British companies are to be forced to publish evidence on their websites that their operations are not reliant on international slavery, under legislation aimed at exposing details of supply chains to public scrutiny.
The government hopes the information will allow shoppers to make “more informed decisions at the checkout”. Under the new rules, which come into force on Thursday, large UK-based firms will release information showing they are taking steps to ensure none of the businesses with which they trade use slave labour.
Guidance will be published on Thursday explaining what information businesses need to provide consumers with to show that they are certain there is no use of forced labour anywhere in their supply chains.
The initiative is designed to force companies that subcontract work or buy in products from other producers to take responsibility for every step of the process.
The legislation comes after a number of scandals involving multinational corporations purchasing products made with the use of forced labour. In 2014, it emerged that high-profile companies such as Tesco and Walmart had sourced prawns from a Thailand-based company that was buying fishmeal – to feed to its farmed prawns – from some suppliers operating fishing boats manned by slaves.
The Modern Slavery Act, passed earlier this year, included a section on transparency in supply chains. Companies with a turnover of more than £36m and a presence in the UK will need to publish a prominent statement on their website detailing what steps they have taken to ensure there is no slavery or trafficking within their own organisations or supply chains.
If no such steps have been taken, they must openly acknowledge in a similar statement that they have failed to deal with possible risks.
The International Labour Organisation estimates that almost 21 million people are currently working in some form of forced labour – in agriculture, construction, domestic labour and manufacturing.
About 17,000 UK businesses will have to publish these statements before the end of their financial year. Officials hope organisations campaigning against modern slavery will monitor the statements and name companies that are not taking any action.
Karen Bradley, the Home Office minister for preventing abuse and exploitation, said: “The government has introduced harsher penalties, and better protections for victims in the landmark Modern Slavery Act. The act will mean that major businesses will, for the first time, be expected to be transparent about the action they are taking to address modern slavery in their global supply chains.
“Consumers, businesses and investors will now have valuable information to inform them on the companies they are supporting – and shoppers can make more informed decisions at the checkout. Businesses risk damaging their reputation, or their bottom line, if they don’t take action to prevent modern slavery in their supply chains.”
Law firms are already providing advice to companies on how to draw up statements. Paul Henty, of Charles Russell Speechlys, said: “Morally and commercially, no business operating in the UK can afford to ignore the Modern Slavery Act and the reporting requirements coming into force.
“If they are unable to convincingly outline the steps they are taking to prevent modern slavery in their operations, companies risk hostile media attention and the potential for high street boycotts. Smaller UK businesses must also take note as they may face greater scrutiny from the businesses they supply.”
The UK is the first country in the world to introduce a requirement for transparency in supply chains, although similar legislation was introduced in California in 2012.
Cindy Berman, from the Ethical Trading Initiative, said the move provides an important tool for customers.
“Consumers will be able to judge companies not just on their words, but on their actions,” she said. “They can monitor whether companies are making year-on-year progress in addressing this issue, and hold to account those that are lagging behind. Companies that fail to comply with the provision, or say they are taking no steps, risk damaging their reputation and credibility with customers.”
Some organisations hope the legislation will eventually be accompanied by greater labour inspection throughout the supply chain.
Caroline Robinson, the policy director at Focus on Labour Exploitation, said: “We welcome the introduction of supply chain disclosure requirements in the Modern Slavery Act. However, it is an uphill struggle for companies to achieve full transparency for modern slavery without government support. To ensure supply chain transparency and to assist companies in meeting their requirements, the UK needs a comprehensive labour inspection system to prevent and combat modern slavery.”
(Published by The Guardian - October 28, 2015)