REUTERS | Navesh Chitrakar

Benchmarking your Modern Slavery statement: race to the top

It is now over a year since the first organisations were required to start producing their slavery and human trafficking statements in compliance with section 54 of the Modern Slavery Act 2015, making it possible to assess and compare the large number of statements already published.

The statutory requirements are brief, providing only that such organisations should publish a statement on the steps that they have taken during the financial year to ensure that slavery and human trafficking are not taking place in their own business or in their supply chains (for background, see Modern Slavery Act: toolkit).

Around the time that the legislation was introduced, there was some debate about what would constitute compliance with the Act’s requirements (as highlighted by business and human rights adviser Anna Triponel in her June 2016 blog post Modern Slavery Act: vital insights from soft law), however there has as yet been no additional governmental guidance on this point issued (although the Modern Slavery (Transparency in Supply Chains) Bill, which does propose some changes to the Act, had its first reading in the House of Lords on 12 July, and the mention of the UK’s efforts in the international sphere in the Queen’s Speech and the recent introduction of a Victim Support Bill make it clear that modern slavery remains on the government’s agenda).

As will be well known, there is no government database of statements made, nor any government programme of review or sanction. The guidance published under section 54(9) of the Act does, however, record the expectation that statements will “evolve and improve over time” as organisations build on their early statements in later years.

Other than each organisation conducting an iterative process of improving its own practices and resulting statements, the method proposed for improving statements is that interested parties will analyse and comment on published statements, allowing organisations to benchmark their own approach:

It will be for consumers, investors and Non-Governmental Organisations to engage and/or apply pressure where they believe a business has not taken sufficient steps.”

Various such organisations rose to the challenge of analysing the first published statements (some of their reports are noted in my colleague Lynsey Poulton’s blog of December last year) and, since the anniversary of the requirement’s introduction, some of them have published follow-up reports in which they analyse the wider base of statements now available and consider the practices they reflect.

As a result, there are a number of resources available to in-house lawyers looking to benchmark their own organisation’s approach to producing their slavery and human trafficking statements and consider how they might improve them.

Statements: legal compliance

As a starting point, the statements should meet the requirements in the law. Although these are minimal, research has found that a number of statements do not meet them. Ergon Associates, a consultancy working in the field of decent work and labour rights, has twice produced reports analysing published statements. The latest report notes that, of the 150 statements analysed:

  • 21% of reports were not clearly signed off by a director (or equivalent); and
  • 25% of reports were not available directly from the organisation’s homepage. This is broadly the same figure as when Ergon reported in May 2016.

Review of existing Modern Slavery Statements

Reviewing other businesses’ published reports may be a useful benchmarking exercise for organisations working on their own response to the requirements of section 54. The Business and Human Rights Resource Centre (BHRRC) has set up a Registry of Modern Slavery statements.

At the time of writing, this Registry contains 2397 statements submitted by organisations in 26 sectors and from 33 countries.

The Registry can be searched by company name or browsed by company name, sector and country of HQ; there is also a map showing where statements have originated from.

At the same time, caution is to be exercised when reviewing statements. Anna Triponel comments that “not all existing modern slavery statements are helpful for in-house lawyers. It is worth seeking to identify those statements that are setting the bar for your industry – both in terms of the modern slavery work being conducted as well as the resulting transparency. By way of example, apparel company ASOS provides extensive detail on its modern slavery work in Mauritius, Turkey and the United Kingdom; shoe company ECCO conveys which business partners it sees as higher risk, including those making its factory clothes and providing bags to its annual Walkathon; and information and communications technology company BT conveys the importance of a cross-functional approach to modern slavery. Of particular interest is the recent movement toward disclosure of internal tools used to combat modern slavery, such as the publication of Marks & Spencer’s toolkit used with its suppliers and partners. Although not all companies can match this level of disclosure, this identification process can be helpful for in-house lawyers to anticipate how stakeholder expectations will evolve over time”.

Statements: ‘good’ and ‘bad’ practice

In 2016, the BHRRC produced its report FTSE 100: at the starting line, focusing specifically on the first 27 statements produced by FTSE 100 companies and ranking the organisations on a scale from 1 – 10. The highest ranking achieved was 3. The report cites examples of what the BHRRC considers to be particularly good (and sometimes bad) practice.

Ergon’s recent report also contains numerous excerpts from modern slavery statements that they cite as showing “good or notable reporting practices” in key areas, including:

  • Organisation structure, business and supply chains.
  • Modern slavery policies.
  • Risk assessment processes.
  • Identifying priorities.
  • Monitoring and auditing.
  • Actions taken to remediate or reduce risk.
  • KPIs.
  • Training.
  • Collaborative activities.

The report highlights areas in which, in Ergon’s view, efforts should be made, but which an organisation might not initially plan to address in their statement, including contractor relationships: 84% of statements analysed addressed these “minimally or not at all”.

BHRRC and CORE guidance

The 2016 BHRRC report comments that it is not surprising that no company received a top score in the first year of reporting, but that the analysis showed that “only a handful of leading companies are reporting and demonstrating rigorous action”. However, the BHRRC stated that it expected to see “year on year improvements” and, along with Anti-Slavery International and UNICEF UK, has contributed to four briefings released by CORE on 12 June 2017, which provide guidance on producing good modern slavery statements.

These are designed to be read in conjunction with CORE’s February 2016 guidance Beyond Compliance: Effective Reporting under the Modern Slavery Act.

The last of them may be of particular interest to in-house lawyers, as it sets out clearly the possible limitations of social auditing when compared with human rights due diligence.

Thomson Reuters Foundation Stop Slavery Award 2017

The Stop Slavery Award was launched by the Thomson Reuters Foundation and first awarded in 2016. It aims to give public recognition to corporations that are ‘best in class’ at “demonstrating integrity, courage and innovation in cleaning their supply chains”. Applications for the 2017 award are open until 15 August 2017.

In 2016, the “Policy and Implementation” category was won by NXP semiconductors; the “Transparency and Response to Challenge” category was won by Hewlett Packard Enterprise. The Stop Slavery Award website also includes information on the ten shortlisted companies and includes links to the shortlisted candidates’ webpages detailing their efforts in this area.

The questions in the application form may be a useful roadmap for organisations working on the task of mapping their supply chains and reviewing their internal policies and procedures – whether or not they choose to put in an application for the award.

Practical Law In-house Alice Southall

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