Updated guidance on modern slavery statements
The UK Home Office has issued updated guidance for organisations on the content of anti-slavery statements required under the Modern Slavery Act 2015.
Under s54 of the Act, companies that have an annual turnover of over £36m or more are obliged to submit an annual statement explaining the steps they have taken to prevent modern slavery in their business and supply chains. This statement should be signed by a director or equivalent, and placed in a prominent position on the website. It should outline the steps taken to ensure that slavery or human trafficking is not taking place in its supply chains or part of its business, or state that the organisation has taken no such steps. Businesses are not obliged to conduct due diligence on supply chains, but simply to report, and there are no criminal or financial penalties for non-compliance.
Analysis of the first year of statements by the CORE Coalition published in September showed that out of the 45 statements examined, 20 were not signed in accordance with the legislation. Two-thirds did not refer to specific risks of slavery and human trafficking in the relevant supply chain or sector, such as if the supply chain involved gold mining.
A contemporaneous study by the Chartered Institute of Procurement & Supply (‘CIPS’) found that one-third of companies that should have published a statement under the Act had not done so.
In its blog, advisory group Ergon Associates sets out an analysis of the updated guidance. Previous Home Office guidance on statements indicated that companies ‘may’ include certain criteria set out in the Act, such as company structure, policies and due diligence procedures. The new guidance states that organisations ‘should aim to’ include this criteria. If the Modern Slavery (Transparency in Supply Chains) Bill – which had its first reading in July – is passed into legislation then this criteria may become mandatory for inclusion.
Other key changes highlighted by Ergon Associates are:
- ‘Firstly, the guidance has a more definitive language advising organisations to publish statements within six months of the organisation’s financial year end.
- The guidance also suggests that organisations should keep statements from previous years available online even when new statements are published, in order to allow for comparison and progress year on year.
- It further encourages organisations to continue to publish a MSA statement even if their turnover falls under the £36m turnover threshold for a particular financial year, in order to demonstrate to the public and investors the importance of transparency to the organisation.’
Although there have been significant prosecutions brought against individuals under the Act, at the moment there are limited enforcement powers against organisations that do not comply fully with their obligations under the legislation.
‘We are helping clients to proactively manage the risks of modern slavery and human trafficking in their businesses and supply chains, however not every organisation either understands or is committed to compliance,’ said Chris Cartmell, a senior solicitor at professional services firm, PwC.
‘One option may be an extension of the corporate “failure to prevent” offence which has proved successful with bribery and corruption and which has recently been adapted to cover tax evasion,’ he added.
The updated Home Office guidance can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/649906/Transparency_in_Supply_Chains_A_Practical_Guide_2017.pdf
