Katherine Steiner-Dicks reports on growing calls for major reforms to the UK’s Modern Slavery Act
Slavery is the greatest of humanity’s evils, yet it has permeated our daily lives, right down to the chopped spring onions in our salads and the tinned tomatoes in our children’s pasta sauces.
The UK broke new ground in 2015 when it brought in the Modern Slavery Act, requiring all large companies to report on whether they have modern slavery in their supply chains. But four years on, the Business & Human Rights Resource Centre (BHRRC), which has been monitoring the quality of Modern Slavery Act annual statements since its inception, finds that the act has “failed to deliver the transformational change” that many of us hoped for.
According to the BHRRC’s 2018 annual assessment of transparency statements by FTSE 100 companies, FTSE 100 & the UK Modern Slavery Act: From Disclosure to Action, the majority of statements continue to be vague or “generic”, omitting crucial details on how the company is working to stop cases of forced labour within its UK or international supply chains.
They cannot comply because the cheap labour conditions do not allow it
Despite genuine efforts by many companies to identify and mitigate risks, the UK supply chains of some of our largest retailers continue to be infiltrated by traffickers, the mafia and gangs, who take advantage of weak human rights due diligence and recruitment in second tier suppliers, according to Rachel Wilshaw, ethical trade manager for Oxfam in the UK.
She says there is no financial benefit for suppliers, producers or recruitment agencies to provide good practice. “They cannot comply because the cheap labour conditions do not allow it,” she said.
When Oxfam conducted a human rights impact assessment study into the processed tomato supply chain for Finnish supermarket SOK Group, it found appalling working and living conditions of tomato producers in Italy.
The assessment, which looked at how the group should address actual and potential human rights risks and was carried out over six months, found widespread low wages, excessive working hours, the risk of forced labour, and unsafe and unsanitary housing, with the vast majority of workers living in settlements that lack running water and electricity.
Closer to home, in July of this year, police broke up the UK’s largest modern slave ring, involving 400 Polish trafficked workers, after a four-year investigation. A separate investigation by the Sunday Times highlighted that some victims were employed by second-tier suppliers to major supermarket and building supply chains, including Tesco, Waitrose, Sainsbury’s, Asda, M&S, Homebase, Travis Perkins, Argos and Wickes.
Wilshaw said she and her colleagues were horrified at the news, which is just “the latest in a long line highlighting these systemic issues.”
We know that most global companies will have modern slavery somewhere in their supply chains
Ironically, Tesco and Sainsbury’s are placed first and second, respectively, in Oxfam’s Behind the Barcodes campaign-led 2019 Supermarket Scorecard of Europe’s 16 largest supermarkets on human rights. (See, ‘Even leading supermarkets are far from ending suffering in their supply chains’)
But their relatively low scores, at 38% and 27%, show how are far even the leaders have to go.
Wilshaw said tackling forced labour in the food sector could be strengthened with an extension of the Grocery Code Adjudicator’s remit beyond UK suppliers to suppliers in developing countries. Oxfam partner NGO Traidcraft is lobbying for this extension.
Patricia Carrier, programme manager at the Modern Slavery Registry, which is part of the Business & Human Rights Resource Centre in London, said: “Given the prevalence of modern slavery in global supply chains, we know that most global companies will have it somewhere in their supply chains, very far down where they don’t have much visibility or leverage.”
Carrier points to clothing retailer ASOS plc as having “one of the more meaningful modern slavery statements and a very clear description of its human rights due diligence strategy.”
Yet, ASOS has reported that only 42% of its product portfolio comes from brands that meet its requirements, which include publishing a Modern Slavery Statement and mapping supply chains to tier-one suppliers.
The Australian Modern Slavery Act has mandatory reporting criteria, and this might motivate the UK to revise Section 54
If the government places more stringent reporting standards on companies, this will likely result from the recently completed independent review of the Modern Slavery Act, said Carrier.
The final report from that review includes the recommendations, among others, that the six reporting criteria in Section 54 of the Modern Slavery Act be made mandatory, and that companies no longer be allowed to report they have taken “no steps” in the last financial year to address modern slavery risks.
“The UK sees itself as a leader on modern slavery legislation; the Australian Modern Slavery Act has mandatory reporting criteria, and this might motivate the UK to revise Section 54 so as to not fall behind the Australian legislation,” said Carrier.
One recommendation calls for companies to be required to consider the “entirety” of their supply chains in respect of modern slavery. Another says businesses should be required to have a named, designated board member accountable for the production of the modern slavery statement. If the board member failed to act where instances of slavery were found they could face disqualification under the Company Directors Disqualification Act 1986.
Another recommendation is for non-compliant companies to be ineligible to bid for public procurement contracts.
The independent review does not recommend that Section 54 be amended to require companies to undertake mandatory due diligence, but this is something that has been called for separately by many stakeholders, who say this will create a level playing field for all companies, not just the ones that stick their necks out and are transparent about potential human right violations creeping into their supply chain.
Companies should be required to carry out human rights and environmental due diligence
In April of this year a group of UK civil society organisations, including the Business & Human Rights Resource Centre, ShareAction, Global Witness, ClientEarth and CORE, called for the introduction of a mandatory human rights and environmental due diligence law in the UK that would cover all companies.
“Companies should be required to carry out human rights and environmental due diligence – that is, to identify, assess and mitigate the risks to all human rights and the environment posed by their activities,” said BHRRC’s Carrier.
In addition to providing increased protection for individuals and communities, workers, human rights defenders, and the environment, Carrier said, a mandatory human rights and environmental due diligence law would “create clarity and a level playing field for companies. It would give consumers the confidence that human rights abuses and environmental damage aren’t part of the price tag for products.”
