Co-authored with Alexandra Malina

The corporate responsibility NGO CORE, working in conjunction with several major international NGOs, has published Beyond compliance: effective reporting under the Modern Slavery Act:  a detailed guide to compliance with section 54 of the UK Modern Slavery Act 2015 (MSA).  The guidance, published earlier this year, is intended to supplement the official Home Office guidance on s.54 and provides valuable insights on what leading NGOs expect from companies in terms of managing modern slavery risks.  

As previously blogged, Section 54 of the MSA requires commercial entities with a total annual turnover of £36m or more that supply goods or services and carry on a business in the UK to publish annual slavery and human trafficking statements.  As explored in Freshfields’ MSA briefing, s.54 will in practice largely be “enforced” by NGOs tracking and reporting on what steps corporates have taken to comply with the legislation. 

What does the CORE guidance expect businesses to do?

Drawing heavily on concepts expressed in the UN Guiding Principles on Business and Human Rights (the UNGPs), and intended to provide companies with practical tips, the CORE guidance eschews adopting a “compliance only” approach and instead offers a “how-to” guide to effectively assess and remedy modern slavery issues.  Its recommended priority actions revolve around three main workstreams:

Understanding the risks of modern slavery posed by particular business models, operating contexts, and the nature and location of workers in the supply chain.  Often referred to as “heat-mapping,” this process is an essential first step for any company seeking to address modern slavery issues, and the guidance lists red flags that companies should pay particular heed to.

Developing comprehensive policies to guide key operational decision-making in relation to modern slavery risks.  Again, the CORE guidance focuses on practicalities, delivering detailed guidance on the kinds of policies companies should consider adopting and key content contain.

Conducting detailed due diligence on companies’ business and supply chains, which the guidance makes clear should include but not be limited to modern slavery issues.

While the above steps are not novel, the CORE guidance adopts a noteworthy approach to several aspects of the process:

First, it suggests that a company embarking on due diligence should undertake a full human rights impact assessment – albeit one focused on labour rights and the rights of women and children – which is broader in scope than the MSA’s narrow modern slavery focus.

Second, the guidance emphasizes the need to undertake external and internal consultations with key “stakeholders,” defining these as referring chiefly to those at risk of modern slavery but also including governments, investors, trade unions, NGOs with issue- or region-specific expertise, and peer companies.  The guidance calls on companies to work collaboratively to address shared modern slavery challenges affecting their industries.

Third, the CORE guidance makes plain that implementing clear and widely communicated modern slavery reporting structures and grievance mechanisms accessible to all workers and their families is fundamental to effective compliance.  

Drafting the MSA statement

In addition to the above, the guidance furnishes a helpful list for companies on expected content in MSA statements:  description of business structure, modern slavery policies, due diligence process adopted (and findings), steps taken or planned to mitigate issues or risks, and the effectiveness of strategies to date.  Companies should disclose any instances of modern slavery that they uncover and corrective actions take, including compensation.  Failure to do so has already generated criticism from the NGO community.

Final thoughts:  what does the CORE guidance mean for companies?

The CORE guidance is a welcome addition to the universe of commentary on the MSA and provides genuinely practical guidance for companies embarking on compliance.  Covered companies are advised to review the guidance carefully when developing a modern slavery strategy.