Why we can no longer ignore modern slavery and how ICAEW can help
5 February 2021: Increasingly it is not enough to claim ignorance of modern slavery in a business or supply chain. Doing so may prove very costly to your reputation and your bottom line.
The recent increase in the awareness of modern slavery, together with comments from the UK’s Independent Anti-Slavery Commissioner about potential new rules, should prompt businesses to pay attention to this vital issue.
First, there was opprobrium heaped on Boohoo (and by association all clothing retailers and manufacturers) when accusations of slavery were levelled at the factories supplying its garments. Its share price fell, retailers cancelled their contracts and the unfavourable headlines made for uncomfortable reading for its owners and others worried they could be in a similar situation. Even though the allegations were subsequently proved to be unfounded, Boohoo has had to initiate several very expensive enquiries and find new suppliers.
Then the government announced plans to tighten up the requirements of the Modem Slavery Act and in January 2021 made it very clear that it expected any company that purchased supplies from the Xinjiang region of China to carry out ‘robust’ due diligence. Financial penalties have also been threatened.
Finally, in the last few days Dame Sara Thornton the UK’s Independent Anti-Slavery Commissioner has spoken in favour of naming and shaming companies that benefit from modern slavery, wherever it occurs in their supply chain. At the moment many commercial organisations say it is impossible to go right down to the bottom of their supply chain. The Commissioner gives this short shift and has suggested that the long-awaited Employment Bill is the perfect opportunity to address such short-sightedness. But it’s not just manufacturers who could be named and shamed: some argue that financial institutions and other professionals who may be lending to or advising companies that benefit from modern slavery somewhere along the line are equally culpable.
Why does this matter to me?
For the moment though, the applicable legislation in the UK is still the Modern Slavery Act 2015 (MSA), although other countries are starting to legislate. The MSA mandates that commercial organisations with an annual turnover over £36m must prepare a Modern Slavery Statement that sets out the risk of modern slavery occurring in its supply chain and what it is doing about it.
The MSA does allow a proportionate and evolving approach but the recent change in rhetoric suggests this will no longer be the case. Organisations will be expected to go to the very bottom of their supply chain and include all aspects of their business. As a result, companies with a much smaller turnover will be brought into the fold and all types of organisations, including accountancy firms, may well be asked to explain what they are doing to actively ensure there is no modern slavery within their supply chain.
Some experts argue that if you haven’t found modern slavery in your supply chain then you haven’t looked hard enough, but if a firm or company purchases promotional goods, IT equipment, foodstuffs or outsources cleaners then it could well be exposed to modern slavery. It is also worth remembering that modern slavery occurs in the UK not just overseas.
How can ICAEW help?
In the light of all of the above, ICAEW’s Business and Management Faculty and the Business Law team have developed a Modern Slavery Hub to help members, whether in business or practice, to navigate the risks.
The new hub includes guides and webinars on the legal requirements in the UK and elsewhere, how to prepare a Modern Slavery Statement, how to spot modern slavery and what to do if you do. There is sector-specific guidance and general guidance. More is planned but if you can suggest other ways we can help or can offer some tips based on your own experience or that of your clients please contact us at email@example.com.
Confronting slavery is always painful but profiting through exploitation, however far removed, is equally painful for us all.