Firm foundations year in review_19-01-16_FB

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 responsibilitywithin the organisation for the coordination and preparation of the annual statement which will require board level approval andmust be signed by a director (or the equivalent) before it is published. While the above steps are undoubtedly familiar, and inmanyways 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 vulnerableworkers when issues are identified. Organisations should therefore reflect on how theywill respond to identified cases of modern slavery, what level of support (if any) they arewilling to give to suppliers to help remediate issues, and how theywill adapt their incentive packages tomitigate 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 andHumanResources Centre andKnowTheChain, have been active inpublically shaming non-compliant companies under similar Californian legislation andwill undoubtedly turn their attention to non-compliance under theMSA. 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 theUK construction sector, the voluntary Considerate Constructors Scheme has taken a proactive approach to the issue and, fromearly 2016, will incorporate into their checklist the question of howsites “assess andmonitor the legitimacy and competency of theworkforce” in an effort to ensure illegal or slaveworkers 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 onmodern 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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