Chapter 5: Supply chains
172.Section 54 of the Modern Slavery Act 2015 introduced a requirement for large commercial organisations supplying goods or services, and carrying out business in the UK, to prepare a slavery and human trafficking statement for each financial year. In these statements, companies over a certain threshold of turnover (set by the Secretary of State, currently set at £36 million) must state the steps they have taken to ensure that slavery and human trafficking is not taking place in its business or supply chains, or it must state it has taken no such steps.216
173.In 2019 the Government launched a consultation on Transparency in Supply Chains (TISC) to gather views on measures to “future-proof” the approach to supply chains and improve transparency. As a result of this consultation, the government agreed to make a number of improvements, many of which would require legislation in order to take effect. This included a commitment to extend reporting requirements to public bodies with budgets of £36 million, making it mandatory for organisations to publish a register of statements, introducing required topics for each statement to cover, and introducing financial penalties.217 At the time of this report, none of these commitments had been brought forward as legislation.
174.There have been recent developments impacting the issue of supply chains and modern slavery. Baroness Young of Hornsey described how issues with supply chains had been “highlighted and exacerbated” by the impact of COVID-19 on businesses and manufacturers globally.218
175.In a report in March 2021, the House of Commons Business, Energy and Industrial Strategy Committee found compelling evidence that many major companies with large footprints in the UK were complicit in the forced labour of Uyghurs in China. That Committee suggested that section 54 be strengthened by widening its scope and imposing fines for non-compliance.219
176.In the 2022 Queen’s Speech, the then government set out their intention to introduce a new Modern Slavery Bill which would “increase the accountability of companies and other organisations to drive out modern slavery from their supply chains”. However, this proposed bill was never introduced to Parliament.
177.At the time of the 2015 Act, the provisions on supply chains were considered world leading, with the UK being the first in the world to mandate reporting on modern slavery risk.220 In the years since, several countries have gone beyond transparency requirements by introducing due diligence legislation which requires companies to be responsible for what is happening in their supply chains.221
Statements
178.Section 54 of the Modern Slavery Act mandates statements from companies of a certain size each year. However, it does not mandate what a statement should contain, and there is little provision for enforcement. While the Home Secretary can enforce the duties imposed by section 54 through an injunction, this power has never been used. For companies that do not meet the threshold, statements are entirely voluntary.
179.We heard that the voluntary reporting criteria under section 54 is insufficient. Ardea International wrote that reporting obligations “have not been effective in preventing modern slavery”, with cases continuing to arise within supply chains of companies that have complied with reporting obligations. They wrote that, of the companies who do not meet the threshold, many do not choose to voluntarily report on modern slavery commitments “because the incentives are not there.”222
180.Section 54(4)(b) of the Modern Slavery Act allows companies to produce a statement saying that they have taken no steps to address modern slavery risks. Weronika Dorociak, Programme Manager for Sustainability at techUK, told us that “We do not think that companies should be allowed to say that they have not done anything … I think that section 54(4)(b) should be removed.
181.Ardea International told us that because section 54 does not mandate the contents of statements, companies are reporting “under inconsistent themes”.223 CCLA Investment Management and Rathbones told us that it should be mandatory for companies to include in their statement “an assessment of effectiveness in ensuring that slavery and human trafficking is not taking place” in the business or its supply chains, “an assessment of the impact of [the companies’] trading, procurement and pricing practices and its use of grievance mechanisms”, a list of all countries and companies from which the business sources, information on their processes for remediation of victims, summaries of all identified instances of forced labour identified, and details of engagement with worker associations and trade unions.224
182.We heard from witnesses about the value of a mandatory registry.225 The Home Office launched its registry in March 2021, and they told us that 12,600 statements had been uploaded to the registry, covering 43,200 organisations.226 The UK Sustainable Investment and Finance Association (UKSIF) wrote that a mandatory registry would “provide accountability and transparency over how companies are addressing modern slavery risks.”227
183.The contents and quality of business statements appears to be highly variable. Dr Bruce Pinnington, Senior Lecturer in Operations and Supply Chain Management at the University of Liverpool, described how they were in part limited by a lack of knowledge about supply chains amongst businesses. He described interviewing practitioners who “did not even fully understand what a supply chain was … They were not thinking vertically at all.”228.
