The UK Modern Slavery Act 2015 requires approximately 19,000 companies to report on the steps they have to take to prevent slavery in their supply chains and businesses. This takes the form of a modern slavery statement.
The UK Government has established a test to determine which organisations are required to publish a statement. You are required to make a statement if your company:
- is a "commercial organisation";
- carries on a business or part of a business in the UK;
- supplies goods or services;
- has as annual turnover (including any subsidiary income) of not less than £36m.
This short guide has been put together to help organisations develop and publish a meaningful modern slavery statement which is aligned with recommendations provided by the UK Government.
Things to know before you start...
- The modern slavery statement is a public confirmation of your company’s commitment to ensuring that there is no modern slavery in its operations and supply chain. Legally, it must be authorised by the company’s board and signed by a director or equivalent. It’s an important statement and senior leadership should be engaged in drafting it and approving it.
- You must publish your modern slavery statement on your organisation’s website(s). A link to the statement must be published in a prominent place on the homepage.
- Don’t make claims in your statement that can’t be substantiated. Don’t assert that the company’s supply chain is low risk unless you have undertaken sufficient due diligence of your supply chain and the results evidence this.
- Draw on external, third party expertise to provide fresh and independent perspective and scrutiny of your supply chain and operations. Enhance the quality of your modern slavery statement by describing such analysis within the statement.
- You should aim to describe your planned objectives and tasks to address modern slavery risks in your statement as well as provide an update on any progress you have made in the last year.
- Slavery is pervasive. While the world’s leaders have set a goal of eliminating modern slavery (Sustainable Development Goal 8.7) it will likely take many years to see this accomplished. Every organisation in the meantime needs to do its bit. Undertaking regular human rights due diligence of your company’s operations and supply chain can have a significant impact in helping to eliminate modern slavery abuses. Preparing your statement is important, but it’s what your organisation is actually doing to minimise modern slavery risk that matters the most.
Your modern slavery statement
We describe below the key parts of a typical modern slavery statement — and give helpful pointers for making sure what you publish both complies with UK law and is meaningful.
Part 1: introducing your statement
Set out the commitments your board has made in relation to eliminating slavery from its operations and supply chain. If your board has been explicit, set this out in your statement e.g. “we are committed to ensuring that no practices of human trafficking or modern slavery exist in any part of our business or supply chain.” But only make commitments if you have the processes in place to deliver them.
If the modern slavery statement is being published to meet regulatory requirements, list the relevant law(s). These may include: the UK Modern Slavery Act; the Australian Modern Slavery Act; the New South Wales Modern Slavery Act; and/ or the California Transparency in Supply Chains Act.
State the date of publication and the financial year which the statement addresses
Part 2: set out details about your company’s structure, business and supply chain
Introduce your company and the subsidiaries covered by the modern slavery statement. You should cover all subsidiary companies that meet the UK Government’s test (see above). If you have a subsidiary that has prepared its own statement, then reference this. Alternatively, if you are a subsidiary company preparing your own statement, say so. It is important to be clear: identify your businesses and the geographies where they operate.
Summarise the depth of your supply chain. Your supply chain includes your direct suppliers (‘tier 1’), their suppliers (‘tier 2’), their suppliers’ suppliers (‘tier 3’), and so on. Complexity and opaqueness will increase as you assess operations beyond your direct suppliers however as modern slavery risk is often higher in the lower tiers of your supply chain, you should try and cover as many levels as practicable.
Acknowledge the extent to which you know your supply chain. If, for example, you only really understand who your tier 1 suppliers are, state this. Undertaking proper due diligence (see below) will allow you to better understand the full extent of your supply chain. If you are planning due diligence in the year ahead acknowledge this here and consider providing sensible goals (for example; “in 2019/20 we will conduct due diligence and aim to identify all our tier 2 suppliers”).
You should be able to identify the number of suppliers, provide a summary of the goods and services procured and state where (geographically) your supply chain extends. Remember that your supply chain includes goods and services core to your business as well as ‘auxiliary’ goods and services (stationary and cleaning, for example).
Part 3: describe your policies in relation to slavery and human trafficking
List any policy commitments you have made in relation to eliminating slavery from your operations and supply chains.
Identify if you are a member of an association related to modern slavery or aligned with any third party codes of conduct. For instance, if your organisation is a signatory to the UN Global Compact this fact should be acknowledged here.
List the policies which contain processes to address modern slavery, summarise how they address modern slavery and detail which groups (employees, suppliers etc) are subject to them (if it’s not apparent from the policy title).
Consider reviewing the following policies to establish whether they adequately address modern slavery risk and support your organisation’s posture:
- employee code of conduct;
- recruitment and employment policies;
- supplier code of conduct; and
- procurement due diligence process (see below).
If in doubt check with your human resources, procurement and legal departments.
Key policies should always be authorised and sponsored by senior management and/or directors and if this is the case with your company’s modern slavery policies, acknowledge this fact.
