ESG and Sustainability do not only relate to protecting the ecological environment, but also the people that live in it and the society they live in. Social equity and a healthy economy are vital to building a sustainable future, which is reflected by the UN’s Sustainability Goal to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.1
Slavery and human trafficking have no place in a sustainable future, but are still a problem in society, and it is likely that organisations will be required to do more to help tackle the issue. Here, we discuss what steps organisations may be required to take to be compliant with legislation, and what technical measures they can incorporate to do so.
Compliance
The Modern Slavery Act 2015 consolidates offences relating to slavery and human trafficking. It also requires certain organisations to publish an annual Modern Slavery Act Transparency Statement, the purpose of which is for such organisations to, in summary, set out the measures they have in place and provide a detailed picture of all the steps they are taking, to ensure that their business and supply chains are free of modern slavery.
In September 2020, the Government announced a package of measures to be introduced to strengthen the provisions of the Act. In November last year, the Government further committed to review the 2014 Modern Slavery Strategy in order to develop a revised strategic approach by Spring 2022. This may all lead to an increased level of stringency and additional requirements that organisations need to be aware of to comply with the Act.
What are the changes that we can expect to see?
The Statement
Currently, a body corporate or partnership, wherever incorporated, which carries on a business in the UK, supplies goods or services, and has a total turnover of £36 million or more, must publish a Statement. In the future, public bodies with a budget of £36 million or more will also be required to publish a Statement.
We expect to see legislative changes to mandate the areas that Statements must cover, designed in conjunction with the Government-run reporting service but, currently, that is not the case. However, Government guidance states that organisations should aim to include information about:
- the organisation’s structure, its business and its supply chains;
- its policies in relation to slavery and human trafficking;
- its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
- the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
- its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
- the training and capacity building about slavery and human trafficking available to its staff.
Procedure
We also expect to see changes to standardise the procedure that organisations will be required to follow in producing a Statement, such as: i) including the date the Statement was approved by the board of directors (or equivalent); ii) a general reporting period running from April to March each year for all organisations (with a single reporting deadline of 30 September each year); and iii) specifying other entities within an organisation’s group to which a Statement applies. In addition, it will become mandatory for reporting organisations to submit the Statement to the Government’s Modern Slavery Statement Registry.
Penalties
Currently, the duties imposed on organisations are enforceable by the Secretary of State bringing civil proceedings in the High Court for an injunction, but we understand that there may be plans to introduce further penalties for non-compliance with the Act and that further enforcement options will be developed in line with the introduction of a new single enforcement body.
Timeline
It is important to note that the only proposed reform to be implemented so far is the centralised Government registry for publication of Statements. However, organisations should ensure that they are in compliance with the current requirements of the Act and applicable guidance, and keep an eye out for further guidance and publications from the Government. This helps both from a good governance perspective, and by reinforcing the moral and social responsibilities underpinning proper engagement with this issue.
Technical and Organisational Measures
There are a variety of measures that organisations can put in place, as alluded to in the Government’s guidance on what organisations should publish in their Statements. For example, having a clear set of policies and procedures to identify and deal with any issues, such as regular due diligence checks on new suppliers to identify those at risk, and proactively engaging with suppliers to manage such risks.
There are also a number of digital technologies that may prove to be helpful in managing good corporate governance and the supply chain links between different organisations. For example, blockchains are able to record and preserve information that is incorruptible, which would allow for greater transparency and security of ESG and Sustainability data through such supply chains.
Top Tips for drafting
For some time, it has been standard practice to include a specific reference to the Modern Slavery Act 2015 in an English law contract in the provisions where the parties agree the obligation to comply with applicable laws. However, there are other clauses that you may wish to consider including as additional boilerplate to encourage suppliers or other commercial partners to properly engage with the issue.
For example, you may require the other party to:
- warrant that it has not encountered any slavery and human trafficking issues in its business or supply chains, and warrant that it shall act in compliance with the Act;
- notify you of any breach of the Act and grant a right of termination if the issues are not promptly addressed and dealt with;
- flow down its compliance obligations through its own supply chains; and
- grant you a right to audit the measures and procedures it has in place to tackle the modern slavery issue.
[1] UN Sustainable Development Goals; https://unstats.un.org/sdgs/metadata/?Text=&Goal=8&Target=8.7
Ralph is an Associate Solicitor in the Commercial IP & IT team at Bristows. Ralph has experience of working on a variety of ESG and Sustainability matters in the tech sector, including advising on compliance with modern slavery legislation and working with companies in transactions relating to developing technology using green, sustainable solutions.
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This article is also published in the Spring 2022 issue of Computers & Law which has been guest edited by the SCL Sustainability and ESG Group.
