The Modern Slavery Act could benefit from some reforms to ensure slavery in UK supply chains is prevented

Global estimates reveal that an estimated 40.3 million people are victims of modern slavery around the world, including 24.9 million in forced labour.

The UK Modern Slavery Act in 2015 was introduced to tackle slavery in UK businesses, including their supply chain factories. However, it has not been effective in addressing the slavery conditions in the supply chains of UK businesses.

Under Section 54 of the Act, UK businesses are only to voluntarily report what measures they may or may not have taken to prevent slavery in their supply chains.

Our research reveals that measures to prevent modern slavery must go beyond just reporting them in their annual reports. We recommend several reforms to the Modern Slavery Act including: mandatory preventative measures; having punishment or reward; making audit reports public; and preventing companies from being able to cut and run.

Mandatory preventative measures

We argue that making companies legally bound to take steps to prevent slavery in the supply chain is essential.

The OECD’s guidance urges companies to engage in due diligence. Due diligence may involve identifying and preventing anti-union policies and practices and assessing their purchasing practices and potential impact on workers’ rights. However, due diligence is not yet a legal requirement.

Due diligence by large businesses with a monitoring mechanism and an enforcement procedure is a must to prevent slavery.

Having punishment or reward

The lack of clear sanctions (punishments or rewards) makes reporting of modern slavery statements toothless. Section 54(4)b allows companies to be legally compliant simply by stating that they have taken no action to prevent modern slavery.

In other words, UK corporations are not legally bound to take any steps to prevent slavery conditions in their supply chains.

Our research demonstrates that some UK companies continue to do business even if they find slavery-like conditions in their supply chain factories. We argue that legal sanctions (such as warnings, fines, court summons and directors’ disqualification) against those companies and assigning a public body to monitor compliance is worth considering.

Making audit reports public

Publication of third-party audit reports would provide greater visibility of supply chains.

In slavery statements, companies report on the outcomes of audits at a very aggregate level (such as the number of factories dropped for non-compliance). Still, factory-specific audit reports are never disclosed on the grounds of business confidentiality.

Consequently, stakeholders’ knowledge of labour standards remains uneven, weakening transparency and corporate accountability. Sharing audit reports (perhaps without naming individual factories), remediation measures and follow-up audit reports would bring greater transparency, accountability and stakeholder inclusivity in fighting modern slavery.

Stop companies from being able to cut and run

The governance gap in supply chains leaves responsibility for human rights fragmented between different governmental and private agencies. This fragmentation allows companies (often secretly) to cut and run when reputational risk is detected rather than working with stakeholders based on shared accountability for improving conditions.

Factory owners and other stakeholders appear to emphasise the need for stakeholder dialogue and engagement in capacity building to eradicate slavery through shared responsibility.

Our research has revealed that in their modern slavery disclosures, some companies make statements about progressive stakeholder engagement programmes. Our interviews with stakeholders, such as focus groups, conferences and round-table discussions with the government, industry representatives, labour activists, NGOs and other civil society members, saw these as of limited use.

The current approach of holding a single group, for example, factories, accountable for the costs of improving labour standards is not working.

Evidence from our research 

National and international initiatives to force compliance (such as audit-oriented systems) focus only on the point of production, which creates an impression of upward accountability and is problematic in previous studies. Companies need to review and report more on their approaches to compliance and monitoring, which in many instances, as evidenced in our research tend to drive slavery underground – appearing to be compliant while hiding the real conditions.

A commitment to shared responsibility across supply-chain stakeholders must mitigate these limitations. Fair-trade arrangements, providing material support for small local factories and establishing long-term contracts within supply chains may help prevent slavery. Of course, these measures go beyond the typical reporting arrangements currently implemented by global companies.

When, and only when, all of these measures are in place, we may be able to develop some capacity to fight modern slavery at the lower end of the supply chain.