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A global problem

28 September 2015

A global problem - read more

Modern slavery presents risks for business, says Bernadette Barber

A key responsibility of any board is to ensure appropriate culture and values exist to support the business and its reputation. This is not easy to do. Few would disagree that ‘culture’ is a difficult thing to define, measure and influence and that well-intentioned values can be difficult to adhere to when faced with the pressures of operating in the real world.

If culture and values are difficult to handle internally, ensuring the business only deals with third parties that are ethically acceptable is even more challenging. Although the challenge is significant, the importance of doing so is not to be underestimated. A company that aims to behave well itself but ignores the indirect impact from its supply chain will be giving out a strong message about its true values. Culture and values are not about words, they are about practice.

The need for companies to be socially responsible is reinforced through a variety of legislative requirements, including the statutory duties of directors, whistleblowing requirements and anti-bribery laws. Implementation of such requirements through statute sends a strong message about the minimum standards that are acceptable within the corporate world and provides enforcement mechanisms that would just not be available under a less-than-mandatory best practice regime. A statutory obligation also sets standards against which organisations can be publicly measured. Such transparency brings prospects to both enhance and damage reputations.

The latest statutory weapon in the UK’s social responsibility armoury is the Modern Slavery Act, which is intended to be implemented in October. This new legislation will impose a reporting requirement on any commercial organisation operating in the UK with annual turnover in excess of a certain threshold (expected to be £60 million). The basic reporting requirements are not onerous. One option is to publish a simple statement on the company website confirming that no steps have been undertaken to confirm the existence or otherwise of slavery and human trafficking within the business. Although a ‘do virtually nothing’ approach will suffice to meet the basic legal requirements, it hardly says that the company is responsible and accepts accountability for the direct and indirect effect its operations have.

Responsible boards will therefore consider the more meaningful reporting and investigation requirements suggested by the Act. These encourage due diligence processes and modern slavery policies to be put in place to ensure staff are appropriately trained and extend those standards to the supply chain. Like the procedures required by the Bribery Act, a risk assessment and some measurement of effectiveness will be required to inform such activity and to ensure that actions are adequate.

With international crises currently giving rise to huge human migration issues, there are millions of people presently trying to escape conflict, political unrest and poverty. Many of these are seeking new homes in Europe and elsewhere and are extremely vulnerable during their travels to exploitation by traffickers and subsequently to forced labour.  

Businesses cannot assume they are immune from the problem and no-one within their organisation or supply chain is being exploited, simply because they operate far away from the troubled homelands of those affected. Although each migrant will be seeking to create a new life, many will face obstacles to legal residency and work, making them easy targets for those willing to flout the law to obtain cheap labour. Some industries will be more prone to such exploitation than others, but there will be few businesses that do not, whether directly or indirectly, employ low paid workers of some sort.  

Modern slavery is a global issue underpinned by millions of individual tragedies. Although few business strategies are likely to be based on deliberately exploiting this, inadvertently profiting from such circumstances and being exposed to public censure are ethical and reputational issues that boards do need to consider.

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