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Slavery Act will force firms to tighten up procedures

Modern slavery has become a major supply chain challenge for the UK construction sector at home and abroad.

With an estimated 38.5m people trapped in modern slavery globally (including slavery, servitude, forced and compulsory labour and human trafficking) and over 13,000 potential victims in the UK alone, the Modern Slavery Act 2015 has brought this complex crime into the spotlight.

For larger organisations, the MSA’s focus on supply chain transparency will have a direct impact as a result of new reporting requirements, while smaller downstream operators are also likely to come under pressure to ensure their own suppliers are compliant.             

Commencing October 2015, commercial organisations with a minimum turnover of £36m conducting business in the UK will be required to publish an annual ‘slavery and human trafficking statement’.

“Public scrutiny will provide the primary incentive for complying with reporting requirement”

This is a statement of the steps (if any) taken to ensure modern slavery is not taking place in the organisation’s business and supply chains.

Taking the right steps

A statement may include: information about the organisation’s policies on modern slavery; the modern slavery due diligence undertaken across its business and supply chains; the parts of its business and supply chains where there is risk of modern slavery taking place and what steps have been taken to assess and manage that risk; and the training on modern slavery available to staff.

The government is expected to publish guidance on the disclosure requirement for businesses in October 2015.

Public scrutiny will provide the primary incentive for complying with reporting requirements.

Negative attention from shareholders, trade unions and civil society (NGOs, human rights groups, customers) is likely to prove an effective incentive, particularly if an organisation, sector or issue is already in focus (such as with the mistreatment of construction workers in Qatar ahead of the World Cup).

“Businesses should take appropriate and proportionate action to tackle modern slavery”

Name and shame

California has similar legislation in effect and dedicated NGOs, such as KnowTheChain, are already engaged in ‘public shaming’ exercises, publishing details on their website of companies non-compliant with reporting requirements under the state’s regime.

The London-based Business and Human Rights Resource Centre has also been active in this space and is likely to turn its attention to UK businesses who fail to comply with reporting requirements.   

There will undoubtedly be significant differences in the approaches organisations in the construction sector take to supply chain due diligence, management and reporting.

There are key regional risks - for example in the Middle East where labour practices for migrant construction workers have been historically poor - which should act as catalysts for enhanced due diligence.

Clear procurement policies, contractual protections in supply contracts, clear labour policies and consistent messaging throughout the supply chain will all be important.

Whatever approach organisations choose to adopt, the message from government is clear: businesses should take appropriate and proportionate action to tackle modern slavery.

Brett Hartley is a senior associate at Clyde & Co

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