A third of businesses fail to complete modern slavery statements

It is shocking to see that a third of businesses have failed to complete a modern slavery statement, despite being required to do so by law, according to the 2017 survey by the Chartered Institute of Procurement and Supply (CIPS).

The UK led the field in legislating to tackle the problem of modern slavery and the Act has certainly resulted in an increase in prosecutions, particularly for gangmasters trafficking labour.

It is disappointing, therefore, to see that such a high percentage of large organisations has failed to meet the minimum requirement of producing a modern slavery statement, suggesting that the absence of any real penalty for not publishing a statement is leading to significant non-compliance.

This is regrettable as the government’s own guidance on complying with the Act raised the bar and set high standards for assessing and preventing slavery. However, according to the CIPS survey, 37 per cent of supply chain managers affected by the Modern Slavery Act admitted they have not not read it.

Section 54 of the Modern Slavery Act “was designed give campaigners, consumers, investors and others the information they need to hold business to account and call for more action”. Placing the onus on civil society to hold businesses to account for any failure to comply allows companies to deprioritise compliance, perceiving that the penalties for non-compliance are low. It is not surprising therefore to learn that vital steps, such as mapping the supply chain to understand the risks and exposure to slavery, have only been completed by 45 per cent of businesses.

According to the CIPS report the industry acknowledges the need for further legislative pressure to compel them to take action. Less than half the supply managers under the Act’s remit think it goes far enough, with more than half calling for fines for businesses who fail to comply. This chimes with the views expressed at our business ethics debate on slavery in the supply chain where the majority felt that amendments will be necessary if the Act is to have an effect.

We know from our work that many businesses are complying with the Act by looking for ways to tackle the problem of slavery and have a meaningful impact. Compliance is higher among UK-based organisations, with 71 per cent completing statements compared to only 40 per cent of internationally-based businesses. Those that do comply should not be on the same playing field as those who do not.

While organisations who take meaningful steps to prevent slavery in their supply chains may avoid supply chain scandals, there should also be a business benefit from investing in effective measures to prevent such abuses.

Government can do this by linking compliance to public contracts. Baroness Young has sponsored a Private Members’ Bill in the House of Lords which, if passed in its current form, will amend Regulation 57 of the Public Contracts Regulations 2015 to prevent public bodies from using companies in a procurement process if they are required by law to prepare a slavery and human trafficking statement but have not done so.

Her Bill also amends Section 54 of the Modern Slavery Act to make the Government’s suggested content for slavery and human trafficking statements compulsory.

The result would be a legal requirement on all companies doing business with UK public bodies to report on modern slavery in a way that adheres to the UK Government’s standards of best practice.

This would be a positive step that the Government should seriously consider if it wants the Act to have a real impact without imposing fines. Loss of business, or potential business, can sometimes be more effective in changing behaviours than financial sanctions.