As retailers are rocked by a series of high-profile ethical scandals, Drapers looks at how effective the Modern Slavery Act is at eliminating exploitation in the supply chain.
Retailers and manufacturers have been left shamefaced following a series of high-profile ethical exposés over the past six months. Among the scandals were claims from BBC’s Panorama that refugee children from Syria were found making clothes sold in the UK in Turkish factories and the case of brothers Erwin and Krystian Markowski, who were jailed for six years in January for trafficking men from Poland to work at Sports Direct’s Shirebrook warehouse.
“Supply chains and their ethics are firmly in the spotlight and will rightly remain so,” argues Kevin Hyland, the UK’s first independent anti-slavery commissioner.
Both scandals come almost 18 months after the introduction of the Modern Slavery Act in October 2015. Championed by prime minster Theresa May, then home secretary, the legislation forms the backbone of a wider government crackdown on slavery, servitude, forced or compulsory labour and human trafficking. Most pressingly for retailers, the act requires all businesses with an annual turnover of £36m or more to publish a statement setting out the steps they are taking to ensure slave labour is not being used anywhere in their supply chains. And although it is still relatively early days, the legislation has been welcomed by some of fashion’s biggest names.
“That piece of legislation has driven us to look even further into our business,” Marks & Spencer’s director of sustainable business Mike Barry told MPs at a hearing to the parliamentary committee on human rights last month. “We have identified things we need to do even better. I am saying clearly, as a businessman, that piece of legislation has been helpful.”
Speaking at the same hearing, Asos chief executive Nick Beighton agreed: “This is a great piece of legislation. It put the spotlight on an issue and contains some clear mechanisms for reporting.”
But despite its warm reception, it is also clear the legislation is far from perfect. Critics argue it is little more than a box-ticking exercise for some businesses, and that it is difficult for the government and the public to keep track of who has published a statement, who has not and – more importantly – whose is up to scratch.
“We feel quite strongly that there needs to be one more push from the government to finish off the journey,” added M&S’s Barry at the parliamentary hearing. “There is no central repository that says which companies in Britain you would expect to receive a report and statement from. There needs to be a list held centrally that says, ‘These are the companies that should be reporting. This is what they have actually reported against.’”
Proposals to include a central repository in the legislation were defeated as the act went through parliament. However, Hyland, whose office was set up as part of the Modern Slavery Act, has also called for a central repository. He argues the mechanism would help hold business to account by allowing the public, consumer groups and investors to compare responses.
Hyland has collected written submissions on how a central repository could work and is currently analysing the results with a view to seeing if there is one system he can champion.
Concerns have also been raised about the quality and content of the statements released by some retailers. Although the government suggests six areas businesses can cover in their statements – including due diligence processes and the parts of the business at risk – there is no legal requirement to do so.
Hyland questions whether retailers are doing enough to address risk in their supply chains (interview, below): “While there have been a number of good examples of modern slavery statements, the quality of the statements, on the whole, has been weak. Many fail to meet the minimum requirements, such as sign-off from senior leadership and placement on the homepage of the website, let alone in-depth analysis of supply-chain risks.”
Katharine Stewart, ethical trade and environmental and sustainability director at Primark, agrees: “We welcome the legislation because it should create a level playing field, but at the moment it is clear that the quality of the statements varies quite dramatically.”
It’s important that we see more practical examples of what businesses are doing to implement the act
Katharine Stewart, Primark
Even a quick comparison of different statements from retailers shows how much the depth and detail included varies. Both Primark and Asos have released comprehensive examples. Asos, for example, breaks its statement down into the six suggested areas. It also includes an extra section explaining further steps it will take to eradicate slavery, including publishing a full factory list by the end of March this year and paying all its UK outsourced workers the living wage (as defined by the Living Wage Foundation) by 2020.
Other high street retailers and etailers have released much shorter, less specific and less comprehensive statements on the steps taken to address slavery within their supply chains.
However, Stewart believes statements will develop with time: “As we approach the second anniversary [of the act], I’m sure there will be some scrutiny and comparison of statements, which will lead to further change. As the legislation takes hold, it’s important that we see more practical examples of what businesses are doing to implement the act, and what best practice looks like.”
Nick Life, a partner at law firm HRC Law and former head of legal at clothing company Bench, agrees but adds that retailers need to be careful to make sure they build on the steps they are taking to stamp out slavery each year: “The legislation will evolve. Once we’ve seen more statements and businesses haven’t complied, they will come under public pressure and eventually I think there will be more sanctions.
“It’s going to take a bit of time to understand what each other’s statements look like. Businesses need to update the statement every year to show how it’s developed, and that’s where people will get caught out. It’s not a case of just putting a statement up on your website and the job’s done.”
Once we’ve seen more statements and businesses haven’t complied, they will come under public pressure
Nick Life, HRC Law
The Modern Slavery Act is also relatively soft legislation, argues Kosten Metreweli, chief marketing officer of ethical sourcing software company Segura. “Nobody is going to prison for not releasing a modern slavery statement – it’s essentially leaving people open to fines if slavery is found in their wider supply chains. Retailers who don’t comply will be open to bad publicity through the press but if you look at similar legislation around bribery, corruption and money-laundering, that carries a 14-year prison sentence.”
There has been a broad consensus from retailers that the Modern Slavery Act is a good start to tackling forced servitude within their supply chains. However, more scrutiny is needed to ensure retailers are not just paying lip service to the legislation and are doing everything in their power to create ethical supply chains.
Kevin Hyland, anti-slavery commissioner
The top priorities of Kevin Hyland, the UK’s first anti-slavery commissioner
What more would you like to see fashion retailers do to address modern slavery?
First of all, I would like to see companies working together and speaking openly about the issue of modern slavery. If you haven’t identified slavery in your supply chain, it is likely that you are not looking in the right places. I want companies to come forward and admit when they have found slavery in their supply chains and demonstrate what they are doing to fix it. Challenges and difficulties need to be aired, not hidden. Only then can we begin to find solutions and protect the most vulnerable workers from exploitation and abuse. A company should not be judged on whether it has identified slavery in their supply chain, but rather on how they respond.
How can fashion retailers make sure they stay on the right side of the legislation?
When it comes to modern slavery it shouldn’t be about “staying on the right side of the legislation”. It should be about protecting the lives and freedom of our fellow man. No profit margin is worth a human life. Operating ethically and operating profitably are no longer mutually exclusive concepts. The business case for having ethical, slave-free, supply chains is in fact very strong. And this case is only going to be strengthened in the years to come as global communications take hold and consumers and society are increasingly able to hold companies to account. While the cost of a thorough auditing process may seem prohibitive in the short term, the long-term benefits of a well-designed process will almost always pay off.
Modern slavery declarations
An organisation’s slavery and human trafficking statement may include information about:
- the organisation’s structure, its business and its supply chains
- its policies in relation to slavery and human trafficking
- its due diligence processes in relation to slavery and human trafficking in its business and supply chains
- the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk
- its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate
- the training about slavery and human trafficking available to its staff
High-risk countries for modern slavery
Source: BSI Group’s Trafficking and Supply Chain Slavery Patterns Index