Modern Slavery (Transparency in Supply Chains) Bill 2017 (the "Bill")
The Bill seeks to amend the Modern Slavery Act 2015 (the "Act") to make further provision for transparency in supply chains in respect of slavery and human trafficking.
If the Bill is enacted, the key change of relevance to commercial organisations is the proposed amendment to Section 54 of the Act to make provision that:
i) subsection 5 of Section 54 be changed from providing an example of what might be included in the content of a Transparency Statement to being mandatory;
ii) if an organisation makes a Transparency Statement stating it has taken no steps to eradicate slavery and human trafficking from its supply chain and business, it must explain its reasons;
iii) public authorities will be required to make Transparency Statements, in addition to commercial organisations; and
iv) the Secretary of State must publish a list of all commercial organisations that are required to publish a Transparency Statement, in a place and format that is easily accessible.
It is also proposed that Regulation 57 of the Public Contracts Regulations 2015 be amended so that a bidder who has to comply with the Act will be prevented from participating in a public procurement procedure unless it has complied with the obligation to publish a Transparency Statement.
Further Comment on the adequacy of Transparency Statements
Now that the obligation to publish a slavery and human trafficking transparency notice on an annual basis has been effective for over a year, and some reports state that in excess of 30,000 Transparency Statements have already been published, it makes sense to take stock of public reaction in case there are any common themes that can offer guidance for next year's statements.
The two principal watchdogs in the UK when it comes to slavery matters are CORE and the Business & Human Rights Resource Centre. Both have made comment following a sampling of a number of the earlier published transparency statements. The Business & Human Rights Resource Centre has created a central registry of statements which it says will allow comparison and benchmarking of policies and practice.
The commentary issued by CORE and the Business & Human Rights Resource Centre notes that, while a number of companies have not complied with the requirement to publish a statement, there is a significant and widespread failure for the published statements to comply with the requirements of the Act in terms of publication on companies' home pages, approval by boards and signature by directors and senior officers. The CORE report in June 2017 commented that of the 2108 statements that had been uplifted to the Business & Human Rights Resource Centre's registry only 14% complied with the legal requirements of the Act. Also noted was a number of statements that did not cover the recommended scope of information outlined in Subsection 5 of Section 54 of the Act (see above for anticipated change stemming from the Modern Slavery (Transparency in Supply Chains) Bill 2017).
So what does all this mean?
Most importantly we need to pay attention to the recommended elements for a Transparency Statement that are likely to become mandatory. If the Bill is enacted as it is currently constituted, next year's statements will have to include information about:
- The organisation's structure, its business and its supply chains;
- The policies in relation to slavery and human trafficking;
- The due diligence processes in place in relation to slavery and human trafficking in the business and supply chain;
- The parts of the business and supply chains where there is a risk of slavery and human trafficking taking place and the steps taken to assess and manage that risk;
- The effectiveness in ensuring that slavery and human trafficking is not taking place in the business or supply chains, measured against such performance indicators as are considered appropriate; and
- The training about slavery and human trafficking available to staff.
Without wishing to belittle the effort needed to address matters such as due diligence in the business and supply chain, complying with the requirements of the Act when it comes to the form and content of a Transparency Statement should not be a complex matter. With the experience of preparing the first statements under the belt the task of preparing the second report should be more familiar territory and the opportunity beckons to show progression from the state of play depicted in the first statement.
It is clear that there is someone out there with a critical eye monitoring published transparency statements. The opportunity for public naming and shaming remains. The joint CORE and the Business & Human Rights Resource Centre report of June named companies in its examples of weak and notable practice and it can be anticipated that they will continue to do so in further reports.
There is no proposal in the Bill to adjust the sanctions for non-compliance with Section 54 of the Act and so the method of formal enforcement remains as the Secretary of State applying for an injunction which continues to be an unlikely course of action. The threat of adverse publicity remains the key consequence. The position proposed in the Bill for an amendment to Regulation 57 of the Public Contracts Regulations 2015 promises some teeth for those engaged in public contracting and the passage of the Bill will need to be monitored by those likely to be affected.