184.There has been research into the quality and contents of modern slavery statements. Dame Professor Sara Thornton told us that, in her work with CCLA Investment Management, they “published a benchmark of the modern slavery disclosures of the top 100 companies”. They found that all but one of the companies had filed a statement, but the statements submitted “were very heavy on policies, rather than what we were really looking for, which was a commitment to find and fix modern slavery. A quarter of them reported finding modern slavery, and nine out of the 100 talked about remedy and reparations.”229
185.Dr Bruce Pinnington told us that in modern slavery statements, “inward-facing sections are complied with rather more than the externally facing sections.” Businesses and organisations preparing modern slavery statements generally appear to find it “easier” to talk about their structure, policies and training, but these areas of the statements are still “generally very basic”. He noted that large multidivisional businesses produce only one modern slavery statement for their wide-ranging areas of business, arguing that “I do not understand how Siemens can write a single modern slavery statement when it is in the software business at one end and making trains at another. How can it possibly write a single, meaningful statement?”. In terms of the detail of statements, he noted that “an awful lot of businesses just publish lists of policies without explaining their relevance.”230 He also highlighted that because of the complexity of modern slavery, the reporting sections should require that companies and organisations “look for specific actions to be taken in relation to discovery as well as disclosure.”231
186.We heard that it would be easier for companies if the reporting timelines were less rigid. Weronika Dorociak told us that techUK’s view was that “companies should be able to align them with their own preferences, with their own business operations.”232
187.Modern slavery statements by companies are inconsistent and the lack of mandated requirements for content makes it difficult for companies to be held accountable for their transparency, even with the voluntary public registry.
188.The inconsistent quality and content of modern slavery statements obfuscates the transparency section 54 was intended to provide. This might be the result of insufficient guidance or engagement with companies, as well as a result of the lack of mandated topics for statements to cover.
189.The Government should make publication of statements on its modern slavery registry mandatory, setting out the required topics for each statement to cover. This should include a description of how the organisation has assessed the effectiveness of its actions.
190.The Government should increase awareness amongst all companies about supply chains and publish standardised and accessible guidance for compliance with section 54.
191.The Government should create a summary dashboard with information including numbers of statements in total, by sector, and from organisations in scope, and examples of good and bad reporting by companies. This dashboard should be published online.
Enforcement
192.We heard extensively about options for enforcing the supply chains provisions of the Modern Slavery Act. Ben Greensmith told us that “the only way we will get companies to play their part and up their game is through the threat of penalties”.233 Baroness Young of Hornsey noted that it is “critical” that practices are monitored and enforcement penalties are implemented, telling us that “if it is all theoretical”, without sufficient oversight, companies will feel that they “can get away with these things”.234 Professor Genevieve LeBaron told us that her research “found that the more stringent the legislation is, the more effective it is … is it mandatory, is it well enforced, are there penalties, does it require more from companies than simply reporting, and does it require them to change their practices that we know lead to forced labour, modern slavery and child labour?”235 She described the UK Modern Slavery Act as “low stringency or medium stringency” when compared to other countries’ legislation.236
193.However, Dr Bruce Pinnington cautioned that enforcing compliance of section 54 would not necessarily lead to good practice, telling us that having all companies produce a statement “could give us a false sense of security that we had 100% compliance with the Act, but that would just mean that everyone was publishing a vacuous statement on the internet and it was nicely signed.”237.
