The United Kingdom Government has recently enacted legislation similar to California’s groundbreaking Transparency in Supply Chains Act to address the issues presented by modern day slavery and human trafficking.  All companies carrying on business in the UK are potentially affected by the Modern Slavery Act 2015 (the UK Act), which includes new requirements for businesses to publish a statement setting out the steps that they adopt to prevent slavery and human trafficking in their supply chains. 

The UK Government has indicated that these provisions will come into force in October 2015.  The California law, as we have noted, is already in effect, and the California Attorney General is undertaking an effort to encourage compliance and potentially to seek court orders requiring non-compliant businesses to comply with the law.

In addition to requiring businesses to disclose their anti-slavery efforts, the UK Act consolidates pre-existing offences of slavery and human trafficking and increases the maximum penalty for such offences up to life imprisonment for the most serious offences, with lesser reporting and compliance offences attracting sentences of up to 5 years imprisonment or an unlimited fine.  It establishes the office of the Independent Anti-slavery Commissioner, whose role is to prevent, detect, investigate and prosecute slavery and human trafficking offences as well as to identify the victims of those offences.

Companies or partnerships that carry on a business or part of a business in any part of the UK, supply goods or services in the UK, and have total annual turnover above the -- yet to be determined -- minimum threshold will be required to publish a statement.  The UK Government is currently consulting on the minimum threshold and will fix this via further regulations.  It seems likely that the focus will be on larger businesses, because these are best placed to influence conduct in their respective market sectors.

The slavery and human trafficking statement will need to cover the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business.  The statement must be published on the organisation’s website, similar to the California requirement.  Unlike the California law, however, the UK Act does not require that certain topics be covered in the statement but instead includes a non-exclusive list of topics that are similar to those that the California law specifies.

It seems likely that current disclosures under the California law will generally comply with the UK Act, but one key difference is that companies doing business in the UK must have their statements approved by their boards of directors.  This is intended to encourage discussions of corporate social responsibility programmes at the highest level, where other requirements like the US Securities and Exchange Commission’s conflicts minerals rule are already prompting a renewed focus not only strict compliance but also on governmental and public relations issues.