Eradicating slavery in the supply chain

While no business sets out to incorporate slavery into its operations, it would be a brave CEO who would say with certainty that there was no forced labour any where in the supply chain. The UK’s Modern Slavery Act is to be applauded therefore, for requiring British companies with a turnover of more than £36m (about 12,000 in the UK) to produce an annual statement to publish the steps taken to eradicate slavery in the supply chain.

While many businesses do monitor human rights in their supply chains, this will encourage more companies to take a responsible and proactive stance to tackle slavery. European businesses with over 500 employees will also be required to include an assessment of their human rights’ impact in their non-financial reporting which is becoming mandatory.

There are some fears that a loophole in the reporting clause means that overseas companies need not comply so that the wholly owned subsidiary of a British construction company operating in Qatar or Dubai, for example, would not need to include the supply chains of these subsidiaries in its reporting.

Loopholes or not, businesses should see anti-slavery reporting as an opportunity to demonstrate corporate responsibility, good governance and leadership.

Companies are already carrying out due diligence on their supply chains in order to be properly protected from corruption risks and to ensure the security of their IT systems. Adding checks for human trafficking and slavery should not be too burdensome.

Businesses should manage their human rights impact with a systematic approach and take steps to:

o   Undertake a company-wide human rights risk assessment to map out possible areas of exposure

o   Conduct human rights impact assessments regularly in high-risk countries

o   Produce a publically available policy on human rights, approved by the Board

o   Ensure that human rights are regularly considered at Board level with overall responsibility delegated at director level

o   Design appropriate procedures and controls to remove any human rights abuses from the company’s operations

o   Develop a monitoring system to assess the impact of the company’s operations on human rights

o   Develop a measurement methodology to assess the company’s performance in managing its human rights impact responsible

o   Produce reporting frameworks for the UK’s Modern Slavery Act reporting and the EU Non-Financial Reporting Directive.

GoodCorporation’s Human Rights Framework provides a checklist of responsible practices that will assist with the human rights reporting. It can also be used to measure human rights impact and to improve policies, procedures and controls. Contact us for advice or information.

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