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The Modern Slavery Act isn’t fit for purpose

The Modern Slavery Act isn’t fit for purpose

Companies are encouraged to make statements against exploitation – but not to end it. Politicians must amend the Act so that it has meaning and force

Imagine being paid £3.50 per hour to work long shifts in a warehouse where a deadly virus circulates, making clothes that are sold for less than twice your hourly wage. Imagine doing that in a city in one of the richest countries in the world. Britain.

That was the experience of workers in Leicester, who last year were found to be making clothes, sold by the fashion retailer Boohoo, in conditions that amounted to modern slavery. After an initial scandal, the case went quiet. But, in September, Boohoo published a full list of its international suppliers; information intended to make amends for having treated workers unfairly, by inviting scrutiny of suppliers that created its products elsewhere.

New research by Tortoise shows just how little Britain’s biggest businesses currently tell us about where the goods they sell come from, and what they are doing to ensure those same goods aren’t produced through exploitation. In the latest update of our Responsibility100 Index – released in full today – our team found that just 14 FTSE 100 companies disclose where their supply chains are, giving locations more specific than the continent or country. Even fewer list the names of their suppliers. 

They can get away with this because the UK’s Modern Slavery Act, introduced in 2015, is vague and undemanding – “a missed opportunity,” according to Andrew Wallis, chief executive of Unseen, a charity that provides safehouses and a support helpline for victims of human trafficking. 

While all the FTSE 100 companies meet mandatory requirements to comply with the Act – meant to boost transparency about worker exploitation, like that which happened at factories supplying Boohoo – the law itself sets a very low bar. Companies are required only to issue a statement offering some details on their anti-exploitation policy, get it approved by the board, and then signed by a company director. Everything else is voluntary. As a result, even companies that go beyond the minimum legal requirements of having a signed, approved statement still report very little. 

  • Three quarters of companies (76 of 100) do not disclose the percentage of all their supply chains that have been assessed – through audits, surveys or site-visits – for the risk of exploitation.
  • Just under a third confirm that all suppliers they work with have signed a code of conduct, agreeing to follow a set of practices intended to prevent labour exploitation. The remaining companies (73 in total) either do not say, or have only made some of their suppliers sign-up.
  • Only six companies report how much of their total spending is given to suppliers who have done a risk assessment. Others spend millions with suppliers, but don’t say which have been assessed.

There are no penalties for companies that fail to report misdemeanors (as there would be for financial accounts). In fact, there is no specific legal requirement to include any particular information at all. That puts little pressure on businesses to better their behaviour. “Without financial penalties or the disqualification of directors for non-reporting, there’s no reason to get serious about the failure to comply,” says Christian Guy, chief executive of Justice and Care and former special advisor to David Cameron.

Amongst the FTSE 100 there is evidence that action is being taken – but other businesses simply walk away from signs of exploitation in their supply chains.  

  • Tesco reported that tell-tale signs of modern slavery had been found in their operations or supply chains 26 times in the past year (though in no cases was modern slavery confirmed). Tesco said it would “welcome decisive government action, including stronger legal requirements” – which could mean penalties or the disqualification of offending directors.
  • Bunzl noted that 15 suppliers in its network did not make enough progress to address concerns about modern slavery. The company has “ceased” relationships with those suppliers, with the knowledge that 30 per cent of the concerns raised were related to suspected child labour. 
  • NEXT found 18 factories with “modern slavery risks”. It gave 14 of them a plan to address the risks, and disengaged from the other four.

The Modern Slavery Act has clearly missed the point. Simply saying how much harm you are doing doesn’t help to limit that harm; transparency is not an end in itself. “There is an urgent need for legally binding obligations on companies – properly resourced and forcefully implemented – that go beyond mere reporting requirements and mandate action,” says Amy Sinclair, director of KnowTheChain, an initiative from the Business & Human Rights Resource Centre that evaluates suppliers by looking at risks of forced labour.

In June this year, a group of Lords and MPs proposed amendments to the Modern Slavery Act that, if passed, would mean companies have to reveal more about their supply chains. But that would just be the start.

Companies exploit people to make money. Low prices pressure suppliers into extracting as much labour from people as they can, at the smallest possible cost – even if that means depriving them of fair pay, forcing them to work inhumane hours, or controlling their access to legal advice or other services. This makes commitments like the provision of a living wage and the Prompt Payment Code – a voluntary standard intended to get suppliers paid fairly and on time – all the more important.

The Boohoo case showed that modern slavery isn’t something that only happens on the other side of the world. It is neither remote nor rare. And it must be actively guarded against: particularly when (as in Britain today) supply chains begin to break down, and suppliers face pressure to relax standards just to meet orders.

The responsibility to end modern slavery fundamentally lies with businesses that force suppliers into unrealistically cheap contracts. But it also lies with us: the consumers who are so accustomed to getting what we want, when we want it, for very little cost; the citizens who can pressure governments to better protect workers in law. 

Because until workers are paid and respected fairly – and until companies, and their directors are truly held accountable for exploiting them – the ones who pay the price for the things we buy will be those who can afford it least. 

Tortoise’s research is part of the Responsibility100 Index, which monitors the rhetoric and reality of FTSE 100 companies’ corporate social responsibility agendas.

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Photograph by Zabed Hasnain Chowdhury/SOPA Images