Celebrated as a landmark moment in preventing modern slavery by some, criticised for its insufficiencies by others, this year marks the fifth anniversary of the UK Modern Slavery Act.
As we have previously discussed, the Act has its shortcomings and has been somewhat limited in its impact on businesses activities in meeting reporting compliance and addressing supply chain risk. Furthermore, in the five years since its inception, the global legislative landscape has changed significantly, with more stringent reporting and due diligence laws being drafted across Europe, America and Australia.
In an effort to strengthen and future-proof the Modern Slavery Act’s transparency legislation, the government initiated a consultation process in 2019.
The consultation sought views on proposed changes to transparency in supply chains reporting, including:
• the areas statements must cover;
• potential features for the new government-run reporting service for modern slavery statements;
• a single reporting deadline;
• civil penalties;
• the extension of reporting to the public sector.
The full report can be accessed here.
How is the Modern Slavery Act set to change?
The government's response to the consultation sets out a roadmap for strengthening the Act moving forward, including the following key changes:
The areas that statements must cover will now be mandated under the law. Whereas there had previously been six areas that companies were advised to report on, these are set to become a mandatory compliance requirement. If organisations have taken no steps within an area, they will have to state this clearly in their statement.
A new government-run reporting service will be introduced. The Home Office is currently developing the new reporting site. All organisations will be encouraged to publish their statements on the new service (ahead of legislative change to mandate this) once it is launched.
A single reporting deadline is to be introduced. Organisations will report on the same twelve month period (April to March). Organisations will then have six months to prepare their statement in time for a single reporting deadline of 30 September.
More details will need to be included in statements. Modern slavery statements will have to state the date of board (or equivalent) approval and director (or equivalent) sign off. Furthermore, modern slavery statements produced on behalf of a group will be required to name all of the entities covered.
Changes to enforcement are being considered but have not yet been finalised. This could include the introduction of civil penalties and assigning a single enforcement body. Whilst the exact details have not yet been defined, it is clear that the government will focus on enforcement amid calls from compliant businesses for a more level playing field.
Public bodies (with a budget threshold of £36m or more) will also be required to produce a modern slavery statement for the first time.
What should businesses do to prepare?
Business and organisations will have to prepare for the new reporting deadline and make adjustments to information gathering and drafting process to ensure they can meet it. Regardless of the entity’s year end, statements will have to be prepared for the April to March period and published by September. Consideration will have to be given to how this could affect the process of putting a statement together.
The mandatory reporting criteria represents potentially the most significant change, bringing the UK Modern Slavery Act in line with Australia’s modern slavery reporting requirements and setting concrete requirements for statements. It will no longer be possible to demonstrate compliance simply by publishing a statement without thorough consideration of its content.
Until now, some businesses’ statements have fallen short of the reporting guidelines by not reporting on the criteria they have not sufficiently addressed. With the new mandatory reporting requirements, businesses will have to be transparent across all areas and state where they have taken no steps at all. It is therefore worth considering the reputational risk of disclosing publicly that the business is doing nothing in certain areas. Businesses can prepare by putting adequate training, risk management and due diligence processes in place to ensure that their approach to modern slavery can be properly evidenced.
The information included in statements will also have to be more comprehensive and include specific key performance indicators (KPIs). The purpose of KPIs is to measure and manage progress towards objectives relating to modern slavery. Businesses should devise their initial KPIs as soon as possible in order to monitor progress and demonstrate continuous improvement in their future statements.
We hosted a webinar on 13 October 2020 where participants heard from a range of experts, from civil society, regulators, the business community and academia, on what effective strategies we have seen in UK businesses and other sectors to address modern slavery.
As well as this we are offering an ‘Improving your modern slavery statement’ online master class on the 27 November 2020. The class will cover the next steps you need to take to demonstrate continuous improvement in line with government guidance, the level of detail to include, and what best practice looks like.
☛ Rory Oake is an intern at Ardea International