The Modern Slavery Act 2015
Business in the Community Insight Paper
The Act, the UN and Business
The Modern Slavery Act was one of the last pieces of
legislation put on the UK statute book before the May
2015 parliamentary hiatus. The Act requires any
business above a certain threshold, operating any part
of their business in the UK, to report on what it is doing
to address modern slavery throughout its supply chains,
wherever they are, and so has UK and international
implications.
The Act should be set against the context of the UN
Business and Human Rights Principles, also known as
‘The Ruggie Principles’ which place the responsibility to
‘Protect, Respect and Remedy’ squarely on
governments and business alike.
At the same time, developments in non-financial
reporting in the EU and in UK company law, along with
consultation on the UK Human Rights Action Plan, and
the introduction of National Action Plans in other
countries, have brought human rights into sharp focus.
Given this increasing focus on Human Rights it is
essential for companies to understand the issues,
implications, obligations and potential impact on this
new Act.
An ambitious, stand-alone
measure, the Act consolidates
and simplifies existing modern
slavery offences into one Act.
The Act is intended to
encourage business to take
more action on this agenda.
Modern Day Slavery in context
 Modern day slavery has been found to exist in 167
countries around the world1
 The estimated number of people in modern slavery
globally is 35.8million: equivalent to the population of
Canada2
 In absolute terms, the countries with the highest
number of people in modern slavery are: India,
China, Pakistan, Uzbekistan, Russia, Nigeria,
Democratic Republic of the Congo, Indonesia,
Bangladesh and Thailand - accounting for some 71%
of the total estimated population to be in modern
slavery
 61% of those living in modern slavery are in 5
countries: India, China, Pakistan, Uzbekistan, Russia
 The governments that are taking the most action to
end modern slavery are: Netherlands, Sweden,
United States, Australia, Switzerland, Ireland,
Norway, Georgia, Austria and the United Kingdom 3
1CIA
2014
1
world Factbook; 2Ibid; 3The Global Slavery Index
The Modern Day Slavery Act: What you
need to know
Businesses affected:
 Size: The Act will apply to all commercial
organisations over a certain size, both listed and
private, regardless of where they are headquartered.
 The size of business to report under the Act is
currently being defined by Government. This criteria
is due to be published in October 2015.
 Geography: The Act applies to companies operating
in the UK and applies to their global operation. It does
not require that a company has a certain size
‘footprint’ in the UK nor that it has to be commercially
domiciled in UK. It is sufficient that any part of a
business operation is taking place in any part of the
UK, subject to the size criteria to be announced by
government. The Act therefore has a global impact.
Supply chains wherever they are:
 A unique feature of the Act is it will require
businesses to disclose what steps they have taken to
ensure their business and supply chains, wherever
they are, are free of slavery.
Disclosure requirement – the ‘Slavery and Human
Trafficking Statement’ Supply chains wherever they
are:
 The Act requires qualifying commercial organisations
to produce a ‘Slavery and Human Trafficking
Statement’ disclosing what steps have been taken to
ensure the business and its supply chains are free of
slavery. A statement will be required for each financial
year. The statements need to be easily accessible
and therefore there is the requirement for companies
to include a link to their Statement in a prominent
place on their website. If a company does not have a
website, The Act requires that they must provide a
copy of their Statement within 30 days to anyone who
makes a written request for one.
 It is possible for a business to comply with the
provision of The Act by simply stating that they have
taken no steps during the financial year to ensure that
their business and supply chains are slavery free.
This would have potential implications on the
business reputation.
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Government Statutory Guidance:
 Following a period of consultation, which took place
from February to May 2015, the government is due to
produce Statutory Guidance in October. The
Guidance is intended to help businesses understand
what a slavery and human trafficking statement might
include, thereby enabling them to produce high-quality
and informative disclosures. It is anticipated that The
Guidance will be practical and use case studies to
illustrate good practice. The intention is that
businesses determine, demonstrate and explain their
policies and practices, relevant and specific to their
own circumstances.
Initial thoughts on the Guidance around the
Slavery and Human Trafficking statement five general areas of activity:
