Modern Slavery Bill

Written evidence submitted by the Rotarian Action Group Against Child Slavery (MS 27)

The Rotarian Action Group against Child Slavery is one of 18 Action Groups approved by Rotary International. We have approximately 1,200 supporters and members in 62 countries and have been involved in and initiated successful anti-slavery projects in the USA, India, Thailand, Nepal and Ghana.

The Mission Statement of the Action Group is as follows:

a)    To create awareness in Rotarian circles and within the wider public influence of the plight of millions of children who are physically and mentally held in servitude as slaves for commercial gain.

b)   To take action by encouraging Rotarians to support, promote and work with anti-slavery bodies in developing prog rammes, campaigns and projects which help to protect children from slavery and its consequences.

Its Officers and Coordinators are Rotarians in the UK, the United States, Italy, India, New Zealand, Australia and South Africa.

Introduction

The Government’s Modern Slavery Bill meets many of the criticisms voiced about the current system of managing, detecting and deterring modern slavery in the United Kingdom. However, as the Bill stands there is a perception that there is too narrow a focus on trafficking and forced labour in the UK as evidenced by the absence of the much expected "supply chain" clause which many anti-slavery activists believe would help to solve the problem of goods produced through slavery abroad. Acknowledging the Government’s firm view that a "supply chain" clause is not appropriate now, this Paper recommends a further amendment to the Reporting Regulations which were agreed in October 2013 under Section 414 of the Companies Act 2006. The Paper argues that "modern slavery" should be added as a separate issue to "human rights", because unlike other abuses of human rights, it is global problem and the number of persons enslaved around the world continues to increase

1. The main aim of human traffickers and slave masters is to make a profit in whatever ventures they are involved with. To achieve their aim, they will use any means whatsoever to protect their lucrative businesses. However, they will walk away if the venture stops making money. So putting pressure on these profits is a key strategy in the fight to eliminate modern slavery. As consumers we can put pressure on slavers’ profits by only buying commodities which we know have not been made by slave labour.

2. It is not easy to identify slave produced goods. Some slave-made goods such as jewellery, fireworks or carpets, come to us finished by slaves, but other products such as cocoa, steel or cotton, may involve slavery somewhere in their processing. The purchase of a shirt is a good example of how difficult it is to identify if slavery is involved because of the processes involved. If it is made of cotton, it is possible that slaves are used to grow and harvest the cotton, as in Uzbekistan. After harvest, cotton may be exported to be made into thread, and it is possible – though less likely – that slaves will be used in the mill that processes the cotton. Then the thread is woven into cloth, and it may again first be shipped from one country to another. We know that cloth factories in some countries use workers in debt bondage. The cloth has then to be cut and sewn into a shirt. A few years ago, a factory using enslaved garment makers was found in California in the USA. The shirt eventually reaches the shop on the high street and is mixed with shirts from other countries and other materials on the rack.

3. Identifying slave produced goods Given all these steps in making products from cotton – or steel, or many other commodities – how can we be sure that we are not buying slave produced goods ? An effective solution would be for firms to carry out audits of their supply chains and then to report their findings to their stakeholders, customers and the general public.

4. Transparency in Supply Chains In 2012 the State of California brought into force its innovative Transparency in Supply Chains (TISC) Act which obliged large firms doing business in or with California to report on the steps that they are taking to address trafficking in their supply chains. A replica of the California (TISC) Act was introduced to the UK Parliament as a Private Members Bill in 2012 by Michael Connarty MP. It had the support of church leaders, business groups, anti-slavery organizations and MPs on all sides. But the debate on the Bill was deferred and failed to be heard before the end of the 2012-13 Parliamentary Session.

5. The Centre for Social Justice (CSJ) issued its damning report in 2013 on the shortcomings of the present system of fighting modern slavery in the United Kingdom. The report entitled "It Happens Here: Equipping the UK to Fight Modern Slavery " highlights the horrific reality of human trafficking and modern slavery in the UK. The report makes evidence-led recommendations for the UK to radically improve its approach to this appalling crime. One of these recommendations relates to the critical role of the private sector in tackling modern slavery and calls for large businesses to publicize their efforts to ensure that their supply chains are free from slavery and to accept their responsibility for stamping out this crime. During the course of their review, CSJ engaged with politicians, business leaders and NGOs to produce the Transparency in UK Company Supply Chains (Eradication of Slavery) Bill. The CSJ model Bill (see Section 7.5 on page 212 of the CSJ Report) proposes that every UK company, with an annual turnover exceeding £100 million, publicly discloses, in its annual report and website, its efforts to eradicate slavery, human trafficking and forced labour from its direct supply chains.

6. Modern Slavery Bill Prompted by the CSJ Report, the Government unveiled its plans to introduce a new all-inclusive Modern Slavery Bill . This was warmly welcomed by most anti-slavery activists because many of the shortcomings of the current system of tackling human trafficking and slavery are being addressed in the new Bill. e.g. consolidation of slavery offences into one Act, the creation of an independent Anti-Slavery Commissioner to drive through improvements in the system, increasing the maximum sentence for relevant offences to life imprisonment, making slavery a priority for the National Crime Agency. But many anti-slavery activists believe that the present Bill is still deficient on a number of issues, e.g. the current visa regulations for domestic workers need to be changed, the absence of an offence to deter anyone who removes, conceals or destroys any identity or travel document. However, this Paper focusses solely on the validity of excluding from the Bill, a mandatory supply chain clause along the lines proposed by the CSJ or by a similar proposed Bill by the Anti-Trafficking Monitoring Group, which lists as members Amnesty International UK, Anti-Slavery International, ECPAT UK, Kalayaan and UNICEF UK.

