operating in (or with supply chains in) high risk sectors or countries. Supply chain mapping to understand risks, clear rules for procurement, contractual protections in supply contracts (warranties, audit and termination rights, etc) and consistent messaging throughout the supply chain will all have a role to play. It will also be important to allocate responsibility within the organisation for the coordination and preparation of the annual statement which will require board level approval and must be signed by a director (or the equivalent) before it is published. While the above steps are undoubtedly familiar, and in many ways analogous to “adequate procedures” under the UK Bribery Act, modern slavery presents a more nuanced problem, given the potential for an organisation to cause further victimisation of vulnerable workers when issues are identified. Organisations should therefore reflect on how they will respond to identified cases of modern slavery, what level of support (if any) they are willing to give to suppliers to help remediate issues, and how they will adapt their incentive packages to mitigate against supplier reliance on forced labour. It is worth reflecting on the reality that a hair trigger termination of a supply contract where, for example, bonded labour is identified on a construction site, may not always be in the best interests of victims. Brett Hartley Senior Associate, London T: +44 (0)20 7876 4860 E: brett.hartley@clydeco.com
Non-compliance Legal sanctions for non-compliance are limited to an injunction compelling the organisation to report. The primary drivers for compliance are intended to be customers, activist shareholders, trade unions, civil society and the press. NGOs, such as the Business and Human Resources Centre and KnowTheChain, have been active in publically shaming non-compliant companies under similar Californian legislation and will undoubtedly turn their attention to non-compliance under the MSA. An organisation’s reputation and the value of its shares are, therefore, most at risk from non-compliance, particularly if it operates in a sector such as construction that is already under the spotlight for labour issues. Notably, for the UK construction sector, the voluntary Considerate Constructors Scheme has taken a proactive approach to the issue and, from early 2016, will incorporate into their checklist the question of how sites “assess and monitor the legitimacy and competency of the workforce” in an effort to ensure illegal or slave workers are not being used on registered sites. Action steps A statement should be underpinned by proportionate and defensible steps to ensure modern slavery is not taking place in an organisation’s supply chains and should take into account sectoral and jurisdictional risks, as well as the complexity of the organisation’s supply chains. A clear policy on modern slavery, whether stand alone or integrated into existing CSR policies, will be essential, as will enhanced human rights due diligence for those
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