194.We heard varying views on the value of sanctioning directors for non-compliance. Some used the Bribery Act 2010, which enforces director liability, as a point of reference.238 In 2021, the House of Lords Select Committee on the Bribery Act 2010 found that the Act was world-leading.239 Baroness Young of Hornsey told us that “once you make an individual or a body of people absolutely responsible for what happens within those value chains or supply chains”, it should have an impact. She argued that “if the sanctions are not high enough, people just choose not to follow the laws … We think that liability in that sense, which is quite clear and has strong enough sanctions, is a way of catalysing stronger behaviour and responsibility throughout the organisation.”240 Ben Greensmith stated that sanctioning directors can “co-exist” alongside other penalties. He said that that “there is needs to be a level of accountability in the boardrooms with directors.”241 Sian Lea said that companies will “have to discover what the harm is and mitigate it, prevent it or remediate it”, which “shifts the burden of proof from victims to businesses.”242
195.Adis Sehic referenced the issue of “phoenixing”, where a company dissolves itself after malpractice, and sets up anew. He said that for the Works Rights Centre caseworkers, “there is still an issue about how you actually hold the individuals who are running these companies liable in individual cases.”243 Dr Caroline Emberson said that “if you target the directors, you can make sure that those people do not just reintroduce a new business and perpetuate the same problematic practices.”244
196.However, we also heard about the risks of introducing director liability. Peter McAllister told us that “the worry if we make directors personally liable is that you will just get lawyers in between them and any of these sorts of good practice.”245 Dr Martin Buttle told us that while director liability “would certainly increase business action on modern slavery”, the systemic and hidden nature of the crime means that “any liabilities should be based on the strength and nature of the connection between the companies and the human rights harm.246 Weronika Dorociak said that techUK would not support director liability because they feel that the consequence would be a “higher rate of termination of contracts” as the “safer option”, which could have negative impacts on local communities relying on that work. She also argued that civil liability “inevitably” leads to “more prescriptive approaches”, rather than “flexible” ones. She argued:
“part of the success of the Modern Slavery Act is the fact that it provides a safe space for companies to talk about what they do on modern slavery. If you take that away, there is a risk that directors will disengage or disengage early and do the bare minimum to comply with the regulations.”247
197.There were a wide number of enforcement approaches that were raised in evidence. Baroness Young of Hornsey told us that one option is “escalation”, where companies are given the opportunity to improve “and if it is still not done or done totally inadequately, you up the ante.”248 Dr Caroline Emberson told us about how Brazil has “a list that sanctions individuals who are engaged, rather than companies.”249 We heard from Eike Wiesner that in Germany, BAFA has “a wide range of possibilities to enforce the legal requirements under the law. If a company does not conduct a risk analysis with regard to human rights and environmental risks, we can decide at our discretion whether they have fulfilled the legal requirement and then, based on that, we can lay sanctions on them. It depends on the degree of violation, of course, but we can do it in up to 2% of the annual turnover of the company under the scope.”250
198.There are many options for enforcing the supply chain requirements of the Modern Slavery Act, but the current approach of no enforcement is not one of them. We believe that the most important aspect to consider when deciding an enforcement approach is proportionality.
199.The Government should introduce proportionate sanctions for organisations that do not comply with supply chain requirements.
200.Several different government departments share responsibility for various aspects of the Modern Slavery Act. Joanna West, Joint Director of the Tackling Exploitation and Abuse Directorate at the Home Office, told us that the Home Office leads “on transparency reporting and the requirements under section 54”, while the Department for Business and Trade (DBT) “leads on overall relationship with UK businesses.” She told us that their teams “work closely together and collaborate to ensure that modern slavery is taken account of.”251
201.Laura Farris MP told us that “there is an inevitable cross-departmental flavour” to modern slavery work. She said that these cross-departmental issues, such as supply chains, which are primarily within the purview of the Department for Business and Trade “should be addressed in a full modern slavery strategy.” She also told us about some potential issues in cross-departmental work, describing that she had faced a “persistent problem” resulting from her ministerial brief cutting across both the Home Office and the Ministry of Justice (MoJ), as the Home Office is unable to access MoJ data.252 Tom Surrey from DHSC told us that part of the role of his department is to be “as easy and good to work with” as they can be, including facilitating the sharing of data and intelligence. He said that they have a “data-sharing protocol” in place with UKVI, the CQC, and local government, as well as Operation Topaz for formal intelligence sharing.253 When asked about the potential for the Department for Business and Trade to become actively involved in issues relating to the care sector, Mike Warren told us that he thinks it would not help for DBT to “insert itself into every area of sector ownership across government, where we do not have the subject matter expertise or the funding levers”, but that when it comes to issues relating to the labour market and exploitation in the care sector, “DBT and its arm’s length bodies are very much involved.”254
202.The cross-departmental reality of modern slavery can obfuscate approaches to enforcement, particularly in the case of supply chains where the Department for Business and Trade has a particular responsibility. Efficient working between departments is essential to addressing modern slavery, and while departments have described how they work together, it would be beneficial to set out formally the role of each department in combatting modern slavery.
203.The Government should clarify responsibility for enforcement in its modern slavery strategy, including making it clear how this is divided between departments and ensuring that departments are properly resourced to discharge this responsibility efficiently and effectively.