7. Audits of supply chains need to be mandatory The Evidence Review Team, commissioned by the Government to gather intelligence for the proposed legislation on modern slavery received evidence that a purely voluntary approach by companies would not be as effective at eliminating modern slavery as a mandatory approach. However, the Home Office issued a statement explaining that supply chain auditing would remain voluntary, because mandatory requirements would be an "additional burden" on businesses. The Home Office also pointed out that since the EU was likely to enact new laws in 2016 forcing companies to report on human rights in their "business relationships", it would not sensible now to introduce legislation which may need to be amended to conform to any new EU requirements.

The Government’s reluctance to introduce a mandatory reporting requirement on companies because of the fear of increasing red tape, is disappointing because recent studies have shown that companies simply do not carry out in depth checks on their supply chains unless they are required to do so. The Corporate Responsibility Coalition (the leading UK civil society network on corporate accountability) has stated that the need for legislative action on supply chains was paramount and that "voluntary action is insufficient to resist competitive pressures to deliver short-term profit". Ironically, Frank Field, the Labour MP, who chaired the Evidence Review Team, stated that the team "marshalled a huge amount of support from business for a supply chain clause"

NB: Whilst mandatory reporting of supply chains audits is currently not on the Government’s agenda, the first steps have already been taken in Europe. On February 26, 2014, the European Parliament voted in support of binding EU rules that ensure that all companies operating in the EU, using or trading minerals sourced from conflict-affected areas, check their supply chains to reduce the risk of conflict financing and human rights abuses.

8. An alternative approach Ideally the Government should reconsider its view and include a supply chain clause in the Modern Slavery Bill. However, if the Government is adamant not to include a supply chain clause in the Bill, there is an alternative course of action, already suggested by the Evidence Review Team, which could be built on existing reporting requirements, results in minimum legislative disruption and does not impose an additional level of burden on companies. Such an objective could be achieved by a further amendment to Section 414C(7) of the Companies Act 2006. Under the Act and its 2013 Strategic Report and Directors’ Report Regulations, the directors of a company must prepare a strategic report for each financial year of the company. The regulations specifically requires the strategic report of quoted companies to include information about "social", "community" and "human rights" issues. If any of these issues are excluded from the report, its absence must be explained. There is a strong case to argue that "modern slavery" should be added to this list.

9. "Human Rights" is too broad an issue It could be argued that "modern slavery" is already included under the "human rights" issue. Yet the latter includes a whole range of issues (e.g. giving prisoners voting rights) and by including "modern slavery" within the broad heading of human rights, relegates its importance and focus for action. Modern slavery should be treated separately, because unlike other abuses of human rights, it is a global problem and the numbers of people enslaved is significant. According to Walk Free’s Global Slavery Index, there are an estimated 30 million people held in servitude in every country in the world (with the exception of Antarctica), generating $150 billion in illegal profits each year. Increasingly, this globalized slavery has been found running through the supply chains which lead directly to our high streets and supermarkets. Including the term "modern slavery" separately, focusses the mind specifically on the crime and will inform companies, their consumers and the general public that slavery does exist, is not an evil of the past or restricted to certain countries in the developing world. The inclusion of "modern slavery" in the reporting regulations would also give a tremendous boost to anti-slavery activists. Anti-slavery bodies are few in number. They are like mice fighting a herd of elephants. They need the support of businesses and their customers to eradicate this most disgracefully overlooked crime against humanity.

10. Modern Slavery inclusion in the Companies Act The advantages of using the Companies Act reporting requirements now to highlight the importance of UK companies playing their part in combating slavery elsewhere can be summarized as follows:

a) There would be no ambiguity as to which companies (i.e. quoted companies) would be required to comply with the relevant reporting requirements.

NB. Quoted companies are those whose shares are bought and sold on the Stock Exchange.

b) Companies will have a greater incentive not to turn a blind eye to exploitation occurring in their names by their suppliers. Companies failing to address the issue of modern slavery in supply chains will incur legal sanctions and reputational damage, which may have far-reaching commercial consequences.

c) No additional burden would be imposed on companies already tackling modern slavery.

d) Ethical companies would be easily identified by consumers and investors.

e) Beefing up the Companies Act would enable Prime Minister Cameron to demonstrate that the UK has taken the lead in eradicating modern slavery, without waiting for any future EU deliberations.

11. Recommendations

The Rotarian Action Group against Child Slavery recommends that the Secretary of State

a) includes the words "modern slavery" as an additional issue to be reported on, under Section 414 C of the Companies Act 2006 and

b) specifies by Order, the requirements for the "modern slavery" section of each Company’ s strategic report. These requirements should include explanations as to how the company has, with respect to modern slavery:

1. verified its supply chains to evaluate and address risks.

2. audited its suppliers

3. certified goods and services purchased from suppliers

4. maintained internal accountability standards, and

5. trained its staff.

NB The Order requirements above are based upon the recommendations of the Joint Parliamentary Committee on the draft Modern Slavery Bill. The above Order should also require that this information is published online.

October 2014