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What makes a good modern slavery statement?

Author: ICAEW Insights

Published: 11 Jul 2022

Modern slavery is still all too common in the UK, with 10,613 potential victims identified in 2020. The modern slavery statement is designed to improve transparency and vigilance within businesses and their supply chains.

While the number of modern slavery referrals through the National Referral Mechanism (NRM) did not increase year on year for the first time in 2020 – primarily thought to be a result of COVID-19 – it remains an area of concern. 

Certain commercial organisations must publish an annual statement setting out the steps they take to prevent modern slavery in their business and supply chains. This is a requirement under section 54 (Transparency in Supply Chains) of the Modern Slavery Act 2015.

A company’s slavery and human trafficking statement should make clear its commitment to tackling modern slavery and substantiate this by documenting its risk-mapping processes, relevant policies, training procedures, action plans, and engagement stakeholders including workers, NGOs, and trade unions.

Companies must update and publish (on a ‘prominent’ part of its website) the statement every year, and this must be signed off by a director and approved by the board. It must be uploaded to the government registry for members of the public to access.

Who needs to publish a statement?

A commercial organisation is required to publish an annual statement if all the criteria below apply:

  • it is a ‘body corporate’ or a partnership, wherever incorporated or formed;
  • it carries on a business, or part of a business, in the UK;
  • it supplies goods or services; and
  • it has an annual turnover of £36m or more.

What should a statement include?

Mainly, organisations must state the steps they are taking to eliminate slavery from their organisations and supply chains, even if this equates to no steps taken, all eligible organisations must publish a statement. The statement should demonstrate a commitment to tackling slavery, exploitation and coercion under its remit.

The following six areas must be covered:

  1. Organisation structure and supply chains
  2. Policies in relation to slavery and human trafficking
  3. Due diligence processes
  4. Risk assessment and management
  5. Key performance indicators to measure effectiveness of steps being taken
  6. Training on modern slavery and trafficking

These six areas are a guideline, and the quality of the information presented should evolve over time. Any modern slavery risks that have been identified and mitigated should be disclosed, as well as prioritised in order of most dangerous risk, instead of evaded to avoid detection.

Companies that do not provide this information in a sufficient and robust manner on their statement are likely to face scrutiny from investors, governments, NGOs and multiple other stakeholders. Further to this, a comprehensive, detailed and accurate account with tangible buy-in from senior management will ensure a positive brand image for the company, with leadership and strong corporate governance being displayed. 

Examples of best practice

Of course, since the guidelines were introduced, there have been many examples of best practice in producing statements, which should be highlighted and followed by others. 

  • Supply chains

Supply chains, especially within the fast fashion sector, have come under increasing societal pressure of late. ASOS aims to alleviate this by producing comprehensive information on the structure of its supply chain. They provide a breakdown of the five tiers involved in the production process, through the acquisition of raw materials to shipping of final products.

  • Human trafficking

Telecoms provider Vodafone developed a code of ethical purchasing that was rolled out to all current suppliers, and forms the bedrock of relationships with new suppliers. The code is overseen by the group board, with senior leadership tasked with its implementation and further development. This is above and beyond the legal requirements placed on Vodafone and demonstrates its commitment to the issue.

  • Risk assessment

Crucial to any risk assessment is any company’s attention to modern slavery or rights violations across its operations, and analysis on its causes and mitigations. Retailer M&S has established an internal governance structure on modern slavery and human rights at each business area. The director of each area is thus responsible for ensuring compliance with the code for their area, as well as supplier relationships.

  • Action to address modern slavery

The difficulties of obtaining thorough and genuine data through the statutory audit process are well known, especially around modern slavery issues, which are sometimes non-existent across the world. Therefore, the retailer Mothercare initiated a team of in-country specialists to gather data and provide feedback on its worldwide employment and supply-line practices. The company then provides case studies of action it takes following reports from these specialists.

  • Training

Businesses should provide training to all levels of on the causes and signs of modern slavery. John Lewis provides targeted training to its entire employee base, more so in countries where it has a large manufacturing base. It reports back on the delivery and success of these training programs.

Modern slavery

Thousands of people are forced into some form of slavery each year in the UK. Chartered accountants have a powerful role to play in stopping this.

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