REUTERS | Navesh Chitrakar

Annual report drafting: what will your Modern Slavery Act statement say?

I’ve heard recently that a number of organisations have decided to include their slavery and human trafficking statement for this financial year in their annual reports, and are now in the process of working out what these statements will say. With that in mind, I thought this was a good moment to provide an overview of resources that could help.

Section 54 of the Modern Slavery Act 2015 (MSA) came into force on 29 October 2015. It requires certain organisations with an annual turnover of over £36 million carrying on a business in the UK to publish a slavery and human trafficking statement for financial years ending on or after 31 March 2016.

Does this apply to my organisation?
The requirement applies to commercial organisations, charities, educational institutions, franchisee models and group companies. Guidance on whether your organisation is included can be found in our Modern Slavery Act 2015 Toolkit and Modern Slavery Act 2015: slavery and human trafficking statement. This includes clarification on the de minimis threshold calculation of >£36 million turnover.

What are the parameters of the statement?
The Home Office guidance recommends that the statement should be:

  • Written in simple language to ensure that it is easily accessible to everyone.
  • Succinct but cover all the relevant points and link to relevant publications, documents or policies.
  • In English, but may be provided in other languages that are relevant to the supply chain.

The statement must:

  • Set out 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 own business; or
  • Confirm that the organisation has taken no such steps.

If you choose to confirm that the organisation has taken no steps, there is no sanction. However, you risk challenge from customers, shareholders, investors, the Board and Non-Governmental Organisations, as well as potential damage to reputation and brand. A number of organisations are tracking statements as they are made so you should anticipate a level of media coverage.

If an organisation is obliged to make a statement but fails to do so, the Secretary of State can choose to enforce the duty via an injunction. If the organisation fails to comply with the injunction it will be in contempt of a court order, which is punishable by an unlimited fine. One would imagine for the moment at least, that there would need to be public interest for the Secretary of State to take this course of action however ‘watch this space’.

What level of detail should be in the statement?
There is no prescribed length or form to the statement but it should reflect what you have done and what you are planning to do. This may include:

  • The organisation’s structure, business and supply chains.
  • Its policies in relation to slavery and human trafficking.
  • Slavery and human trafficking due diligence in the organisation and in the supply chain.
  • Any slavery and human trafficking risk assessments carried out.
  • The purpose, type and frequency of training made available, and to whom.

It is worthwhile cross-referencing our Modern Slavery Act 2015: checklist and sample slavery & human trafficking statement. Your answers to the questions set out within the checklist in particular should provide some inspiration for the content of your own statement.

I would also suggest reading Anna Triponel’s blog from earlier in the year giving ‘vital insights from soft law‘. This highlighted that at that time:

Analysis of the early slavery and human trafficking statements produced has, so far and with a few exceptions, suggested that companies are falling below expectations, with just nine of the 27 statements analysed meeting the requirements on information.

The more up to date analysis from the Business & Human Rights Resource Centre (BHRRC) at the end of November 2016 states that 75 company statements on the UK Modern Slavery Act have been made with only 22 meeting the minimum legal requirements.

There is also BHRRC analysis of FTSE 100 Modern Slavery statements which highlights that the majority of statements made to date demonstrate weak risk assessment and due diligence. The BHRRC makes recommendations for the next tranche of companies reporting.

Who should approve the statement?
For companies, the board of directors must approve the statement and be signed by a director. We have a memorandum to Board of directors and board minutes that provide support.

For partnerships, refer to Modern Slavery Act 2015: slavery and human trafficking statement.

How do we ‘publish’ the statement?
The Home Office guidance advises that the statement must be ‘published on an organisation’s website with a link in a prominent place on the homepage’. You cannot rely on the annual report, including the modern slavery statement, being available for view or download on the homepage. You should have a modern slavery link that is directly visible on the homepage or part of an obvious drop-down menu on that page.

Lynsey Poulton

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