget threshold of £36 million. Given that the UK Government is seeking to increase procurement from Small and Medium-Sized Enterprises (SMEs) to 33% by 2022, the UK government is requiring more information from its suppliers in terms of practices to address modern slavery risk – even if SMEs are not required to report on it, as per Section 54.
A review of these proposed amendments leads to one big question – will the legislation be merely another government requirement to comply with, or something that will mobilise the business sector for good?
On the face of it, new mandatory reporting will give large corporations reason to think more about modern slavery risk. By making companies explain why they haven’t reported on particular topics – the legislation pushes companies into either being part of the conversation or being actively against it. With Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) metrics becoming more important to the modern-day consumer, companies are less likely to pick the latter.
On the other hand, the Government seems hesitant to give a harder line on civil penalties when it comes to enforcing the amended Act. While the Government is considering a Single Enforcement Body for Employment Rights, a question mark hangs over whether these amendments will have any real impact without an enforcement mechanism confirmed.
When will this all happen?
While the modern slavery statements due in respect of the current financial year will remain unaffected, it’s a safe bet that we will start seeing these legislative changes come to fruition ahead of next year’s reporting period.
This seems even more likely when we consider a similar direction of travel across the EU. The European Commission is currently tabling an EU-wide human rights due-diligence law for June 2021, which could apply to non-EU domiciled countries. Germany also passed a new modern slavery law, which levies heftier fines to businesses implicated by modern slavery, excluding them from public procurement processes.
Given the context, it’s unsurprising that 2021 has seen the Home Office starting to implement changes, beginning with the launch of a registry website in March 2021, for the voluntary uploading of modern slavery statements. Small moves such as these suggest the Act is very much on the mind of the Home Office – with more changes to come in due course.
It seems having a more engaged and prepared stance towards modern slavery can only be a good thing given the upcoming amendments. Lyons Davidson has been taking its own steps in partnership with STOP THE TRAFFIK, to increase its commitment to modern slavery prevention. See our Modern Slavery Statement 2020-2021 for more details, here.
Overall, having an awareness of upcoming amendments to the Act is vital, with the proposed changes coming sooner rather than later. This preparedness will be key to making sure companies aren’t left behind, as the UK business sector starts to ramp up its commitment to human rights.
Although changes- to a single reporting date and what statements must include haven’t been enacted, the Home Office’s Modern Slavery Statement Registry has opened and businesses are being encouraged to upload their latest statements, so the government are clearly gearing up for more change. We are keen to help our clients understand the implications for their businesses. Contact Alex Hewitt ([email protected]) for an initial conversation on how we can help.
This blog was written in partnership with STOP THE TRAFFIK, a non-profit organisation that aims to disrupt human trafficking and modern slavery globally. STOP THE TRAFFIK’s business consultancy offers bespoke solutions to corporations and financial institutions to manage the risk of modern slavery and become ethical market leaders. Please email here for any queries, at [email protected]