The government has issued revised Modern Slavery Guidance, Transparency in Supply Chains. This update provides practical advice to businesses required to publish modern slavery statements.
Compliance
Section 54 of the Modern Slavery Act 2015 (MODSA) mandates that commercial organisations with a minimum turnover of £36 million must publish an annual slavery and human trafficking statement. This statement should outline the steps taken during the previous financial year to prevent modern slavery in their business and supply chains.
Modern Slavery Statement
The guidance aims to increase transparency and encourage effective reporting on modern slavery. Businesses are recommended to include disclosures in their statement regarding:
- Organisational structure
- Organisational policies
- Assessing and managing risk
- Due diligence
- Training
- Monitoring and evaluation
The guidance details the type of content a business may include in a modern slavery statement under each heading, identifying information considered 'good practice' and 'best practice'. Disclosures are categorised as Level 1 and Level 2. Level 2 disclosures are more in-depth and should be completed in addition to Level 1. Businesses drafting their first statement should focus on Level 1 disclosures, while those familiar with the reporting requirements are encouraged to include Level 2 disclosures.
Organisations drafting a statement should review the guidance thoroughly and include as much recommended information as possible. Below is an overview of the suggested content:
Organisational Structure
Ensure the organisation has a comprehensive understanding of its business and supply chains. At a minimum, details should be provided on:
- The structure, including size, countries of operation and different trading entities.
- The supply chain structure, including countries of operation, sourcing, production, assembly and distribution of goods/services.
- Unknown aspects of the supply chain.
- Products/services, sector and volume of production.
- Direct and indirect suppliers.
- Individuals responsible for identifying, assessing and responding to modern slavery, and governance structure.
- Information gathering within the organisation.
- External stakeholders engaged to map the supply chain.
- Continuous improvement in mapping supply chains and understanding the business.
Organisational Policies
Summarise the organisation's internal operating policies related to modern slavery, demonstrating how these are communicated, enforced and linked to international standards.
Assessing and Managing Risk
Disclose the organisation's modern slavery risk assessment process, including details on when this is carried out, responsible individuals, risk identification and assessment, and the highest priority risks to workers.
Due Diligence
Summarise actions, programmes and initiatives undertaken to cease and prevent modern slavery and mitigate specific risks. Include details on engagement with suppliers and workers, the approach to human rights due diligence, grievance and remediation mechanisms, business models and KPIs that may inadvertently cause or contribute to modern slavery. Provide information on any modern slavery incidents identified and steps taken to remedy these.
Training
Outline internal and external training on modern slavery, detailing the materials used and how the training was developed and delivered.
Monitoring and Evaluation
Set goals, provide KPIs and monitor these to assess the effectiveness of measures in addressing modern slavery.
Stakeholder Engagement and Continuous Improvement
The guidance emphasises stakeholder engagement and continuous improvement. Modern slavery is recognised as a complex and evolving issue and organisations are encouraged to engage with relevant stakeholders to better understand the risks and resolve them. Organisations should seek to continuously improve their response to modern slavery and identify any changes adopted to support improvement. This will help stakeholders track the organisation's year-on-year progress.
Impact
The guidance raises standards and expectations for organisations regarding modern slavery, highlighting best practices for identifying and mitigating risks. Businesses should review their modern slavery risk assessments, policies, training materials and statements in response to this guidance. We regularly work with clients on MODSA compliance and can assist with reviews and updates.
This article was written by Erin Thomson, Trainee Solicitor, in MFMac's Commercial team.
