The UK Modern Slavery Act 2015: Implications for Global Business

From 31 March 2016 firms must comply with the UK Modern Slavery Act (MSA) reporting on steps taken to make their business and supply chains slavery-free. The latest development in the growing global trend towards mandatory human rights reporting, the MSA came into force in October 2015 and is based on the California Transparency in Supply Chains Act 2010 (CTSCA), but in many respects goes further. It applies to all commercial organizations in the UK, as opposed to only retail sellers and manufacturers as the CTSCA does, and it applies extraterritorially.

Specifically, the MSA requires any commercial enterprise that carries on part of its business in the UK (regardless of where it is incorporated) and supplies goods or services and has a global turnover of £36 million or more to produce a “slavery and human trafficking statement.” This statement, which must be approved by the company board, signed by a director, and published on the company’s homepage, must describe the “steps taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains or in any part of its own business.” (The requirement to publish the anti-slavery statement only applies to financial years ending on or after 31 March 2016.)

While the legislation does not require companies to eradicate slavery from their supply chains, it does strongly encourage them to embark on a journey toward transparency—by conducting investigations, responding to known issues, and mitigating risk—and to do so over time. 

Companies should carry out due diligence throughout their supply chain, and not just on so-called Tier 1 suppliers. Instances of modern slavery are often most likely to occur at the very bottom of global supply chains and abuses on the ground (or under it, or at sea) can work their way up the value chain and generate legal and reputational risks, especially for well-known brands. 

The average global business with operations in the UK is likely to be comprised of some entities that are caught by the legislation, and others that are not. Such businesses must choose—weighing up the commercial and reputational implications—whether to report only on entities falling strictly within the ambit of the legislation, or to issue a group-wide statement.

More information on the Modern Slavery Act 2015 can be found here.