Governance Perspectives The UK’s approach to modern slavery

The Committee is conducting an inquiry into forced labour in UK supply chains.

Speaking alongside me were Scott Steedman CBE, Director-General at British Standards Institution, and Craig Melson, Associate Director at techUK.

Forced labour remains a major global problem. It is estimated that 27.6 million people globally are subject to forced labour, including 3.3 million children.

According to the UK’s independent Anti-Slavery Commissioner, there is evidence that goods made using forced labour are available to buy in the UK, meaning business practices that violate human rights may be making profits from UK consumers.

The UK’s response to labour exploitation in international supply chains is largely governed by the Modern Slavery Act 2015. This requires companies with a turnover in excess of £36m to publish a modern slavery statement detailing the measures that they are taking to combat forced labour.

There was general agreement among the discussants that, although the Modern Slavery Act was a pioneering piece of legislation a decade ago, its limitations are becoming ever more apparent.

For example, there is very little enforcement activity in respect of modern slavery statements. Those that are published are highly variable in quality, and largely seen as tick box exercises.

Most importantly, the Act does not establish a requirement to conduct meaningful due diligence of supply chains or do something about any problems that are identified.

This sits in contrast to the EU’s new Corporate Sustainability Due Diligence Directive (CSDDD). CSDDD establishes a mandatory due diligence requirement for companies with turnover in excess of €150m and those employing more than 500 employees (although these thresholds are reduced for some high-risk sectors).

An obvious conclusion from this discussion might be that the UK should now follow the EU’s lead and adopt the CSDDD (or something similar).

However, it is interesting to note that the European Commission last week proposed Omnibus legalisation which will significant roll-back some of the provisions of CSDDD. These changes have arisen due to growing concerns about European growth and competitiveness (issues that were highlighted by last year’s Draghi Report).

According to the latest proposals, implementation will be pushed back to 2028. Due diligence will only be required in respect of tier 1 suppliers (not the entire supply chain) unless there exists plausible intelligence about forced labour in lower tiers. Due diligence will be required every 5 years rather than annually.

It seems that the EU is edging towards a more pragmatic response to the issue of forced labour – one which balances an ethical response with a more growth-friendly mindset. Going forward, this moderated approach might represent a good model for the UK.

It is interesting to note that the British Standards Institution have just published a new guidance standard on managing the risk of modern slavery (BS 25700). This provides an excellent framework that can be used by companies of all sizes.

Consequently, there is no need to wait for new legislation. With the help of BS 25700, companies can act immediately to stamp out the abhorrent practice of forced labour in their supply chains.

In my testimony to the Committee, I also highlighted the role of the IoD Code of Conduct for Directors. One of its key elements is to ‘promote high business standards across the supply chain, particularly with regard to employment conditions and environmental impact’.

By promoting the adoption of the Code, especially amongst the directors of state-owned companies and regulated entities, government can raise awareness of the forced labour issue and encourage business to take substantive action.