“Transparency in supply chains enables companies to comply with the growing number of legal requirements, and this is part and parcel of being competitive in the market. The more transparent the company is, the more attractive the brand will be for consumers”
Ramesh Panavalli, Senior Consultant
Modern Slavery and Human Rights Legislation: Actions for Businesses
Modern slavery is a global issue. According to the United Nations, 40.3 million people are subjected to modern slavery through forced labour each day. In the UK, there are estimates of as many as 138,000 people who are trapped in modern slavery. At COP 21, nearly 200 UN countries and territories aligned on this global concern and agreed to eradicate modern slavery and achieve UN Sustainable Development Goal 8.7 by 2030. This article reviews what changes have been made by governments and what businesses should do to maintain transparency within their supply chain.
In recent years, the media has repeatedly brought attention to human rights violations that have shocked the world, resulting in countries tightening their legislation in response. Countries with strong political will, high levels of resources, and a strong civil society that holds governments to account are taking the strongest action. For instance, the UK and US governments require companies to annually report on their supply chain and ensure that it is risk free from modern slavery. Others, such as Australia, are facing increasing pressure from human rights organisations and trade unions to tighten anti-slavery laws in a bid to crackdown on forced labour goods from entering the supply chain.
|Examples of Human Rights Violations|
|Toughening the Modern Slavery Act|
|What these Changes Mean|
|What Businesses Need to Do|
|How We Can Help|
Global Examples of Human Rights Violations
Forced labour and slavery in supply chains is a hidden threat. It has the potential to affect all businesses. Unless a business has complete transparency across their supply chains, they could unknowingly be supporting such activities. The following examples are well documented examples of forced labour, however no country is free from modern slavery.
Some recent examples of forced labour today, include:
- Xinjiang province, China, home to 1.8 million Muslim Uighurs. Many of these minorities are forced to work in cotton fields which account for more than 20 percent of the world’s cotton.
- Sumangali workers in South India where an estimated 100,000 girls are recruited from their houses to work in factories for several years under constant surveillance, precarious work conditions, limited freedom and low wages.
- Syrian workers who have fled the war in their home country and migrated to Turkey but are unable to receive the same rights as Turkish workers. Figures from 2019, show that out of the 3.6 million registered Syrian refugees in Turkey, only 31,000 received official work permits.
Toughening the Modern Slavery Act in the UK and global supply chains
In January 2021, the UK Government released additional measures, toughening the response towards modern slavery and preventing goods linked to forced labour from entering the UK supply chain. Currently, the UK imports £3.7 billion worth of textiles and apparel from China, some of which are products of forced labour from Xinjiang province. The UK will now review export controls in order to prevent goods potentially contributing, either directly or indirectly, to alleged human rights abuses in Xinjiang. This review will determine specific items that will become subject to controls in the future.
This builds on the 2015 Modern Slavery Act issued by the UK Government where Section 54 requires businesses with a total annual turnover of £36m or more to prepare a slavery and human trafficking statement for each financial year. The slavery and human trafficking statement should set out what steps organisations have taken to ensure that slavery and human trafficking is not taking place in its organisation or supply chain.
Other countries have also taken action against modern slavery, for example:
- Canada has issued a ban on goods suspected to have been imported from the Xinjiang province.
- The US Government has announced a ban on imports containing any cotton or tomato products originating from Xinjiang and has also adopted a bill imposing various restrictions related to the province, including the prohibition of several imported commodities originating in that region, in a bid to impose sanctions on human rights violations.
- Australia introduced its Modern Slavery Act 2018, requiring Australian companies to report on the risks of modern slavery in their operations and supply chains under federal legislation.
What do forced labour legislation changes mean for UK brands, retailers, companies, and investors
As of 2015, UK registered companies must take necessary human rights due diligence steps maintain compliance with laws in the United Kingdom, United States, Canada, Europe, and other jurisdictions. These laws prohibit the import of goods made with forced labour and mandate human rights due diligence, defined by the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Supply Chains.
The UK Government provides guidance and support for all UK public bodies where they have identified human rights violations in their supply chain. Compliance will be mandatory for central government, non-departmental bodies, and executive agencies. With instances such as China, the UK Government provide new, robust, and detailed guidance to UK businesses. They set out the specific risks faced by companies with links to the relevant country and underline the challenges of effective due diligence supported by a government campaign. Companies face financial penalties if they try to cover up imports from any affected region and suppliers will be excluded by the Government when there is evidence of rights violations in their supply chains. Export controls will be reviewed to prevent the shipping of any goods that could contribute to such violations.
“It is not enough to have human rights policy in place. Companies must demonstrate a real integration of human rights due diligence in their supply chains. From engaging with stakeholders, to proposing it at board level meetings, they need to have clear signals around the quality of due diligence in the company.”
What businesses need to do now
As governments strengthen legislations on modern slavery, it is important to consider how businesses maintain transparency in their supply chain in line with these laws. The most critical actions businesses can take to ensure compliance are:
- Understand the source of raw material to finished product. Further reviews need to be undertaken to decide on the specific products that will be subject to new import controls and government sanction lists.
- Look at the Modern Slavery statement. Assess and establish a human rights due diligence programme to identify, prevent, mitigate, and account for actual potential human rights and environmental impacts in their operations.
- Identify salient risks within the business. Find gaps and develop new policies and action plans in relation to modern slavery mitigation.
- Build capacity within the organisation. Establish training and development on ethical trade, human rights, gender equality, modern slavery, as well as creating grievance mechanisms and worker representation models for global supply chains.
How we can help
Anthesis can support businesses with the creation of human rights impact assessments and in developing strategy and direction towards human rights due diligence, with a focus on transparency and traceability in supply chains. Using our in-house tools, such as Activator Hubs, we can identify and rank where the key human rights and salient risks are located within your business, both geographically and within Environmental, Social and Governance (ESG) parameters.
For more information on how to identify if your organisation needs to publish a modern slavery statement, or guidance to ensure slavery and human trafficking are not taking place in your supply chains, contact us.
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