Public procurement
204.Section 54 of the Modern Slavery Act applies only to commercial organisations, not to public bodies. Peter McAllister told us that “there are many companies, such as those that supply into the public sector, that are not subjected to [the] level of scrutiny or pressure” that large commercial organisations are.255 We discussed the relationship between public procurement and reports of modern slavery in the care sector in Chapter 3.
205.Under the Public Contracts Regulations 2015, modern slavery is included as a reason to exclude organisations from contracts.256 Public bodies are required to give a minimum of 10% weighting to social value criteria which include modern slavery considerations under Public Procurement Note 06/20.257
206.We heard from Home Office officials about the public procurement processes of the civil service. Rebecca Wyse, Joint Director of the Tackling Exploitation and Abuse Directorate at the Home Office, described to us the “centralised commercial operation” based in the Cabinet Office. She told us that commercial staff across government are “trained in how to identify and address modern slavery risks in public procurement”, citing the Procurement Act 2023 as providing government “with the power to exclude suppliers where there is compelling evidence of modern slavery in their supply chains.” In 2019, the Home Office launched a modern slavery assessment tool to help public bodies assess their supply chains, to enable them “to make an informed decision.”258 When deciding to award government contracts, an assessment of the social value, which includes modern slavery, is now “worth 10% of the bid”. She said that “government continues to push hard on this and to ensure that we are showing best practice. We are doing well, but I would not like to say that we are perfect.”259
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The Procurement Act 2023 aimed to “reform the United Kingdom’s public procurement regime” following Brexit. The Act covers contracts awarded by most central government departments and their arms length bodies, as well as the wider public sector such as the NHS and local government. Part three of the Act legislates for the introduction of a public debarment list for serious cases of misconduct. Suppliers can be investigated for debarment on national security grounds, including cases of modern slavery. |
Source: Government Commercial Function, ‘The Procurement Act - a summary guide to the provisions’ (16 June 2022): https://www.gov.uk/government/publications/the-procurement-bill-summary-guide-to-the-provisions/the-procurement-bill-a-summary-guide-to-the-provisions#exclusions-and-debarment [accessed 1 October 2024]
207.Other witnesses, however, had some concerns about public procurement processes. Peter McAllister told us that in relation to the Public Procurement Act, he was worried “that the intent is to exclude suppliers. If you as a supplier said, “We found modern slavery in our security firms or in our warehousing”, the incentive would not be to report that, mitigate it and deal with the victims; it would probably be to hide it because you would be worried about losing your contract.”260 He told us that a “better way forward” is “driving transparency … and rewarding companies that take action to find these things” and work to resolve them.261 Hannah Newcomb told us that Stronger Together has heard “directly” from the organisations they work with that they are concerned that the debarment provision of the Procurement Act “could lead to issues being hidden”. She said that it would be a “crucial message that reporting instances and supporting potential victims to access remedy will not lead to debarment if a business or an organisation is proactive in finding the issue, responding to that issue and providing remedy.”262
208.Rebecca Wyse told us about their work with members of the Five Eyes nations “to share best practice and collectively increase the standards.”263 Hannah Newcomb told us that in 2018, the UK, USA, Canada, New Zealand, and Australian governments “committed to a series of modern slavery principles in relation to public procurement”, but that the “impact” of these commitments is unclear. She told us that while the Government committed to the “employer pays principle” and mentioned this in their 2019–20 Modern Slavery Act statement, it was not mentioned in their next two statements.264
209.We heard about the NHS as an example of mapping supply chains in public procurement. Sara Thornton told us that the review of modern slavery and human trafficking risks in NHS supply chains from December 2023, in accordance with the Health and Care Act, found that 21% of the 1,300 suppliers examined “had a high risk of forced labour … a lot of which was sourced from China”.265 Eleanor Lyons told us “the NHS now has new regulations potentially being developed as a consequence of the Health and Social Care Act.”266 Sara Thornton told us that, as well as following the guidance under the Procurement Policy Note 02/03, “the importance of improving supply chain mapping”, increasing the number of people within the NHS “who know what they are doing”, and “standardising risk assessments” should all be incorporated into regulation.267 However, Peter McAllister told us that the public sector is “still largely stuck in compliance mode” and use a “passive approach” to complying with regulations. He said that major businesses “have moved beyond that passive compliance approach … whereas it seems that much of the public sector is still stuck”, in a passive approach, by simply stating conditions in contracts and not taking any further responsibility.268
Box 5: Review of risk of modern slavery and human trafficking in NHS supply chains
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The Health and Social Care Act 2022 introduced reforms to the administration and delivery of health and care services in England. Section 47 of the Act required the Secretary of State for Health and Social Care to assess the potential risks of slavery and human trafficking in NHS supply chains in a comprehensive review. That review was published in 2023 and concluded that there needed to be regulation setting out how to address modern slavery risks in the procurement process, to allow the NHS to use its buying power more effectively to eradicate modern slavery. However, the review stated that it was “not presently possible to avoid high risk suppliers completely.” |
Source: Department of Health & Social Care, ‘Review of risk of modern slavery and human trafficking in the NHS supply chain’ (18 December 2023): https://www.gov.uk/government/publications/review-of-risk-of-modern-slavery-and-human-trafficking-in-the-nhs-supply-chain/review-of-risk-of-modern-slavery-and-human-trafficking-in-the-nhs-supply-chain#executive-summary [accessed 1 October 2024]
210.While recent developments in public procurement are positive, a passive approach is insufficient. Companies should be encouraged to be transparent and address modern slavery where it is found, rather than fear debarment if they discover it. Government should lead by example and meet the same standards of responsibility to reduce modern slavery in its supply chains that should be required of private companies.