Remember, commitments are meaningless without processes to implement them. It is, for example, superficial to state that “we do not tolerate modern slavery in our supply chains” unless you have a due diligence process in place to enforce this claim. And processes in turn are meaningless unless implemented.
Part 4: describe your due diligence processes in relation to slavery and human trafficking risk in your business and supply chains
You cannot address modern slavery risk properly without conducting a reasonable level of due diligence. Modern slavery due diligence should be based on the process of human rights due diligence detailed in the UN Guiding Principles on Business and Human Rights (‘UNGPs’). The UNGPs identify four key stages of the due diligence process and we provide guidance on how companies can report against each of them below.
UN Guiding Principles
4 key stages of due diligence
- Assess
Explain how you are assessing modern slavery risk in your operations and supply chain. There are many approaches you can take to assess modern slavery risk. Whichever approach you do take, engage in an assessment process that considers risk to people first.
Your objective should be to identify your highest risk areas so you can focus your due diligence efforts sensibly. The UNGPs describe this approach as prioritization.
If you are able, give a brief summary of any metrics or outcomes from your assessment activities. An example of this might be: “we identified 100 suppliers from our 10,000 direct suppliers (1%) as having higher modern slavery risk and we prioritized these for enhanced risk assessment”. Acknowledge if you supported your due diligence activities with audits or other forms of onsite assessment. - Integrate and Act
Summarise how you have addressed any identified modern slavery risk. Explain how you have integrated your due diligence processes into your wider management systems. - Track
See Part 6 below. - Communicate
As far as possible, communicate with all your relevant stakeholders, including the workers in your supply chain. It’s useful to summarise the communication you have made pertaining to modern slavery, for example, communication related to workshops you may have run or updates made to policies and codes of conduct. Remember, your modern slavery statement itself is an important communication so needs to reflect a true picture of your company’s efforts.
Part 5: explain the parts of the business and supply chain where there is a higher risk of modern slavery taking place, and the steps taken to assess and manage that risk
Set out and explain any areas in your operations or supply chain where you have identified higher risk. Risk may be higher because of geography or industry sector, or because of the mode of employment; for example, there could be higher risk in part of the business where there is a reliance on foreign migrant workers as these people can be particularly exposed to modern slavery risk.
Be mindful of privacy and defamation laws when identifying specific modern slavery risk areas or incidents.
Set out clearly how your company has addressed your risks and describe the controls in place to provide continual monitoring and management of them.
You may have been unable to identify any areas of higher risk in your operations or supply chain. The most effective way to assess modern slavery risk is to engage in modern slavery due diligence. If you have not adopted formal due diligence processes and are unsure of the level of modern slavery risk in your organisation, better to state this together with a commitment to undertake due diligence in the year ahead.
One last but important reminder. Be careful not to make assertions relating to low modern slavery risk that are not based on the results of reasonable due diligence.
Part 6: provide assurance of your effectiveness in ensuring that modern slavery is not taking place in your business or supply chain, measured against the appropriate performance indicators
Providing meaningful indicators that support any assurance you provide can be challenging. You should identify ‘key performance indicators’ (KPIs) or ‘key risk indicators’ (KRIs) that are relevant to modern slavery risk prevention and can track this over time.
Examples of effective KPIs/KRIs that can be used to manage slavery risk include:
- %percentage of tier 1 (and tier 2, tier 3 etc) suppliers assessed for modern slavery risk;
- %percentage of direct (tier 1) suppliers subject to enhanced risk assessment;
- %percentage of total cost of suppliers identified as higher risk to total supplier costs for year;
- number of incidents related to modern slavery identified;
- number of speak-up incidents related to modern slavery reported; and
- number of incidents related to modern slavery addressed.
Part 7: describe the training resources available to staff, suppliers and other relevant third parties, to address modern slavery
Confirm if your staff are being trained on modern slavery or if plans are in progress to train staff in the coming year. State if training is restricted to specific departments, for example procurement and HR functions. Provide a brief summary of the format of the training (in-person, CBT (computer based training etc) and say when and how often it is delivered (at staff induction, following promotion etc).
Staff should be re-trained on a regular basis and this fact, and the frequency of retraining, should be noted in your modern slavery statement.
You should also keep a record of the individuals trained. Consider reporting on the number and/or percentage of staff trained. If staff are tested consider tracking and reporting on any improvement in the results.
The UK Modern Slavery Act only requests that companies report on staff training. Some companies train their suppliers as well. If your training programme is extended to suppliers include this fact.
Part 8: Board approval and director’s signature
Section 54 of the UK Modern Slavery Act requires that the modern slavery statement be approved by the reporting company’s board of directors (if the organisation is a body corporate; alternative arrangements are specified for partnerships). The statement should therefore confirm that it has been duly authorised.
The Modern Slavery Act also requires that the statement is signed by a director of the reporting company (in the case of body corporates; alternative arrangements are specified for partnerships).
If you require help or advice with modern slavery due diligence in your organisation, please contact info@rightsdd.com.
