As part of the Campaign Against Labor Trafficking, Concordia and Omnia Strategy held a private sector roundtable last week on the U.K. Modern Slavery Act. The recent implementation of the Act in the United Kingdom is beginning to transform the country’s private sector across industries, as well as how the global community approaches transparency in supply chains. At the same time as this positive development, shareholders continue to demand higher profit margins, and resources and know-how have not kept at the same pace as transparency requirements or government regulation. The notion of national regulation to address modern day slavery is starting to root itself in a number of other countries, and it is clear that there is a role for cross-sector collaboration in ensuring effective legislation is developed, passed, and implemented. This roundtable convened private sector representatives and compliance experts under Chatham House Rules to assess the effectiveness of the U.K. Modern Slavery Act to date and to share challenges that still lie ahead, with an emphasis on broader global adoption. The following are key takeaways from the roundtable.
The U.K. Modern Slavery Act is largely responsible for pushing the issue of modern slavery into the mainstream, participants agreed. Spurring significant positive changes across industries, modern slavery compliance is no longer relegated to the legal department for most companies — it is now a boardroom-level conversation. While the Act has been criticized by some as too open in terms of reporting guidelines, roundtable participants actually praised it for not being overly prescriptive. Instead of a mere compliance “tick-the-box” exercise, companies feel the Act empowers them to report on progress. While guidance can help some companies initially think through vulnerabilities, the burden of numerous reporting requirements often distracts from meaningful due diligence. The Act’s flexibility leaves companies room to come up with creative solutions that are tailored to their individual supply chain management styles and implementation timelines. Some went as far to say that modern slavery wouldn’t have even reached the private sector agenda without it.
Despite the positive reception, there remain significant challenges and obstacles to implementation — finding the resources to devote to due diligence being paramount among them. Due diligence too often starts when a company is publicly shamed for its supply chain practices. Reputation-saving fears positively work to align company incentives in allocating funding to address labor abuses in supply chains, but B to B companies that have fewer reputational risks might struggle to find internal alignment from this incentive structure. Here, the Modern Slavery Act can be used as a platform to enlist the support of senior leadership teams across businesses and supply chains and engage executive leadership as champions against modern slavery. In this way, internal company champions can structure company priorities, work through internal communication challenges, and streamline funding to where it is needed. Of course, the Act only applies to large companies with turnover above £36 million. For those companies operating under this threshold, internal leadership is needed to make sure this issue even reaches the agenda.
Uncertainty also remains on what constitutes “best practice”. Participants expressed frustration at the lack of government funding around enforcement, and their reticence to create a registry (either public or internal) of companies that are beholden to the Act. Here, civil society has helped bridge gaps. Determining other ways to aggregate and showcase best practices was identified as a clear next step for pushing forward improved compliance mechanisms. Extrapolating best practices from award applications or corporate reporting statements was brought up as one solution, however, protecting the identity of companies remains a challenge.
For countries considering implementing similar legislation, standardization among international reporting requirements is important. Large multinational companies (MNCs) are better positioned to make meaningful progress on cleaning their supply chains when operating across multiple nations under similar reporting and compliance requirements, and it is important that a proliferation of different reporting requirements does not distract from the actual work of conducting due diligence. Importantly, companies that had underdeveloped transparency procedures at the development period of the U.K. Modern Slavery Act now have more robust practices in place and can participate more fully in the consultation process of other national regulations. The engagement of the private sector is paramount to successful regulation, and this can be seen as another positive outcome of the still nascent Act.
London, United Kingdom