Is Yours One of the 6,000 Companies that Failed Modern Slavery Act Compliance ?

Pop quiz: 1. Does your company have any business in the UK?  And 2. Is your global turnover more than $50 million (£36 million)?  Yes to both?  Ah, shoot, you have to write a Modern Slavery Statement.  Don’t worry, you’re not alone if you haven’t done it yet.  The UK Home Office estimates that 11,000 companies are subject to the Act, but the Modern Slavery Registry has only received 4,299 of them.  That means an estimated 6,701 companies haven’t complied with the Act. 

We’ve already seen numerous prosecutions of people who have violated the Modern Slavery Act.  In 2016, the UK Department of Justice brought 51 prosecutions under the Act, including a high-profile case with devastating financial and reputational effect that saw DJ Houghton Catching Services liable for abuses against victims of trafficking.  They supplied eggs to some of the biggest brands in the UK, including McDonald’s, Tesco, Marks & Spencer and more. 

What do you do if you realize that you haven’t met the deadline?  The first thing is to figure out what you’ve done already, and then put it into your statement.  Next week we’ll tackle how to plan for a better statement next year, but for now, let’s look at what the statement requires, and how you can pull together information on what you’ve already done so you can be in compliance in a hurry. 

The statement basically has six parts.  These include:

(1.) Explaining Your Business, Business Structure and Supply Chain

Everyone should be able to get this part right.  The first thing you should do is to write down an overview of the services your company provides, followed by a detailed report of the types of businesses in your supply chain.  Include information about high-risk parts of your supply chain, such as use of seasonal workers and recruiting agencies.

(2.)  Policies

The next thing you should do is explain any policy you have that relates to modern slavery, human trafficking, or labor.  Don’t have a dedicated policy on human rights or modern slavery?  OK – does your Code of Conduct include a statement on treating people fairly and not discriminating?  Is your company part of the United Nations Global Compact?  If so, look to this year’s statement and pull out everything related to human rights.  Talk to the Corporate Social Responsibility folks – they may have something you can use.

(3.)  Due Diligence Process

Most companies have a due diligence process related to anti-bribery, but not all companies have a due diligence process related to anti-slavery.  Does your due diligence process capture anything about human rights abuses?  Does your due diligence process include an adverse media check that would flag articles or reports of modern slavery or human rights failures? 

Check with Procurement to find out if their due diligence process includes anything related to labor.  Check with Legal to find out if anti-slavery clauses are included in contracts with suppliers, or at the very least, if contracts include a requirement to comply with all laws. 

(4.)  Risk Assessment and Risk Management

Several of our clients first learned that they needed a Modern Slavery Statement during the course of their Compliance Program Evaluation or company-wide Risk Assessment.  Your Modern Slavery Act statement should detail any risk assessment you’ve done relating to modern slavery.  Does your current risk assessment look at labor issues or consider human rights issues?  Does your Audit team look for red flags for modern slavery when it visits sites or suppliers?  Include all the information you can.

(5.)  Effectiveness

The fifth part of the statement should describe what you’ve done to measure the effectiveness of your program.  If you haven’t done anything, take heart – the Business & Human Rights Resource Centre gave an average score of .8 on a scale of 0-5 for companies’ effectiveness measurement.  Figure out if you’ve done anything to measure effectiveness and if you haven’t – write a plan for how you’ll fulfil this requirement next year and include it in your statement. 

(6.)  Training

The last part of your statement should detail the training you’ve given on modern slavery.  Hopefully you’ve given training on modern slavery, but if you haven’t, does your Code of Conduct training include anything related to ethics within your supply chain?  Does it tackle human rights, ensuring good labor conditions, or not discriminating?  Does your Human Resources team do any human rights-related training?  If so, include it in your statement.

If you haven’t complied with the Modern Slavery Act, do so as quickly as possible.  While you can’t make up for what you haven’t done yet, you can still highlight what you’ve done so far.  Next week we’ll go through how to create and implement a plan to meet each of the six categories effectively, but for now, get compliant as soon as possible with a statement on your website linked from the your company homepage, approved by the Board of Directors, and signed by a Director of the Company.

Need help with this?  My company, Spark Compliance Consulting, provides modern slavery risk assessments, planning advice, supply chain review and assistance in drafting effective modern slavery statements.,