Should The Public Be Responsible For Bringing Corporates To Task?

Since the passing of the Modern Slavery Act of 2015 (MSA) I have often posed the question how effective and robust are its provisions regarding Transparency in Supply Chains (TISC).    There are arguably no effective penalties for non-compliance with the legislation – no fines, no imprisonment, no sequestering of funds or seizure of goods – a vague ill-defined threat that compliance could be enforced through court action is suggested but it is fair to say the ambience of a relaxed regulatory regime pervades the MSA.

Instead of legislative rigour, the Government is instead relying on pressure groups, consumers, investors, Parliament and others to subject organizations to reputational and brand campaigns and other scrutiny to compel action. This has been demonstrated over the last twelve months by:

·       The Prime Minister setting up the first ever Government task force on Modern Slavery to help drive enforcement of the MSA

 

·      A House of LordsPrivate Member’s Bill seeking to strengthen the MSA’s corporate duty to report and a Parliamentary Committee taking evidence on the MSA and its initial implementation

 

·      Growing NGO, pressure group and media scrutiny of Modern Slavery Statements published to date in compliance with the MSA

 

·    Investigative  and   undercover   journalism   into   labour   exploitation,  modern  slavery   and trafficking including allegations of unsafe and exploitative working conditions in British clothing supply chains as well as supply chain abuses abroad (such as in the electronics, construction and food sectors)

 

·     The increased media profile given to recent modern slavery convictions and related litigation, including the jailing of two traffickers who had supplied workers via an agency to Sports Direct and the reported £1m+ compensation agreed in a case involving workers allegedly exploited in the UK agricultural sector

·    The increasing number of allegedly authoritative benchmarking surveys.  These rank some of the largest companies on their anti-slavery or human rights performance and are gaining traction. Examples include Know the Chain and the Corporate Human Rights Benchmark

 

So has the Government set the right tone of ‘regulation lite’ in the MSA?   Does it work?   The Business & Human Rights Resource Centre have set up a free registry of statements that have been disclosed by companies (and can be searched by company name, headquarters and sector) and have recently analysed the statements of the first FTSE 100 companies to report under the MSA – a total of 27. The analysis found there is a gulf in the quality of action between a handful of leading companies and the rest of those companies whose statements are on the registry.  This sort of analysis is useful but may also seek to conceal or sanitise the elephant in the room.  The elephant of limited knowledge.  It appears that no one, not Government, nor pressure groups, consumer groups, NGOs, not the courts, can tell us, the public, even the most basic of facts.  Facts such as such as how many firms meet the £36m turnover threshold, how many of those have complied and most important of all who has not complied and their names. Or how we need a definitive list of those who are not complying with the MSA.

 

Kevin Hyland, the Independent AntiSlavery Commissioner (IASC) last week gave Parliament his assessment of how businesses have responded to the MSA’s reporting duty in the first year. He believes that the MSA has driven up director-level awareness of modern slavery and has resulted in some businesses taking practical steps to tackle the issues.  However, he characterised many of the initial slavery and trafficking statements as weak. He urged businesses to do more to understand and to mitigate their industry specific risks, including working collectively to combat shared sector risks, and to provide greater information in their statements on how they are responding.

 

Whilst the limited collation of the disclosure statements by the Business & Human Rights Resource Centre is useful and the statements made by Kevin Hyland are commendable, they do not provide the dynamic, robust drivers’ needed and perhaps envisaged by the MSA that would provide the detailed  and  substantive  mechanics    the  platforms,  structures  and  toolkits  -  needed  by  the corporate sector before they can move forward in this field.   Nor has the shadow of any meaningful

‘stick’ emerged from the benign ambient light of the carrot’ based regulatory framework the MSA is based on.    The Government is relying heavily on brand reputation and naming and shaming of corporates to produce results.  In short it asks the public to do the work of taming the corporate

 

world by using its purchasing power. It is a power the public will find hard to wield if it does not have the basic information about actions and processes of the corporates and who the saints and sinners are.  Without better data and without the naming of names the MSA will fail in its noble intentions.

 

Authors

Sharon Benning-Prince and Dr Mike Emberson, the Medaille Trust