The internet is awash with offers of advice, guidance and templates for Modern Slavery Act statements. Consequently, companies face a reporting dilemma. In the interests of transparency, how much should they disclose? How much will disclosure expose them to naming and shaming by the media and campaigning NGOs? And will they be damned if they do or damned if they don’t?
This is an important time for UK-based companies. As of 1st April – in compliance with the UK Modern Slavery Act 2015 – a first tranche will be legally required to report on the steps they are taking to ensure their supply chains are free from slavery.
Eventually, around 12,000 UK-based companies with a threshold of over £36 million annual turnover will need to produce a modern slavery statement every year to meet the requirements of the Modern Slavery Act.
High-street brands and retailers are wracked with dilemmas on how much to reveal publicly about the risks and actual incidence of forced labour in their supply chains. They’re telling ETI, “we’re damned if we do and damned if we don’t disclose”. And they worry about how NGOs, consumers, investors and unions amongst others, will view their reports.
First analyses of modern slavery reporting
It’s good to see that some companies are keen to show they are ahead of the game. At least 100 posted statements prior to the legal requirement to report. Disappointingly, most of these are wafer-thin on compliance with the law and appear to be largely PR exercises.
In the past couple of weeks we’ve seen the first analyses of modern slavery statements that companies voluntarily produced ahead of the legal requirement.
- The Business & Human Rights Resource Centre (BHRRC) has published 75 statements by companies on their website, which they jointly analysed with the NGO CORE coalition (comprising, amongst others, ETI members Anti-Slavery International, Cafod, FLEX, Traidcraft and Quaker Peace and Social Witness). They found that only 22 statements meet minimum legal requirements as set out in the Modern Slavery legislation and just nine reported on all six criteria in the statutory guidance.
- Ergon Associates has also produced a very helpful report analysing 100 modern slavery statements. But they too find that most do not go beyond setting out broad commitments and descriptions of their policies and procedures. Very few describe their risk assessments, and even fewer say what they will actually do if they find modern slavery. Nor do they describe how they will monitor the effectiveness of the actions they will take.
Nevertheless, this early wave of reporting and subsequent analysis is welcome. Both raise the level of debate and discussion on what a good modern slavery statement should look like.
Companies cannot get away with saying and doing as little as possible
Unfortunately, many companies’ legal advisors are telling CEOs to say as little as possible to manage their risk. Some are even trying to help companies find ways to avoid reporting on the basis of technicalities or possible loopholes in the law.
Our advice to such companies is to save the time, cost and energy they are expending on these efforts. It is not acceptable for a company to say and do as little as possible. Putting heads in the sand and hoping no-one will notice is not going to cut it in today’s world. It’s just a matter of time before the transparency machine finds and outs them.
And the transparency machine is alive and well.
We recognise that some less sophisticated campaigning NGOs are often media darlings because they love to name and shame companies albeit often with little in the way of sound remedial recommendations. They're masters of clicktivism. They organise consumer email petitions in support of campaigns, and consumers may genuinely believe that they've done their bit to save a trafficking victim that day. Or have helped lift a garment worker out of poverty.
We also recognise that while appalling conditions can undoubtedly exist in supply chains, and vigilance and remediation is always essential, such campaigns can, if not careful, do more harm than good. Workers are often left vulnerable and more at risk when known brands and retailers pull out of relationships with their suppliers. Those workers remain desperate for jobs, and are forced to find them elsewhere – at almost any cost to their own lives and safety.
But, the key point is that not all NGOs lack perception. Most can and do have a role to play. So what’s to be done?
Our 2015 study with the Ashridge Centre for Business and Sustainability found that over 70 per cent of companies believe slavery is likely to exist in their supply chain. Let’s start with that.
Once companies are more honest about what’s likely to exist, they can spend their energies on deciding what they can do about it. And those companies that are most serious about tackling the problem also know they cannot do this alone. They must engage with other companies as well as other stakeholders, including trade unions and NGOs, with their often strong local and community links.
Beyond compliance: effective reporting under the Modern Slavery Act
Sophisticated NGOs understand the complexity of modern supply chains and the difficult hidden nature of modern slavery, as the latest civil society guide for commercial organisations on the Transparency in Supply Chains (TISC) clause of the Modern Slavery Act shows.
The CORE Coalition’s “Beyond Compliance: Effective Reporting Under the Modern Slavery Act” argues that it is far better for companies to be honest and open about slavery. It recognises that uncovering and tackling the problem will take time and effort, and that the first statements are an initial step in a much longer journey.
Ultimately, the report argues, companies will be judged by how seriously they take modern slavery and how committed they are to tackling it systemically – dealing with the root causes, not the symptoms.
CORE recognises that the reporting requirement will be a challenge for companies, but as they write, “hiding the problem of slavery will do nothing to change the status quo. We believe that where risks do exist, consumers would prefer companies to be open about what they have found and set out what they are doing to end slavery …”
In ETI’s view, that’s the right approach.
We don’t consider that companies should feel compelled to reveal everything they know about the problems that exist or could exist.
But if companies can show us – with integrity, honesty and courage – that they are doing the analysis, mapping their supply chains, understanding where the biggest risks lie, and engaging with workers, trade unions and key stakeholders to address and remediate the likelihood of modern slavery, then we believe they should be rewarded, rather than exposed for their efforts.
ETI is also pleased to offer bespoke consultancy / advisory support for companies developing their Modern Slavery Statement. This is delivered by ETI in partnership with Anti Slavery International – known for its expertise in this area. Please contact Cindy Berman if this is of interest.