211.The Government should improve the implementation of its guidelines so that its supply chains compliance is proactive rather than passive. It should be able to demonstrate this through tangible action to reduce modern slavery.
212.The Government included in the 2022 Queen’s Speech detail about a proposed new Modern Slavery Bill. This proposed new Modern Slavery bill was set to include provisions requiring public sector bodies with a budget of £36 million or above to be subject to the requirements of section 54.269 We heard from multiple organisations and individuals supporting this idea.270
213.The British Retail Consortium told us that the “complex supply chains” of public bodies make them “susceptible to modern slavery and exploitation”.271 In our care sector chapter, we discuss the potential impact of extending duties to public bodies on the significant number care providers that receive public contracts, who may not meet the £36 million threshold themselves.
214.The Scottish government wrote to us that they consulted on proposals to extend supply chain reporting requirements to public bodies in Scotland in 2022, but that while responses were generally favourable, “there were concerns raised as to the resource implications” of such requirements.272
215.Section 54 of the Modern Slavery Act should be extended to all bodies in the public sector with an annual budget equivalent to that of the commercial organisations to which it applies.
Specific provisions
216.In the 2022 Queen’s Speech, the Government stated that the proposed new Modern Slavery Bill would reduce “the prevalence of modern slavery in supply chains through increased transparency from businesses and public bodies, building on the strong foundations of our existing approach to increase the pressure on those who do not take action”. This would include “strengthening the requirements on businesses with a turnover of £36 million of more to publish an annual modern slavery statement … mandating the reporting areas to be covered in modern slavery statements”, requiring publication of statements on a government registry, extending section 54 requirements to public bodies, and introducing civil penalties for non-compliance.273
217.Dame Professor Sara Thornton told us that the new Modern Slavery Bill announced in the Queen’s Speech had been drafted and “was ready to go”. She told us that the legislation, as drafted, “could have made a difference to very vulnerable workers.”274 However, Dr Bruce Pinnington felt that, though the recommendations resulting from the 2019 consultation would be “useful”, they would be of “limited value” because “the world has changed … If it were run again now, we might conclude that perhaps even that did not go far enough, let alone the Government’s watered-down response to it.”275
218.The contents of the proposed Modern Slavery Bill outlined in the Queen’s Speech in 2022 would constitute a positive improvement on the current picture of supply chain provisions for modern slavery, although they could go further.
219.The previous Government drafted legislation on supply chain reporting. This draft legislation should be strengthened by the current government, and must, as a minimum, require relevant companies and public sector organisations to report and set out meaningful, reasonable steps to both identify risks and tackle modern slavery in their supply chains. Those failing to do so should face proportionate sanctions and, in the interests of transparency, a central register of such statements should be published by government.