 A brief description of an organisation's business model
and supply chain relationships;
 A business’s policies relating to modern slavery, including
due diligence and auditing processes implemented;
 What training is available and provided to those in supply
chain management and the rest of the organisation;
 The principal risks related to slavery and human
trafficking including, how the organisation evaluates and
manages those risks in their organisation and their supply
chain;
 Relevant key performance indicators to assist the reader
of a slavery and human trafficking statement to assess
the effectiveness of the activities described in the
statement.
Recent legislation relating to modern
slavery and human rights reporting (UK
and international)
The California Transparency in Supply Chains Act
2010
This Act aims to eliminate slavery and human trafficking
from global supply chains of companies operating in
California by requiring ’retail sellers and manufacturers
doing business in the state to disclose their efforts to
eradicate slavery and human trafficking from their direct
supply chains for tangible goods offered for sale’.
The UK Companies Act 2013
As amended, this Act has, since 1 October 2013,
required companies quoted on the London Stock
Exchange to report on their human rights performance
which includes Modern Slavery, “to the extent
necessary for an understanding of the development,
performance or position of the company’s business”.
Annual reports from 31 December 2013 onwards should
therefore include human rights information to comply
with this requirement.
EU Non-Financial Reporting Directive 2014
Introduced in November 2014, by the Council of Europe
and EU Parliament, eligible companies, who are
required to produce strategic reports, will also have to
include more specific, structured and detailed
information on human rights (among other things) than
would have previously been the case. These new
requirements will come into force during 2016.
The wider implications of The Act
Modern slavery is a complex problem, and tackling it
requires looking beyond the UK’s shores. The Modern
Slavery Act is a milestone in the integration of Human
Rights into the UK regulatory framework.
Further, The Act is unique in that it has introduced into
legislation an ambitious measure to encourage
transparency in supply chains, which has international
implications. No matter where it is headquartered, if a
company is doing business in the UK and it falls within the
size thresholds, the implications of The Act will reach
throughout that company’s supply chain globally.
The Modern Slavery Act aims to create a level playing field
across all eligible businesses from all sectors, both listed
and private. The intention is that this will ensure “large
businesses cannot turn a blind eye to modern slavery
simply because of their corporate status or domicile”.
There has been rapid evolution in the expectations of
business with regards to human rights. The Modern
Slavery Act takes these expectations a step further. The
significant transparency in supply chains measure, which
has been brought into legislation through this Act, means
that business need to be aware, and prepare for
compliance and action.
Human rights abuses and modern slavery are the scourge
of the 21st century. In response, UK, European and
Global regulation and legislation is pushing in the same
direction, as the boundaries between soft and hard law
begin to blur. Whilst new legislation may provide
challenges for companies, as frameworks are developed,
one thing is certain: Human rights and modern slavery are
firmly on the agenda internationally.
The question is therefore not whether a business needs to
be aware of its human rights and modern slavery profile,
within its own operations and through its supply chain, nor
is it whether or not it has to report. The question is: when,
how, and are you prepared?
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New disclosures compared
Given the incoming UK and European legislation and regulation on human rights, modern slavery and nonfinancial reporting requirements, it is helpful to understand the similarities and differences.
Modern Slavery Act:
‘Slavery and human trafficking statement’

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


Structure, business and supply chains
Policies
Due diligence processes
Risk assessment and management
Effectiveness and KPIs
 Training available
EU Non-Financial Reporting (NFR)
Directive Strategic report




Describe business model
Policies pursued, including due diligence
Outcomes of those policies
Principal risks and how they are managed
 Non-financial KPIs
Business in the Community will be offering a number of events to support companies on the Human Rights
agenda.
If you are interested in the work BITC does on Human Rights more broadly, please contact Sue Adkins,
International Director at Business in the Community, on [email protected].
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