Business Law & Compliance

Growing SMEs and the modern slavery statement

10 min read

23 August 2017

When your company grows, so too do your legal obligations. For example, if you foresee your business making an annual turnover of £36m, then you'll need to start crafting a modern slavery statement. But did you know it should still be on your radar no matter your size?

The Modern Slavery Act 2015, which detailed the introduction of the modern slavery statement, was brought forward by prime minister Theresa May – home secretary at the time. It proclaimed new penalties, such as life sentences, to those knowingly exploiting people.

The first legislation of its kind in Europe, this Act aims to put slave masters behind bars where they belong,” May wrote at the time. “We have further delivered enhanced protection and support for victims through a world-leading requirement on businesses.”

What she hinted at in the above passage for the Telegraph, is the modern slavery statement – a typed acknowledgement of supply chain transparency, to be published within six months of each financial year-end

Any company with a turnover of £36m or more doing business in the UK will have to secure this statement a location on its website, with a link to it visible from the homepage. The Home Office’s guidance recommended its accompanying text be “Modern Slavery Act Transparency Statement”. 

This is of no concern to an SME then, right? Wrong – for two important reasons. You could scale and find yourself needing a modern slavery statement, the first of which should already mention ways you’ve tackled the issue. And large corporate bosses will need suppliers to meet certain requirements – it doesn’t hurt to know what they’ll be knocking on your door for.

But with there being no mandatory specifics, we unveil some of the basics most have stuck to – using well-known companies as examples.

Acknowledging the issue – Unilever

Each company has been recommended by the government’s Beyond Compliance guide to acknowledge modern slavery and its impact. In this instance, we look to Unilever – and its unveiled statistics highlight how research has been dedicated to the subject.

“According to the ILO there are 21m victims of forced labour. This is unacceptable and must stop. Instances of forced labour take many forms. But each time a person is working or providing a service against their freedom of choice, and cannot leave that work or service without penalty or the threat of penalty, it is forced labour.

“We acknowledge the risk of forced labour occurring in global supply chains. We also know there is more we can do to strengthen our process and oversight in this area. In order for effective and lasting solutions to be found, the root causes of human rights abuses need to be addressed.

“But no one sector can successfully address these issues alone. That is why we will continue to work both bilaterally with our business partners and more widely to create positive change.”

Values – Grant Thornton

Think of the modern slavery statement as a way for consumers to understand your business. Not just by highlighting moral expectations and steps intended for change, but through the policies and values the company is based around as well.

It’s a focus on corporate culture, and, as Grant Thornton demonstrates, sometimes you don’t need a few pages to give it justice.

Our CLEARR values: collaboration, leadership, excellence, agility, respect and responsibility underpin our culture and how we do business. They are embedded throughout our business and set the parameters for how we expect people to behave with their colleagues, clients and the world at large. 

“We seek to treat everyone fairly and consistently, creating a workplace and business environment that is open, transparent and trusted. Our policies and procedures relating to the Modern Slavery Act are in line with our culture and values.”

Read on to see what you can learn from Thames Water, M&S and Tesco when it comes to the modern slavery statement

Policies – ASOS

You may wish to unveil your policies alongside your values. This could include requirements suppliers are contractually set to meet and programmes that have been put in place to protect all workers.

Take ASOS as an example. It explained: “Our main operational policies related to respecting, protecting and remedying the human rights of all those who work on behalf of ASOS, are our human rights statement and ‘Do the Right Thing – ASOS Code of Integrity’. These apply to all areas of ASOS business and supply chains.

“ASOS has been developing its ethical trade programme since 2008 in order to protect workers against human rights abuses, including forced or compulsory labour. Since 2009, ASOS brand and third party brand suppliers have been contractually required to comply with the ASOS supplier ethical code. This has now been extended to non-stock suppliers.

“In 2016 the supplier ethical code was updated and now includes a separate section providing greater detail on what constitutes forced or compulsory labour, or modern slavery. Related supplier policies that support action on modern slavery include ASOS migrant and contract worker policy and ASOS child labour policy.”

Managing and addressing risk: Due diligence – Tesco

Establishing the framework you’ll use to identify and address modern slavery is key. Tesco is a great example of this, stating: “Risks of modern slavery are dynamic and change quickly. Therefore, we regularly reassess and respond to the potential and actual risks in our business and supply chains.

“To do this effectively, we have put in place a due diligence process, in line with the UN Guiding Principles on Business and Human Rights. The process was developed in consultation with over 50 internal and external stakeholders, including industry bodies, civil society groups, as well as government bodies and agencies.

“The key objectives in developing the due diligence approach were to – as a priority – place respect for workers’ rights at the heart of our strategy and ensure the approach we took would be relative to the risk, allowing us to devote more time to the most important challenges.”

It even included a graphic of the five steps underpinning said process.

Further steps you intend to take – Thames Water

One of the trickiest things about the modern slavery statement is showing actual progress and how you plan to further tackle the issue. This can be anything from workforce training to asking suppliers to meet certain standards.

Thames Water did just that in its “further steps to be taken” section. It emphasised: “Following a review by an independent third party of the effectiveness of the steps we have taken to date to ensure that there is no slavery or human trafficking taking place in our supply chain, we intend to take the following further steps to combat slavery and human trafficking.

“New suppliers will be required to answer additional questions (which we are currently developing), in relation to the approach used to comply with the Act, before any orders are placed by our business.

“These responses will be used to validate the appropriateness of those suppliers being added to our supplier list. Also, further and more tailored training for our ‘Buying Team’ will be rolled out to help them identify and recognise high risk commodities and services when ordering goods or services on behalf of Thames Water.”

Key performance indicators – M&S

That you will be judged on your achievements goes without saying. It’s also worth noting, however, that consumers want to know how you measure your own success. They hope to glean how effective your policy has been.

That’s where M&S comes in. The company explained: “We understand that Modern Slavery risk is not static, and will continue our leading approach to mitigating this risk in the year ahead.

“In order to assess the effectiveness of the measures taken by M&S we will be reviewing certain key performance indicators and reporting on them in future modern slavery statements:

“This includes staff training levels; actions taken to strengthen supply chain auditing and verification; steps taken to upskill our high risk suppliers, and assessing their ability to detect and mitigate modern slavery risk in supply chains; as well as investigations undertaken into reports of modern slavery and remedial actions taken in response.”