Modern slavery is often something that businesses consider happens to someone else. We all agree that we don't want slavery or similar treatment in our supply chain, whether for clothing manufacture, hiring of direct or indirect staff, or workers in your supply chain. many Recent stories show that no supply chain or business, however big, is immune: LVMH's unit put under court administration in Italy over labour exploitation | Reuters
When the UK enacted the Modern Slavery Act (the Act) in 2015, it was ahead of the curve. At the time, this was a landmark piece of legislation aimed at combating human trafficking and modern slavery in the UK, but now many reflect on the fact that there is just one clause impacting businesses and consider this is not doing enough. As the ‘Italian’ purees likely to contain Chinese forced-labour tomatoes - BBC News article puts it “once again, we are presented with credible evidence suggesting that major retailers are failing to address human rights abuses in the supply chains of everyday products.”
But it is not as simple as that. The article recognises the need for the law to be revisited and updated and states that “it’s time for it to act. It’s never been clearer that the Modern Slavery Act isn’t fit for purpose, and I urge ministers to introduce robust new legislation as a matter of urgency.”
So, as it reaches its 10th birthday, and we await the implementation of the EU's Forced Labour Regulation, it has never been more crucial to evaluate its impact and identify areas for improvement.
What are the current requirements?
The Act primarily aimed to consolidate existing laws (relating to trafficking and slavery), establish an independent anti-slavery commissioner and child trafficking advocates, place a requirement on certain companies to make an annual Modern Slavery Act statement and introduce tougher penalties on the perpetrators of modern slavery.
With regards to businesses in particular, s.54 of the Act requires certain commercial organisations (with an annual turnover of £36 million or more), which are carrying out all or part of their business in the UK, to publish an annual modern slavery statement. This statement outlines the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains and in any part of its business.
The Act also provides a detailed list of information which may be included within this statement. These include: the organisations structure (both its business and supply chains), the policies it has in relation to slavery and human trafficking, its due diligence processes in relation to both, its effectiveness in ensuring that slavery and human trafficking are not taking place, and the training available to staff.
The emphasis being on what businesses 'may' include within this statement "makes it difficult for companies to be held accountable for their transparency, even with the voluntary public registry". (Paragraph 187 Government Review of Modern Slavery law) It is widely recognised, that this discretionary aspect of the statute has led to businesses producing inconsistent and often inadequate statements, with some qualifying organisations as failing to issue any statement at all.
Section 54(4)(b) allows organisations to report that they have taken no steps to address modern slavery and human trafficking. With no criminal penalties for non-compliance with s.54 of the Act, many argue that whilst the statement (confirming compliance or not) is mandatory there are no consequences for lack of action, which ultimately obfuscates the transparency s.54 drove to achieve.
Identifying areas for improvement
Whilst there is no doubt that the Act has significantly increased public awareness about modern slavery, and brought these complex issues into boardroom discussions, it is clear that the Act has not achieved what it set out to with regards to compliance and enforcement. Dame Karen Bradley MP stated that; "Our Modern Slavery Act was world-leading but we are beginning to fall behind". As the Minister Jess Phillips put it at a recent Westminster Forum: "I'm afraid to say that the saddest factor that I could tell you about this is that there are more victims of modern slavery in our prison system than there are modern slavers."
With wide acknowledgement that the UK has fallen behind other nations, a Select Committee was appointed in January 2024 to consider the Act. A report was published in October 2024 confirming that "The proportion of prosecutions to National Referral Mechanism is only 1.8%, despite the focus which the Act paid to enforcement" and with regard to transparency in supply chains "the Act was initially seen as world-leading in this area but it has not perhaps had as much practical impact as envisioned, and best practice internationally has progressed".
The Select Committee recommended focusing on a number of items, but of particular importance to businesses is that it was confirmed that the current legislation is too limited to have significant practical impact and that the publication of statements should be widened, and compliance with requirements should be enforced. Ultimately, there will be a focus on implementing legislation which will require companies, who meet the threshold, to undertake modern slavery due diligence in their supply chains. Even just making publication on the modern slavery registry mandatory, and setting out the mandatory areas to be covered, would make a material difference.
This emphasis on due diligence marks a shift in thinking. It highlights that the approach to effectively addressing modern slavery in supply chains has evolved. Regulators now demand more than just a tick-box exercise; due diligence requires a proactive and comprehensive effort from companies.
Alternative enforcement measures on the way?
Whilst inadequacies with the Act have been highlighted, many regulators (whilst waiting for legislative reform) are looking at utilising other existing legal frameworks such as s.172 Companies Act 2006 to combat modern slavery issues.
The report produced by the Select Committee also highlighted that advancements in both UK legislation (the Procurement Act) and developments internationally in relation to due diligence will already start to place obligations on certain businesses to meet more restrictive due diligence requirements.
For example, at EU level the Corporate Sustainability Due Diligence Directive (CS3D) sets, subject to omnibus revisions, a rigorous standard for human rights and environmental due diligence for in-scope companies operating in the European Union. In particular, it places a duty to identify and address actual and potential adverse human rights within their own operations and those within its 'chain of activities'. Whilst the Directive will not come into force until 2026, the transformation needed to implement human rights due diligence across business functions across supply chains, and companies should start preparing now.
We are also aware that the Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill (COPAD) was introduced in the House of Lords. This bill aims to build upon CS3D and other EU due diligence laws, including the German Supply Chain Due Diligence Act and the French Duty of Vigilance. In particular, this bill sought to place a duty on commercial organisations and public authorities to prevent human rights and environmental harms, including an obligation to conduct and publish human rights and environmental due diligence assessments on their own operations, subsidiaries, and value chain. Although COPAD has not been selected for the new parliamentary session, and will not be reintroduced into the House of Lords, businesses should anticipate that this level and theme of regulation will be discussed in the future with the new Government, and it is only a matter of time before it becomes legislation.
Additionally, the EU has made further strides in combating modern slavery with the European Council's adoption of the Forced Labour Regulation (Regulation 2024/3015). This regulation prohibits products made with forced labour from being sold on or exported from the EU's internal market. It underscores the EU's dedication to addressing human rights issues in global supply chains. Similar to CS3D, this regulation will impact global companies operating in the EU market. The regulation will take effect the day after its publication, though companies will have 36 months to comply.
This will mean that EU based businesses will need to have this in mind when considering their supply chains. Not only will deforestation rules require this assessment, but the combination of modern slavery and CS3D too.
With all of the current turmoil surrounding CSRD and CS3D, due to the Omnibus proposals, it remains an open question if the final implementation date for the Forced Labour Regulation will ever be met – or indeed how it will interface with these fast changing laws, which are a shell of the legislation that had been passed at the point that the Forced Labour Regulation was passed.
What's next?
It is no secret that the UK Minister, Jess Phillips MP, wants to strengthen compliance and tackling modern slavery within corporate supply chains, and as recently as 10 December we heard her repeat these messages when speaking at the Westminster Forum. The Minister was clear that a change to the law would be advanced during this parliament. What shape that bill will take, we shall have to wait and see, but it will almost certainly include consequences for non-compliance.
Ultimately, and rightly so, this issue is here to stay, and as a myriad of new duties approach from both the EU and closer to home, businesses will need to enhance their efforts to conduct effective due diligence of their supply chains. Otherwise, as Boohoo learned, the reputational and financial impacts of not doing so are vast. In the meantime, it is perhaps a good time to review this part of your supply chain diligence.
For more insights also see our Global Consumer Trends article 'What does forced labour clampdown mean for food?'
If you have any questions or would like to discuss any of these topics and what they mean for you and your business, please get in touch with our Consumer sector and Regulatory experts.
