Thursday, February 16, 2017

Does your business know how to comply with the Modern Slavery Act?

The Modern Slavery Act 2015 was introduced by the UK government last autumn in a bid to eradicate illegal slavery from the country's supply chains.

Under the legislation, buyers found to be enabling modern slavery to take place in their supply chains can face significant financial penalties, alongside potentially irreparable reputational damage. This means that supply chain visibility is essential.

Modern slavery prevalence

According to research carried out by the Ethical Trading Initiative and the Ashridge Centre for Business and Sustainability at Hult International Business School, 71 per cent of companies believe it is likely that modern slavery is present somewhere within their supply chains. Andrew Wallis, CEO of Unseen, commented at the LUPC & SUPC Conference that procurement professionals concerned about complying with the law on supply chain transparency should not be afraid of finding slavery.

With many believing it's probable that illegal workers are employed in their supply chains, it is clear that action needs to be taken to improve supply chain transparency and demonstrate actions to address the end this practice for good.

The Modern Slavery Act requires buying organisations with an annual turnover of £36 million or over to provide regular reports on the presence, or lack of, illegal working in their supply chains to demonstrate their compliance with the legislation to the UK government.

However, recent research has shown that the initial introduction of the Act has so far failed to have the intended impact.

Compliance among buyers

Earlier this year, the CORE Coalition and the Business & Human Rights Resource Centre found that the majority of buyers are already failing to demonstrate their compliance with the new Modern Slavery Act.

The organisations looked at the quality of the first 75 reports received and found that only 22 were signed by the company director and available on their website's homepage. Businesses are also expected to provide information on their organisational structure, approach to supplier due diligence and give evidence of other company policies; for example, environmental, and health and safety.

Marilyn Croser, director of the CORE Coalition, commented: "While the companies that have published reports under the Act are to be commended as early movers, it's clear that there is widespread misunderstanding among business about what's required."

It's important that buyers are displaying their modern slavery reports on their websites to do their bit to improve visibility, but 33 of the initial reports were absent from the web and a further 33 had not been signed by the buying organisation's director.

Are your suppliers even aware of the act?

A survey conducted by the Chartered Institute of Purchasing and Supply (CIPS) led to the discovery that small and medium-sized enterprises (SMEs) also appear to have significant gaps in their knowledge in terms of complying with the recent Modern Slavery Act.

Over two-thirds (67 per cent) of the 267 small businesses questioned said they had not taken any steps to eliminate slavery from their supply chains, while a further 61 per cent were unaware of the introduction of the Act or the potential implications it could have for their future.

Although eight in ten SMEs reported that they did not think modern slavery was present in their operations, CIPS believes this is primarily due to ignorance and a widespread lack of awareness of the legislation. As a result, large buying organisations could be allowing modern slavery in their supply chains via the SME suppliers that they work with, placing all businesses involved at risk of financial, reputational and even legal damage.
David Noble, group chief executive officer of CIPS, stated: "To truly eliminate this evil from UK procurement, supply chains need to be mapped and simple measures put in place. Partnerships between larger corporations and smaller SMEs will be instrumental in driving out malpractice in the supply chain.

"The legal duty in the Act must not override the moral obligation of us all to make sure our supply chains are slavery-free."

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