Research from Hult International Business School has found nine in ten respondents believe modern slavery is likely to be occurring at some stage in their global supply chain, with more than half acknowledging they have uncovered actual or suspected cases in the last three years.
The greatest risk is seen furthest from view. 87 per cent see a high likelihood of modern slavery among ‘tier 3’ suppliers and beyond, such as the farms growing the cotton for clothes sold in UK shops. There are also risks closer to home, with 65 per cent seeing a high likelihood among outsourced services such as cleaning, security, construction and logistics.
“The Modern Slavery Act was a landmark when it was introduced,” notes Giles Bolton, Executive Director, Ethical Trading Initiative, “but this report shows it is no longer driving new action. 87 per cent of organisations surveyed believe modern slavery is likely to be occurring in their value chains, and 90 per cent say a key weakness of the Act is that it only requires a statement, not action.
“The UK needs to follow other countries and put in place a law that requires companies to act, to create a level playing field and ensure that workers get the remedy they need,” Bolton says.
The research finds the Modern Slavery Act has made some difference. 69 per cent of respondents say it has increased senior leaders’ attention to modern slavery in their organisation.
However, respondents believe its impact has been limited by weaknesses in its design. The Act requires larger companies to publish an annual statement on what they are doing about modern slavery but does not require them to take specific action. 90 per cent say this is a key weakness, while 85 per cent say penalties for poor compliance are not strong enough.
Additionally, 73 per cent say the Act has driven a focus on reporting over substantive action, and 56 per cent say the teams responsible for addressing modern slavery spend less than 40 per cent of their time on direct action versus compliance and reporting and other activities.
Interviewees also spoke about an increasingly common pattern of fears of litigation and legal exposure driving less disclosure and transparency, rather than more.
As a result, only 35 per cent believe the Act has driven more consistent action across their industry, with the most committed organisations moving ahead of others. The most substantive action appears to be happening in sectors with strong collaborative initiatives, with 94 per cent of respondents calling for better ways for organisations in the same industry to work together on human rights risks.
To improve corporate action across sectors, respondents supported a range of steps to strengthen regulation alongside more coordinated support from others including investors, business customers, cross-sector initiatives and educators:
- Enhanced UK regulation requiring mandatory human rights due diligence (92 per cent)
- A requirement to manage downstream risks, such as those linked to franchisees and investment portfolios (85 per cent)
- An annually updated benchmark covering all organisations in their sector (85 per cent)
- More education for senior leaders on the importance of their leadership on these issues (92 per cent)
- Higher quality investor scrutiny of organisations’ approach to modern slavery (83 per cent).
“What stands out is how consistent the message from business is,” says Hult’s Professor Matt Gitsham added: “These are organisations that have invested in tackling modern slavery, and they want a framework that rewards that effort. Clear duties and meaningful enforcement would give them a stronger mandate internally and would bring the UK back into line with its international peers.”
