It’s been over 2 years since the government announced its proposals to make changes to the transparency in supply chain requirements under the Modern Slavery Act 2015, but it has now proposed the Modern Slavery Bill as part of the Queen’s speech. The purpose of the Bill is stated to be to strengthen the protection and support for victims of human trafficking and modern slavery and increase the accountability of companies and other organisations to drive out modern slavery from their supply chains.
Although the finer details of the Bill are yet to be specified, the announcement in the speech aligns with the government’s response to the July 2019 Consultation Paper.
The current position is that section 54 of the Act requires certain commercial organisations which supply goods and services to publish an annual modern slavery statement setting out “the steps that the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place either in its supply chains or in parts of its business, or a statement that the organisation has taken no such steps”.
Key features of the Modern Slavery Bill highlighted in the Queen’s speech include:
Extending section 54 of the Act to capture public bodies with a budget threshold of over £36 million
Whilst public sector bodies currently report on a voluntary basis the government proposes extending the mandatory reporting requirements to public bodies that have a budget threshold of £36 million or more. There is no detail in the announcement about the extension to the public sector, although this was covered in detail in the Consultation Paper. For more information on this read our previous law-now. Modern slavery: firms face tougher stance on transparency in supply chains (cms-lawnow.com)
Mandating inclusion in an organisation’s modern slavery statement details of:
- The structure and nature of the organisation;
- Internal policies in place regarding slavery and human trafficking;
- Due diligence processes currently in place;
- How particular areas of risk in the business and supply chains are identified and the steps that are taken to mitigate these risks;
- The organisation’s effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, which can be measured against any performance indicators as the organisation considers appropriate;
- The training and resources available to staff in the organisation regarding slavery and human trafficking.
Publishing a modern slavery statement to the government registry
Currently, statements published in accordance with the requirements of section 54 of the Modern Slavery Act are only required to be published on an organisation’s website with a link to the statement in a “prominent place”. The Bill as envisaged will make it mandatory for all businesses (including public bodies) that meet the section 54 requirements to publish their modern slavery statement to the specified government registry.
In March 2021, the government launched its online modern slavery statement registry and, whilst not currently mandatory, it encourages all organisations to publish their annual modern slavery statements on the registry. Since its launch, over 7,000 statements have been submitted covering over 23,350 organisations on a voluntary basis. See our previous law-now discussing the registry. Government takes first steps to tighten reporting requirements on modern slavery (cms-lawnow.com)
The introduction of civil penalties for organisations that do not comply with the requirements
This is a key change to the modern slavery statement regime, which has frequently been described as toothless. To date, monitoring of compliance and the quality of statements has been largely undertaken by not-for-profit organisations rather than the government with the key risk for organisations being reputational damage from the exposure of issues in their business and/or supply chain.
Whilst the Queen’s speech did not expressly refer to them it is anticipated that the Bill will also include the introduction of a single reporting deadline and a mandated format for board approval of a statement. Both of these proposals appeared in the government’s response to the consultation.
Whilst we still await further details on the timing of the Modern Slavery Bill the government has indicated its intention to take steps in this regard. As a result, organisations should carefully assess whether they are caught by the requirement to publish a modern slavery statement. Those that are should have the new requirements on their agenda for the upcoming year to ensure both compliance with the law and to continue their general focus on Environment, Social and Governance (ESG) issues.
Article co-authored by Alex Reading, Trainee Solicitor at CMS