How the Modern Slavery Act impacts companies and public procurement in the North West

Source: Corporate approaches to addressing modern slavery, Ashridge / ETI

The Modern Slavery Act 2015 requires large firms who have operations in the UK to report on their efforts to ensure there is no slavery, forced labour or trafficking in their business or supply chains. 

From 31 March 2016, all companies with global annual revenues of £36m or more will have to report against the transparency in supply chains requirement of the Modern Slavery Act. 

At least 17,000 companies, both those based in the UK and international firms with UK operations who meet the revenue threshold, will need to produce an annual modern slavery statement which must be approved by the board of directors, and signed by a director or equivalent. Most organisations might think they are low risk, however, a recent study by Ashridge Business School and the Ethical Trading Initiative found that 71 per cent of companies believe there is a likelihood of modern slavery occurring at some point within their supply chains.

The requirement for medium and large companies is clear - but how does the Modern Slavery Act impact SMEs, Social Enterprises, Charities and public procurement practices?​

Large companies will start requiring their suppliers have an ethical sourcing policy and practices in place to check their suppliers and sub-contractors are doing all they can to ensure modern slavery is not taking place. But where does a social enterprise or SME start with such a seemingly large task?  

First, understand your supply chain and assess where the risk of modern slavery is greatest - considering sourcing countries and different types of materials, manufacturing processes, or where there is a high use of temporary or contract labour are good places to start.

Then look at your purchasing practices, policies and relationships with your suppliers. Are your standards and requirements for suppliers around worker rights and labour standards clear. Is there a clear pathway for issues to be raised and dealt with if they are found? Do any of your purchasing practices place unnecessary pressure on suppliers?

As a final initial step, consider who in your own team, or of your suppliers could benefit from specific training on what Modern Slavery is, how to identify it, and what to do if any issues are found?

These same steps apply equally to public procurement, where the government is also seeking to lead in ensuring its own procurement practices follow suit. Public procurement bodies are also starting to assess their purchasing procedures, and publish statements outlining their approach.

Below is an outline of the requirements of an annual slavery and trafficking statement for large companies, or other organisations who want to understand what they need to do, and demonstrate the steps they have taken to ensure modern slavery risks are addressed in their business and their supply chain.
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Annual Slavery and Trafficking Statement

The annual slavery and trafficking statement will need to include five general areas of activity, and for businesses who already produce an annual Sustainability or CSR report, the statement can be included as part of their existing reporting. The general areas of activity are:

1. A brief description of an organisation's business model and supply chain relationships; 
2. A business’s policies relating to modern slavery, including due diligence and auditing processes implemented; 
3. Training available and provided to those in a) supply chain management and b) the rest of the organisation; 
4. The principal risks related to slavery and human trafficking including, how the organisation evaluates and manages those risks in their organisation and their supply chain; and 
5. Relevant key performance indicators.

The government has produced guidance which sets out the kinds of information that might be included in a disclosure, and some case studies of good practice including:

• who is required to publish a statement
• how to write a slavery and human trafficking statement
• how to approve and publish the statement

See the government's Transparency in supply chains: A practical guide here.

To learn more about the Modern Slavery Act and how it could effect your organisation, please get in touch.