Colleen Theron, director of UK-based human rights business consultancy Ardea International, agrees with mandatory due diligence and also the introduction of penalties to enforce non-compliance.
“Whilst the UK Modern Slavery Act has raised some high-level awareness of modern slavery risk, the lack of enforcement penalties has led to low levels of compliance and a lack of true buy-in by senior leadership,” she said in an interview.
In February, an Environmental Audit Committee report into the fashion industry called on the government to update company law to require modern slavery disclosure or face fines, noting that retailers including Foot Locker and Versace are failing to comply with the Modern Slavery Act.
In terms of accountability, it is important to look at just not what is in the Modern Slavery Act
Marilyn Croser, director of UK civil society coalition CORE, said in a recent blog that while the government considers its response to the Modern Slavery Act review “advocates should use this [time] to argue that while the transparency requirements can be strengthened, for the UK to remain a leader, it must go beyond reporting and begin the process of introducing mandatory human rights and environmental due diligence.”
Meanwhile, legal experts believe that companies’ Modern Slavery Act statements are likely to be tested in the courts.
“In terms of accountability, it is important to look at just not what is in the Modern Slavery Act because once a statement is put into the public domain, and it is published, it exists in a legal vacuum,” Peter Hood, a legal consultant at the London offices of Hogan Lovells, told Ethical Corporation.
“I think there is scope for companies to be held legally accountable [in the English courts] for something for which they say in a modern slavery statement, according to negligence, for example,” said Hood.
In April 2019, the Supreme Court in Vedanta Resources Plc v Lungowe determined that a UK-domiciled parent company may owe a duty of care to third parties affected by operations of its Zambian copper mine subsidiary. Vedanta is the holding company of KCM, which is the owner-operator of the Nchanga copper mine.
A client alert paper by White & Case LLP said: “In light of this potential widening of the scope of circumstances when a duty of care may be imposed on a UK-domiciled parent company, multinational companies may want to evaluate their current corporate structure, policies and procedures.”
When the long arm of the law starts to tap on the shoulders of senior executives, we will start to see transformative change
Cindy Berman, head of modern slavery strategy at the Ethical Trading Initiative, said in a recent blog that getting serious about modern slavery means being honest about the complexity of the problem. “If anyone said they have the solution – a new toolkit, an app, a certificate, a consultancy or NGO that is taking care of the problem – they’re missing the point. There is no one simple solution,” she said.
When the long arm of the law starts to tap on the shoulders of senior executives whose companies are found to be non-compliant in their Modern Slavery Act statements and supply chain human rights obligations, we will start to see transformative change. Then the biggest cost will come from not doing the right thing.
Tony’s Chocolonely leads Dutch campaign to end child labour
For Dutch cocoa and chocolate company Tony’s Chocolonely, making money is just a means to reach its mission of 100% slave-free chocolate.
Ben Greensmith, UK country manager for the company, says the strategy “has proven very successful for us. We’ve grown from zero to market leader in the Netherlands in 12 years and are now expanding rapidly internationally,” he says.
Bitter Sweets, a report last year by Tulane University and the Walk Free Foundation on child labour in the cocoa industry in Côte d'Ivoire and Ghana, found limited evidence of children being forced to work by someone outside their family in those countries, which produce 60% of the world’s cocoa. The report identified poverty instead as the root cause: with the vast majority of farmers not being paid a living wage, they cannot afford to hire adult workers.
Farmers that supply Tony Chocolonely’s cocoa are members of its partner co-operatives Kapatchiva, Ecojad, ECAM and Socoopacdi in Côte d'Ivoire, and ABOCFA in Ghana. Tony’s impact team regularly travels to Ghana and Côte d'Ivoire to visit the partner co-operatives and attend their annual general meetings.
The company’s mission is to 'make 100% slave-free chocolate the norm', not just in Tony’s supply chain, but the entire chocolate industry
The company’s five sourcing principles include being able to trace the cocoa beans and payment of a higher price, even above the Fair Trade premium, to enable workers to earn a living. The company also forms long-term commitments to cocoa workers, propagates strong farmer groups and finds ways to raise productivity and lessen dependency on cocoa.
Greensmith adds that his company’s mission is to “make 100% slave-free chocolate the norm”, not just in Tony’s supply chain, but the entire chocolate industry.
The company led an initiative to support the introduction of a Dutch child labour due diligence law that was signed by 24 companies, including Barry Callebaut, Cargill Cocoa & Chocolate, Rabobank, ASN bank, Bavaria and Heineken.
The law, which came into effect in May, obliges Dutch companies to find out whether their goods have been produced using child labour and come up with a plan to prevent child labour in their supply chain if they find it. Businesses also have to submit a statement describing their due diligence efforts to the government.
Katharine Steiner-Dicks is founder and editor of Buzzvestor Media.
This article is part of the in-depth Human Rights briefing. See also:
‘Even leading supermarkets are far from ending human rights abuses in their supply chains’
‘The risk of worker exploitation is as high in Leicester as in Turkey or Bangladesh’
‘If Boris Johnson wants a global Britain he needs to get serious about ending modern slavery’
How Slavefreetrade is using blockchain to shine a light on the good guys
How AB Sugar is helping smallholder farmers in Africa secure land rights
'If there is to be a just low-carbon transition companies can't ignore their workers'
‘Do we need a Paris Agreement on social issues to get companies to take them seriously?’
ABN Amro gets to grips with salience in second human rights report
From Untouchables to plastic waste entrepreneurs
Investing in people: how brands are stepping up to the refugee crisis