Due diligence
220.There have been many calls for obligations to be imposed on businesses beyond the transparency requirements of section 54, by introducing mandatory due diligence. Sian Lea, Business and Human Rights Manager at Anti-Slavery International, told us that mandatory reporting “still does not get to the heart of the issue … compliance does not equate to meaningful action to eradicate modern slavery within global supply chains.”276 There are a number of companies that voluntarily perform due diligence, such as those working with the Ethical Trading Initiative (ETI). Peter McAllister, Executive Director of ETI, told us that companies that do due diligence in their supply chains do so “typically because they have been exposed to campaigns, have had shareholders ask them or are exposed to consumers’ demands”. He told us that “unless you are tapping into” one of the motives driving business action, businesses will be reluctant to engage. He told us that the companies that do engage are frequently consumer-facing.277
221.It was the belief of the majority of witnesses that voluntary due diligence is insufficient. Peter McAllister told us:
“It is about relying not just on the few good ones or people who have been caught in the public eye but on carefully thought-out regulation that rewards and encourages good behaviour, and ultimately holds companies to account if they fail to demonstrate that they take these sorts of issues seriously.”
222.It was his feeling that “levelling of the playing-field will come from well thought-out regulation.”278 This idea of “levelling the playing field” through legislation was also supported by Ben Greensmith, Managing Director of Tony’s Chocolonely. He noted that in the field of cocoa, “over two decades of self-regulation have been totally ineffective.” We heard from Baroness Young of Hornsey that she had encountered many businesses who wanted to “push” current transparency requirements further to mandatory human rights due diligence legislation.279 Hannah Newcomb also told us that Stronger Together has heard from many businesses they work with that they would “welcome mandatory human rights due diligence legislation to help level the playing field.”280
223.We heard varying views on what the threshold should be for companies, if any, to be subject to mandatory due diligence. Peter McAllister described the “ripple effect” that would result from companies with a £36 million turnover undertaking due diligence in their supply chains, because “a lot of the smaller companies supply or sell to larger companies.”281 Dr Katherine Christ and Hon Professor Roger Burritt told us that “small and medium sized enterprises are being increasingly caught up with the reporting requirements of larger entities, often having to provide similar information in different ways multiple times … updated government guidelines should be provided to assist smaller entities and suppliers who do not meet the threshold, but to whom disclosures trickle down in their downstream contracting.”282. Peter McAllister said that while it would be best if all companies were concerned about due diligence, “for practically driving behaviours and reactions and normalising good behaviour” the £36 million that threshold is probably reasonable.”283
224.Small and medium businesses could find mandatory due diligence more challenging to achieve than larger businesses, due to the expense. Weronika Dorociak told us that techUK would “definitely not throw SMEs into the mix, at least not immediately, because the costs would be enormous for them.” She said that businesses they had consulted told them that the cost of due diligence on modern slavery would be in the “eight figures”284. Dr Bruce Pinnington suggested “a two-track system, where SMEs are subject to controls similar to now, in that they first have to become aware and start writing modern slavery statements, but the larger firms—the above threshold firms—should undertake mandatory due diligence.”285
225.We also heard that due diligence should not be limited to modern slavery practices, but should include other forms of exploitation such as sexual harassment, wage theft, and denial of trade union rights. Peter McAllister told us that “modern slavery does not exist in a vacuum. The best way to tackle it is to make sure that we are shining a light on all forms of abuses and removing the space for modern slavery to exist.”286
226.The Minister for Victims and Safeguarding, Laura Farris MP, told us that there have been “incremental” changes in this area since the Act, but acknowledged “there is room for improvement in this area.”
227.The Government should introduce legislation requiring companies meeting the threshold to undertake modern slavery due diligence in their supply chains and to take reasonable steps to address problems. We recommend that they consult businesses on potential changes, looking closely at the issues we have raised and giving due consideration to small and medium sized companies’ ability to meet any new requirements.
