In Part I, we discussed the basics behind the UK Modern Slavery Act of 2015.  To briefly reiterate, that Act requires any company doing business in the UK with an annual turnover of £36 million or more to publicize their efforts in combatting modern slavery in their respective supply chains through an annual statement.  The Act itself established minimum requirements for these statements, but there are various commercial reasons to do more and incorporate best practices into a compliance program and then, by extension, into the annual Modern Slavery Statement.  For example, public tender processes may require a higher bar in order to participate, or at the very least may grant preferences to those companies with effective programs.  Further, private companies want business partners that operate by the same values and are more frequently requiring potential partners to hold themselves to a higher bar.

With that in mind, companies should be more focused on ensuring their Modern Slavery Statement is effective and meets these higher thresholds.  This may not be as difficult as it initially appears.  I know there are companies that are becoming overwhelmed by an endless onslaught of new regulations over the years, but an effective compliance program is designed to be able to handle new risks without requiring a complete overhaul.  Many companies already have controls in place that are helping to mitigate modern slavery risks. 

Here’s a perfect example. Companies frequently screen for negative news to assess any potential reputational damage while doing due diligence on third parties.  When discussing this with a client, we posed a question: what would happen if this screening produced articles that linked the third party to the use of forced labor?  The client responded that would end the review, the third party would be excluded and the company would find another partner.  Exactly!  The due diligence process works and it’s already taking modern slavery into account.  The only issue is that this wasn’t stated anywhere in the internal procedures.  Regardless, the company can certainly attest to the fact that third parties undergo a due diligence process and are evaluated on links to modern slavery.  The company can then adjust its internal procedures as needed in order to memorialize actions they were already doing. 

That doesn’t mean compliance stops there, as there are still ways to enhance this due diligence process.  First and most importantly, if you’re not already doing so, you should be running due diligence on your suppliers.  There are several risks in your supply chain (OFAC, for example, continues to focus sanctions compliance within supply chains) and due diligence is necessary to mitigate these risks.  Your current due diligence questionnaire may need additions or modifications to account for modern slavery risks, such as adding a pointed question or two in this area.  Does the supplier utilize any types of forced labor or human trafficking in its production or in its own supply chain?  Does the supplier understand its own requirements for compliance and what are they doing in this area?

For another example of an easy win, most companies that are required to publish a Modern Slavery Statement almost always have some sort of whistleblower hotline.  Many companies allow third parties to access this hotline and may even encourage certain third parties—such as vendors or customers—to use the hotline if necessary.  The existence of a hotline, and the related policies and procedures, should be enumerated in a company’s modern slavery statement.  Look at it practically, if a report came in regarding the use of forced labor with a supplier, what would your company do with that report?  I feel confident that it wouldn’t just be ignored and that an investigation would be commenced.  Again, here’s a control that is already an important piece to modern slavery compliance and should be included in any modern slavery statement. 

There are some areas that may require some additional work to improve in order to rise to best practices.  Many companies are now including references to modern slavery within their respective Codes.  This is a great start.  We would also recommend a standalone Modern Slavery Policy that takes a deeper dive and include provisions that specifically note a company’s stance on various aspects.  These policies should note that a company believes in such liberties as freedom of workers to terminate employment, freedom of association, and freedom of movement.  These policies should also prohibit child labor, compulsory overtime, confiscation of worker identification documents, and more.

Further, we also recommend specific training on modern slavery risks for targeted employees who have roles that may help identify these risks and issues.  This includes defining the various forms of modern slavery, such as forced labor, child labor, human trafficking, bonded labor, indebted servitude, and more.  The training should clearly discuss the company’s role in combatting such practices with a focus on the supply chain.  This training will be most effective by including various “red flags” and risk factors that employees should be aware of.  Common risk factors for modern slavery include geographic location, a reliance on a low skilled workforce, dangerous or undesirable work, the presence of migrant workers, and the presence of labor intermediaries, among several others.

In sum, compliance with the UK Modern Slavery Act does not need to be onerous and does not require a program overhaul or the implementation of difficult new procedures and controls.  Instead, give yourself credit for the actions your company is already taking in this regard and look to enhance existing controls to push the program towards best practices.