Learning from modern slavery statements

With more than 2,100 modern slavery statements online, we should now have a good idea about how companies are interpreting their reporting obligations under the UK’s Modern Slavery Act, writes guest blogger, Stuart Bell of Ergon Associates.

ETI's new Base Code Guidance: Modern slavery - practical guidance for brands and retailers.

How useful are modern slavery statements and do we know any more about the prevalence of modern slavery and what companies are doing to combat it? Ergon sampled 150 statements published in March this year to assess their content. We also compared them to a similar sample from a year earlier to see whether statements had ‘improved’.

The good news is that none of the reports analysed had taken the minimalist but legally-compliant route of simply stating that it has taken no steps to address slavery and human trafficking. More substantively, our research shows statements are getting more detailed – and longer – than a year ago. In particular, information on company structure, supply chains, modern slavery policies and training is more extensive.

However, there is generally a big gap between a handful of larger, consumer-facing companies (often ETI members) that are starting to report in some detail on both their processes and the real risks they face, and a long tail of others that provide only cursory and superficial statements.

Amongst the leadership group, some companies demonstrating that the Modern Slavery Act’s requirements are driving deeper and broader risk assessments that are reaching parts of their business previously untouched. For example, John Lewis reports on risk assessment work on its raw materials supply chains, while ASOS report that their supply chain mapping will go as far as tier 5 suppliers. Marks & Spencer describe that they have reviewed risks in their retail operations, property portfolio, logistics, HR, and IT, as well as product supply chains.

Other companies, such as Bettys & Taylors, provide detail on how they go about risk assessing suppliers in terms of the information sources and methodology used. We have previously commented that many companies have been reticent to identify actual risks for fear of adverse publicity. But we are now starting to see the identification of risk geographies (Co-op), and priority issues. For example, Tesco, clearly separates risk in its supply chains from risks in its own business and, for the latter, calls out construction workers building stores, agency labour in distribution and logistics, security and cleaning staff, as well as car wash workers. This recognition of risks in contracting supply chains is a real gap in most reports.

However, in most cases, there is scope for broader thinking about due diligence and greater levels of openness in reporting. We need to see how companies are identifying and prioritising risks, and that they are not simply relying on audit programmes that we know are not good at finding hidden problems such as human trafficking. But as well as thinking more deeply about modern slavery, there is a big opportunity for businesses to use it as an entry point to the wider human rights agenda. Several companies, such as Marks & Spencer and John Lewis, are producing more integrated modern slavery and human rights reports.

As risk assessments get more embedded in company processes, the hope is that we should also start to see more in way of remediation – actual actions taken to address instances of modern slavery, whether this is direct compensation for affected workers, changes in operational procedures, sourcing strategies or business relationships to reduce risk to workers. 

From that we see in our professional advisory and consulting practice, we are hopeful that some businesses are starting to see the benefit of thinking seriously about modern slavery in order to better understand their operations and supply chains, as well as to provide better safeguards for vulnerable workers. In terms of reporting and action, the rest need to start learning from the best.

This blog is a reprise of a talk given by Stuart at our Ethical Insights Breakfast Briefing on Modern Slavery Statements One Year On. Ethical Insights briefings occur monthly and focus on a wide range of topics. They offer an informal, open space to air challenges, share ideas and learn from one another. Subscribe to our mailing list and be kept up-to-date.