THE ULTIMATE GUIDE TO
MODERN SLAVERY ACTS
The UK and Australia both have Modern Slavery Acts, and more countries are preparing to pass similar legislation. Here’s everything that compliance (and procurement) teams need to know, and ways to make life easier for future you.
To make this complicated legislation easy to digest, we break it down as follows:
Basic rationale for the legislation
Background on the Modern Slavery Act
Business requirements under a Modern Slavery Act
How to go beyond compliance and actually thrive under the legislation
Background on the Modern Slavery Act
Business requirements under a Modern Slavery Act
How to go beyond compliance and actually thrive under the legislation
Why a Modern Slavery Act?
The Modern Slavery Acts in the UK and Australia were written to tackle the pervasive forced labor in global supply chains. If all companies had to take action on modern slavery, the logic followed that consumers could readily purchase products and services without worrying about how they were indirectly supporting human rights abuses.
Unfortunately, when it comes to legislation, human rights and modern slavery are often juxtaposed with compliance burdens, regulatory hassles, and impeding business. While no one wants to be seen as being in favor of modern slavery, human trafficking, or child labor, laws are often watered down to make them easier to enforce.
In the perverse Goldilocks world of human rights, there is no “just right” - even one person forced into modern slavery would be unacceptable if it happened right in front of us. Too often, legislation is portrayed as caving to the needs of businesses and the struggles of compliance burdens.Even when laws are simplified to improve compliance, companies can still struggle to grapple with them. In the UK, 10% of organizations that were required to report still didn’t file modern slavery statements for fear of public backlash if they showed that there were issues in their supply chain. In Australia, there was also significant under-reporting, as well as poor reporting from companies that did file their modern slavery statements.
As a result, it seems that enforcement will increase, governments will find ways to add teeth to existing legislation, and companies will need to meet and exceed current requirements. But there are simple ways for organizations to go beyond basic compliance to actually turn their statements into something that benefits the company’s bottom line.
Unfortunately, when it comes to legislation, human rights and modern slavery are often juxtaposed with compliance burdens, regulatory hassles, and impeding business. While no one wants to be seen as being in favor of modern slavery, human trafficking, or child labor, laws are often watered down to make them easier to enforce.
In the perverse Goldilocks world of human rights, there is no “just right” - even one person forced into modern slavery would be unacceptable if it happened right in front of us. Too often, legislation is portrayed as caving to the needs of businesses and the struggles of compliance burdens.Even when laws are simplified to improve compliance, companies can still struggle to grapple with them. In the UK, 10% of organizations that were required to report still didn’t file modern slavery statements for fear of public backlash if they showed that there were issues in their supply chain. In Australia, there was also significant under-reporting, as well as poor reporting from companies that did file their modern slavery statements.
As a result, it seems that enforcement will increase, governments will find ways to add teeth to existing legislation, and companies will need to meet and exceed current requirements. But there are simple ways for organizations to go beyond basic compliance to actually turn their statements into something that benefits the company’s bottom line.
Background on the Modern Slavery Act
Abolitionist activists have campaigned for years to stamp out modern slavery. Whether people are trafficked into the UK or Australia and forced to work, or the labor abuse happens in another country where consumers “benefit” from the cheap goods, there needed to be policies put into place to move companies, communities, and governments in the right direction.
The UK was the first to pass the Modern Slavery Act. It was designed to punish traffickers, protect victims, and push companies to evaluate their supply chains to avoid using forced labor. The UK Modern Slavery Act passed in 2015, inspiring other countries to do the same.
Australia took up the challenge and created an even stronger piece of legislation. While modeled on the UK legislation, the Australian Modern Slavery Act created reporting thresholds for companies, disclosure guidelines, and even a repository for all modern slavery statements.
Together, these laws are spurring more countries into action. New Zealand is debating similar legislation, Canada is moving in the same direction, Germany has passed due diligence requirements, and the EU is discussing a range of policies to address modern slavery and environmental justice.
The UK was the first to pass the Modern Slavery Act. It was designed to punish traffickers, protect victims, and push companies to evaluate their supply chains to avoid using forced labor. The UK Modern Slavery Act passed in 2015, inspiring other countries to do the same.
Australia took up the challenge and created an even stronger piece of legislation. While modeled on the UK legislation, the Australian Modern Slavery Act created reporting thresholds for companies, disclosure guidelines, and even a repository for all modern slavery statements.
Together, these laws are spurring more countries into action. New Zealand is debating similar legislation, Canada is moving in the same direction, Germany has passed due diligence requirements, and the EU is discussing a range of policies to address modern slavery and environmental justice.
What does the Modern Slavery Act require businesses to do?
At their core, the Modern Slavery Act of the UK and Australia both have two main requirements:
In the UK, the reporting threshold is companies with a turnover of £36 million or more per year or public bodies with a budget of £36+ million. In Australia, that threshold is AUD$100 million or more. This applies to multinational companies with revenue at that level in applicable countries.
While the first part of the requirements can be rather vague, when it comes to the report, it’s much more specific. Australia was the first to specify the components of a modern slavery statement, although the UK has followed suit with similar recommendations that are soon to be legal requirements.
In the UK, the reporting threshold is companies with a turnover of £36 million or more per year or public bodies with a budget of £36+ million. In Australia, that threshold is AUD$100 million or more. This applies to multinational companies with revenue at that level in applicable countries.
