Navigating the challenges of complying with the UK Modern Slavery Act: A guide for businesses
The implementation of the UK Modern Slavery Act is a significant milestone in the country's commitment to ethical business practices. This legislation not only mandates transparency in supply chains but also holds companies accountable for their actions. While the UK was an early adopter of anti-slavery and human trafficking legislation, it's far from the only jurisdiction where this type of regulation exists, which serves as a clear indication that governments are taking supply chain due diligence seriously and proactively promoting ethical supply chains.
The good news is that many organizations are taking this ethical imperative seriously and adopting robust policies and procedures to combat the scourge of modern slavery issues across the globe. A key requirement of the UK Modern Slavery Act is to publish a modern slavery statement, which outlines information about a company's anti-slavery efforts. To help you better understand this legislation and its requirements, we discuss the following topics:
- What the UK Modern Slavery Act is and its impact on businesses
- The challenges of complying with the UK Modern Slavery Act
- Key considerations for complying with the Act
- How technology can aid in complying with the UK Modern Slavery Act and other similar legislation
What is the UK Modern Slavery Act, and what implications does it have for businesses?
The UK Modern Slavery Act, enacted in 2015, requires businesses operating in the UK with an annual turnover of £36 million or more to publish an annual statement outlining the steps they have taken to ensure that slavery and human trafficking are not present in their supply chains or business operations.
Under the Act, businesses must pay special attention to the implementation of Section 54, also known as the Transparency in Supply Chains (TISC) provision. This provision requires qualifying organizations to publish an annual statement detailing the actions they have taken to ensure that slavery and human trafficking are not occurring in any part of their business or supply chains.
The statement should include information about the organization's structure, policies, due diligence processes, risk assessments and training programs related to modern slavery. It should also highlight the steps taken to monitor and evaluate the effectiveness of these measures.
While there are currently no monetary penalties for businesses not in compliance with the UK Modern Slavery Act, businesses are subject to reputational damage should they not properly address the ethical practices associated with preventing modern slavery and human trafficking. Organizations should remain vigilant, as reforms to the Act could be on the horizon, including stricter enforcement and penalties.
Who is required to comply with the UK Modern Slavery Act?
To determine if a commercial organization is required to publish an annual statement under the UK Modern Slavery Act, the following criteria must all apply:
- The organization has an annual turnover of £36 million or more
- The organization is a ‘body corporate’ or a partnership, regardless of where it is incorporated or formed
- The organization conducts business, or a portion of its business, within the UK
- The organization supplies goods or services
More information regarding these requirements can be found on the UK government's website.
Challenges of complying with the Act
Complying with the UK Modern Slavery Act presents several challenges for businesses, the most significant being the complexity of supply chains and the lack of visibility. Many companies have intricate, global supply chains, making it difficult to trace and monitor every tier of their supply network. This complexity hinders the identification and assessment of modern slavery risks across multiple suppliers and geographies. Additionally, limited visibility into lower-tier suppliers and subcontractors further complicates efforts to identify and address modern slavery risks. Obtaining accurate and up-to-date information about suppliers' practices and labor conditions becomes challenging, especially in industries with opaque supply chains.
Complying with the Act requires dedicating resources to conducting due diligence, audits and risk assessments. Businesses may struggle to allocate the necessary time, expertise and budget to address modern slavery risks effectively. Gathering and managing data related to supply chain practices, labor conditions and supplier compliance can be complex. Businesses need robust systems and processes to collect, analyze and store relevant information, ensuring accuracy and accessibility for reporting purposes.
With compliance requirements and expectations surrounding modern slavery continuously evolving, keeping pace with changing legislation can be daunting. Businesses must stay up to date with changes in legislation, guidelines and best practices, which can be demanding. Adapting compliance measures according to these reforms becomes necessary to ensure ongoing adherence to the Act.
These challenges require businesses to invest in strategies and resources to overcome them. Applying a set of best practices can help organizations enhance their ability to comply with the UK Modern Slavery Act.
Key considerations for UK Modern Slavery Act compliance
To overcome the various challenges of complying with the UK Modern Slavery Act, organizations must go beyond mere tick-box exercises. They are expected to demonstrate a genuine commitment to eradicating modern slavery by taking proactive steps. Here are a number of steps that companies should consider:
- Establish a clear policy to combat modern slavery: Create a clear and concise policy statement that demonstrates your commitment to eradicating modern slavery. This policy should outline your company's stance on the issue and the actions you will take to prevent and address any instances of modern slavery.
- Conduct a global risk assessment: Conduct a comprehensive risk assessment to identify any potential risks of modern slavery within your business operations and supply chains. This will help you understand the areas that require immediate attention.
- Implement due diligence procedures:Establish effective due diligence processes to identify, prevent and mitigate modern slavery risks in your supply chain. This involves conducting regular audits, engaging with suppliers and assessing their compliance with anti-slavery measures.
- Monitor and evaluate your program: Regularly monitor and evaluate the effectiveness of your anti-slavery measures. Review your policies, procedures and supplier compliance to identify areas for improvement and ensure ongoing compliance.
- Employee education: Educate your employees on the risks of modern slavery, detection methods and reporting procedures. By raising awareness and promoting vigilance, you can ensure that everyone within your organization plays a role in combating modern slavery.
- Promote collaboration with relevant stakeholders: Engage with relevant stakeholders, such as NGOs, industry associations and government bodies. By sharing best practices and collaborating with others, you can collectively work towards creating a more impactful program.
- Continuous improvement: Regularly review and enhance your anti-slavery efforts. Stay updated on evolving legislation and industry standards to ensure that your compliance measures remain effective and aligned with the latest requirements.
As was stated earlier, complying with the UK Modern Slavery Act does come with challenges, but the most important step is to continually demonstrate your organization's commitment to eradicating modern slavery. The good news is that technology — specifically, robust, purpose-built GRC software — can help your business reach its compliance goals more efficiently.
Using technology to overcome compliance challenges and implement best practices
With the enactment of the UK Modern Slavery Act, along with other similar legislations such as the Uyghur Forced Labour Prevention Act in the United States, Australia's 2018 Modern Slavery Act and the German Supply Chain Act, businesses are now compelled to prioritize due care in their supply chains. They must assess risks, implement remediation measures and provide comprehensive training to their employees. By doing so, companies comply with the law and contribute to fostering a fairer and more ethical business environment.
For many organizations, technology is crucial in mitigating supply chain risks and effectively meeting new compliance requirements. Centralized platforms, like Diligent One Platform, offer AI-powered monitoring, detailed audit trails and the ability to store third-party information in a single location. These capabilities enable businesses to proactively respond to current and future legislation, ensuring ethical practices and staying ahead of global supply chain regulations, including the UK Modern Slavery Act.
By leveraging technology and embracing responsible business practices, companies can navigate the complexities of supply chain compliance, protect against modern slavery risks and contribute to a more sustainable and ethical global business landscape.