228.There have been developments in multiple countries where mandatory human rights due diligence has either been introduced or is being considered. Multiple witnesses mentioned countries such as Germany, France, Norway, US, Canada, as well as the due diligence proposals in the EU.287 Anti-Slavery International wrote to us that, in this context, the “UK must play its part in addressing forced labour in value chains and align UK policy with international developments and consensus on the need for mandatory due diligence laws.”288 techUK wrote to us that “the global landscape has shifted towards rigorous sustainability reporting and due diligence standards, and the UK is yet to catch up with these trends”.289 However, Professor Genevieve LeBaron noted that “the most stringent” examples internationally are still “relatively new, so we are still waiting to build up the evidence base that shows that they lead to those types of changes in corporate behaviour as opposed to merely reporting.”290
229.Professor Genevieve LeBaron told us that, compared to other legislation internationally, the UK Modern Slavery Act is “low stringency or medium stringency”. In contrast, higher stringency laws are the 2017 French Duty of Vigilance law and the 2022 Norwegian Transparency Act. She said that higher stringency legislation usually comes from “models that have some due diligence provisions.” She noted the flaws of reporting-style legislation, where “companies tend to report on things that we know do not work” and “often contain loopholes around the portions of supply chains that are most likely to be full of things like modern slavery.”291
Box 6: Examples of international due diligence laws
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In 2017 the Duty of Vigilance Law was passed in France. The Act:
In 2018, the Australian Modern Slavery Act was passed. The Act:
In 2022, the Norwegian Transparency Act was passed. The Act:
The German Act on Corporate Due Diligence Obligations in Supply Chains came into force in January 2023. The Act requires companies with at least 3000 employees total, or with at least 1000 employees in Germany, to:
The EU corporate sustainability due diligence directive was given approval by the Council of the European Union in May 2024. The directive:
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230.The developments internationally on due diligence indicate that the UK has fallen behind. As many UK companies operate internationally, they will find themselves obligated to meet the due diligence requirements of other nations.
231.The Government should make UK due diligence law compatible with the standards of the international landscape to make compliance easier for companies.
232.We have considered the idea of altering the threshold for companies that are obligated to follow Section 54 of the Modern Slavery Act, which is currently a turnover of £36 million for commercial organisations. We have also contemplated what the threshold should be, if any, for the due diligence legislation that we have recommended. The form the threshold should take has also been raised. We heard from representatives of the German Federal Office for Economic Affairs and Export Control, which is responsible for implementing the German Act on Corporate Due Diligence Obligations in Supply Chains, that their threshold is determined by the size of companies. In 2023, the threshold was companies with at least 3000 employees. In 2024, this was changed to companies with at least 1000 employees.297
233.While there are a wide number of options for what thresholds should be applied to supply chain legislation, we believe that these thresholds should be consistent across sectors, including the public sector.
234.Any measures introduced for the private sector should apply equally to the public sector. Consideration should be given as to how to implement this principle in detail, such as the appropriate threshold to use for the public sector (see paragraph 215).
Import bans
235.When considering international developments in modern slavery, the US Uyghur Forced Labor Prevention Act (UFLPA) was frequently raised by witnesses. Sara Thornton told us that the “clarity” of the approach of banning imports unless the absence of forced labour is proven, is “an attractive idea”, in addition to due diligence laws. She noted that the EU was also looking at emulating the US approach.298
Box 7: The US Uyghur Forced Labor Prevention Act (UFLPA)
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The Uyghur Forced Labor Prevention Act (UFLPA) was introduced and signed into law in December 2021. The Act prohibits the importation of goods mined, produced, or manufactured wholly or in part in the Xinjiang province of China or by an entity on the UFLPA Entity List. The UFLPA Entity List contains lists of entities that are known to:
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Source: US Customs and Border Protection, ‘Uyghur Forced Labor Prevention Act’ (1 July 2024): https://www.cbp.gov/trade/forced-labor/UFLPA [accessed 1 October 2024] and US Homeland Security, ‘UFLPA Entity List’(10 February 2024): https://www.dhs.gov/uflpa-entity-list [accessed 1 October 2024]
236.Sian Lea asked the question “what will the UK do to stop itself being a dumping ground for products that have been rerouted from other jurisdictions with stronger legislation?” She noted the risk of “bifurcation”, where “a company has a clean supply chain into the US and does not worry about its supply chain for the rest of the world”. Sian Lea advocated for an import ban which works “complementary” to due diligence legislation, noting import bans that are well designed can ensure remediation for victims.299 Professor Genevieve LeBaron told us that the Canadian government have introduced an import ban on goods made with forced labour as part of new legislation with the United States and Mexico. She felt that this was an “important development” for Canada, which some critics have described as becoming a “dumping ground” following the United States’ import ban.300
237.However, we also heard about the limitations and risks of import bans. Dr Bruce Pinnington told us that “import bans are a bit after the fact”, rather than being prevention focused. He noted that remediation is not always a solution, naming cases “where payment has not gone back to the people who produced the material in the first place.” He told us that if import bans become “the main instrument” they can cause “further damage back at the source.”301 Peter McAllister told us that “we have to be careful that we do not demonise parts of the world … It would really worry me if we suddenly decided that cocoa was essentially a demonised product because there is some forced labour and plenty of child labour.”302
238.While import laws could assist in preventing goods made with forced labour from entering the UK, country-specific bans have significant foreign policy implications. However, without any consideration of import laws, the UK risks becoming a dumping ground for tainted products.