While the first part of the requirements can be rather vague, when it comes to the report, it’s much more specific. Australia was the first to specify the components of a modern slavery statement, although the UK has followed suit with similar recommendations that are soon to be legal requirements.
- Find and address modern slavery risk in your operations or supply chain
- Publish a modern slavery statement every year reporting on these activities and how you plan to improve in the coming year
In the UK, the reporting threshold is companies with a turnover of £36 million or more per year or public bodies with a budget of £36+ million. In Australia, that threshold is AUD$100 million or more. This applies to multinational companies with revenue at that level in applicable countries.
While the first part of the requirements can be rather vague, when it comes to the report, it’s much more specific. Australia was the first to specify the components of a modern slavery statement, although the UK has followed suit with similar recommendations that are soon to be legal requirements.
While the first part of the requirements can be rather vague, when it comes to the report, it’s much more specific. Australia was the first to specify the components of a modern slavery statement, although the UK has followed suit with similar recommendations that are soon to be legal requirements.
Companies are expected to highlight a range of things in their modern slavery statement:
- Structure, business, and supply chain. This section explains the nature of the business, how its supply chain works, the reach of its network, and any relevant countries or communities that may be impacted.
- Policies on modern slavery. While pretty much any company might come out and claim a “zero tolerance” for forced labor, this is the section where the organization needs to explain what that means in practice.
- Risk assessment, prevention, and mitigation. The business or public body needs to showcase how they will identify and address any risks that are discovered through these policies and procedures.
- Due diligence. While any team can work hard to find and mitigate modern slavery, it’s vital that organizations showcase what they will do to confirm any findings or actions taken.
- Effectiveness. Policies and internal reckonings are important, but organizations need to go a step further to explain the impact of these activities.
- Training and capacity building. Finally, businesses are expected to help their employees learn more about modern slavery so that they can expand policies, identify potential risks, and build great awareness around the issue.
One of the toughest elements for organizations is that they need to show continual improvement. Every year, the report needs to include how previous policies have had an impact, and what will be done in the coming year to enhance those efforts.
This can sound like a lot, and for many compliance teams, it can be a significant legislative burden. But it doesn’t have to be.
This can sound like a lot, and for many compliance teams, it can be a significant legislative burden. But it doesn’t have to be.
How to go beyond compliance, and why it’s a good idea.
The first step in any of this is to map your supply chain. Until you truly understand what you’re purchasing, and who you’re purchasing from, you simply can’t report on the state of modern slavery in your supply chain. Anyone who has worked with supply chains knows that while this sounds simple enough, it’s quite a substantial task. That’s where FRDM comes in.
The only data-driven supply chain mapping tool for modern slavery, FRDM needs only a few data points from your spend data to build a comprehensive picture of your supply chain. The software’s proprietary algorithm identifies high, medium, and low-risk suppliers. Alerts help you keep tabs on potential new risks, or when your suppliers or their suppliers are mentioned in the media, embargoes, or shipment seizures. You can even send collaborative Self Assessment Questionnaires (SAQs) to your suppliers to gain more data and find solutions together.
As a result, you can build your modern slavery statement more easily.
The only data-driven supply chain mapping tool for modern slavery, FRDM needs only a few data points from your spend data to build a comprehensive picture of your supply chain. The software’s proprietary algorithm identifies high, medium, and low-risk suppliers. Alerts help you keep tabs on potential new risks, or when your suppliers or their suppliers are mentioned in the media, embargoes, or shipment seizures. You can even send collaborative Self Assessment Questionnaires (SAQs) to your suppliers to gain more data and find solutions together.
As a result, you can build your modern slavery statement more easily.
Organization structure and supply chain
Map your supply chain with FRDM
Risk assessment and prevention
Use FRDM to find the parts of your company’s supply chain with high human rights risks. FRDM can also integrate with your supplier onboarding to confirm that they match your values before you start a new supplier relationship.
Effectiveness
FRDM’s impact score changes as you take more actions. The better your data, the more you engage with suppliers, and address alerts the higher your score will go.
Training and capacity building
As an extra, FRDM offers online training for our clients to help raise awareness of modern slavery in the supply chain and in communities globally.
The reality of legislation and regulatory shifts is that they can be unpredictable. The trend is clear that more countries are adopting similar laws, with New Zealand’s closely modeled on Australia’s. Canada will be rolling one out soon as well. No matter where you do business, you can get ahead of any new regulation by having comprehensive supply chain transparency.
Simply knowing about any hidden risks in your supply chain will help you go beyond compliance, keeping you a step ahead of any new rules. As more countries require similar reporting, there’s a level of economy of scale for teams like yours - once you’ve written a modern slavery statement that applies to one country, it’s fairly straight forward to adapt it to other legislation with fewer additional resources.
Plus, it can be good for your reputation and future ESG objectives. Your marketing and communication teams can leverage these improvements to build your status in the market. Consumers and partners are increasingly buying with their values, and you’ll already be positioned to benefit from this trend.
Need to get compliant with the Modern Slavery Act? Start mapping your supply chain today. Contact us to learn more.
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and how it can help your business comply with all regulatory requirements for continued success.
and how it can help your business comply with all regulatory requirements for continued success.
