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Ending Slavery In The Supply Chain

RiskGlobal sourcingEuropeSupply chain managementCorporate social responsibilityGlobal RiskGovernance and Legal ComplianceSupplier Audits+-

Provisions in the UK’s Modern Slavery Act 2015 came into force at the beginning of October requiring businesses to report on the steps they are taking to stop slavery and human trafficking from occurring in their supply chains. What they do and how they do that will be key to avoiding any potential financial or reputational damage.

 

What is interesting about the Modern Slavery Act 2015 is that the legislators recognise the role that businesses have to play in that process. Section 54 of the Act requires commercial organisations with a turnover in excess of £36m to prepare a slavery and human trafficking statement for each financial year. A commercial organisation, the Act defines, is a supplier of goods or services.

 

Slavery includes servitude and forced or compulsory labour. Trafficking is defined as arranging or facilitating the travel of a person with a view to that person being exploited.

 

The statement must identify the steps taken by an organisation to ensure that slavery and human trafficking is not taking place in any part of a business, including the supply chain.

 

There is an option for the statement simply to state that the organisation has taken no such steps.

 

The reputational and indeed potential financial consequences in these days of ethical shareholding and customer/consumer thinking are such that any business should think very carefully before following that course.

 

The legislation requires the statement to be approved by the Board or in non-corporate bodies by those in positions akin to a board of a company.

 

The Act contains much detail as to what such a statement should contain but there is no mandatory format. Information suggested in the Act as suitable for inclusion in a statement includes:

  • The organisation’s structure, its business and its supply chain
  • 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 chain
  • The parts of its business and supply chain where there is a risk of slavery and human trafficking taking place and the steps that 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 chain, measured against such performance indicators as it considers appropriate
  • The training on the issue available to staff

There are a number of measures which we believe should be taken into consideration by an organisation when thinking about how they might comply with this legislation including:

  • Appointing someone with sufficient seniority to be responsible for compliance and monitoring
  • Considering how to collate the necessary information for the statement including appropriate consultation with employees and representatives from within the supply chain
  • Ensuring that the whole procurement team is aware of the obligations and making appropriate enquiries of potential suppliers
  • Reviewing contractual provisions to ensure that suppliers are required to have in place procedures to prevent trafficking and slavery while also allowing for the termination of contracts if any fall short
  • Consider training for those in the organisation and supply chain management and procurement teams

Compliance will be best achieved by applying the principles of risk assessment, leading to appropriate procedures and diligent monitoring of those procedures.

 

Non-compliance with the requirements of Section 34 is not a criminal offence but the obligations are enforceable by the government bringing civil proceedings for an injunction.

 

It is likely though that it is the potential reputational and financial damage that will drive compliance as opposed to the sanction of High Court proceedings.

 

Jon Cooper is a partner at Bond Dickinson LLP

 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.

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