239.The Government should consider introducing import laws which ban goods being brought into the UK if they are produced by certain companies known to use forced labour. These import laws should not be targeted at particular countries.
240.The Department for Business and Trade officials explained how modern slavery is considered during trade negotiations. Matthew Davies told us that “modern slavery forced labour is a core part of the way we think about our negotiations programme”. When they negotiate agreements, provisions are sought in a “labour chapter” or “trade and sustainable development chapter” where they seek to get the “partner countries to reaffirm and reinforce the ILO conventions or declarations.”303
241.The Government should include the issue of modern slavery and forced labour in its trade negotiations.
216 Modern Slavery Act 2015, section 54
219 Business, Energy and Industrial Strategy Committee, Uyghur forced labour in Xinjiang and UK value chains (Fifth Report, Session 2019–21, HC 1272)
221 World Favor, ‘The ultimate guide to Human Rights Due Diligence laws – who’s affected and how to comply’ (April 2023): https://blog.worldfavor.com/the-complete-list-of-national-human-rights-due-diligence-laws-whos-affected-and-how-to-comply [accessed 1 October 2024]
223 Ibid.
225 Written evidence from CCLA Investment Management and Rathbones (MSA0054) and UK Sustainable Investment and Finance Association (MSA0034)
236 Ibid.
239 Bribery Act 2010 Committee, The Bribery Act 2010: post-legislative scrutiny (Report of Session 2017–19, HL Paper 303)
256 The Public Contracts Regulations 2015 (SI 2015/102)
257 Cabinet Office, Procurement Policy Note – Taking Account of Social Value in the Award of Central Government Contracts (September 2020): https://assets.publishing.service.gov.uk/media/5f6ccf89d3bf7f7237cf4015/PPN-06_20-Taking-Account-of-Social-Value-in-the-Award-of-Central-Government-Contracts.pdf [accessed 1 October 2024]
259 Ibid.
261 Ibid.
269 The Prime Minister’s Office, The Queen’s Speech 2022, (10 May 2022), p 83: https://www.gov.uk/government/publications/review-of-risk-of-modern-slavery-and-human-trafficking-in-the-nhs-supply-chain/review-of-risk-of-modern-slavery-and-human-trafficking-in-the-nhs-supply-chain#executive-summary [accessed 1 October 2024]
270 Written evidence from The British Retail Consortium (MSA0025), Arise (MSA0026), Justice and Care, Centre for Social Justice (MSA0037), Anti-Slavery International (MSA0076) and CCLA Investment Management (MSA0054).
273 The Prime Minister’s Office, The Queen’s Speech 2022, (10 May 2022), p 83 https://www.gov.uk/government/publications/review-of-risk-of-modern-slavery-and-human-trafficking-in-the-nhs-supply-chain/review-of-risk-of-modern-slavery-and-human-trafficking-in-the-nhs-supply-chain#executive-summary [accessed 1 October 2024]
291 Ibid.
292 General Directorate of the Treasury of France, ‘New law on the duty of vigilance of parent companies and on its affiliated entities’ (9 May 2021): https://www.diplomatie.gouv.fr/IMG/pdf/law_on_the_duty_of_vigilance_cle8b1211.pdf [accessed 1 October 2024]
293 Explanatory memorandum to the Modern Slavery Bill 2018, The Parliament of the Commonwealth of Australia
294 Erling Grimstad, Businesses must respect basic human rights - the Transparency Act, Forbrukertilsynet: The Transparency Act (2024): https://www.governance.no/en/the-transparency-act/ [accessed 1 October 2024]
295 German Federal Ministry of Labour and Social Affairs, ‘Supply Chain Act’: https://www.bmas.de/EN/Europe-and-the-World/International/Supply-Chain-Act/supply-chain-act.html [accessed 1 October 2024]
296 European Council, ‘Corporate sustainability due diligence: Council gives its final approval’ (24 May 2024): https://www.consilium.europa.eu/en/press/press-releases/2024/05/24/corporate-sustainability-due-diligence-council-gives-its-final-approval/ [accessed 1 October 2024]