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Towards Mandatory Human Rights Due Diligence

Government Response to the Transparency in Supply Chains Consultation


Author - Arjun Sharma


(Photo Credit: Leicester Mercury)[1]


Introduction


On 5th July 2020, a Sunday Times undercover investigation highlighted alleged instances of exploitation in Boohoo’s supply chain.[2] A factory, manufacturing textiles for ‘Nasty Gal’ fashion garments, had been operating behind closed shutters in unsafe COVID-19 working conditions, throughout Leicester’s exceptional localised lockdown. The initial exposé revealed that labourers were working without gloves, masks or social distancing measures, all whilst earning well under the national minimum wage (as little as £3.50/hour).


Alison Levitt QC’s review found further health and safety breaches, including locked fire doors and no access to clean drinking water.[3] The Gangmasters and Labour Abuse Authority are now investigating similar instances of modern slavery in over 200 sweatshops in Leicester.[4]


Unfortunately, the UK’s modern slavery problem goes far beyond the East Midlands, and even the private sector. Recent investigations have accused Top Glove and WRP, Malaysian suppliers of PPE for the NHS, of subjecting migrant workers to forced labour, illegal wage deductions, debt bondage and minimum wage breaches.[5] The incessant focus on reducing costs has resulted in both businesses and public services turning a blind eye to risks of modern slavery in their supply chains.


In 2015, the UK led global efforts to combat modern slavery and human trafficking by enacting the Modern Slavery Act. Under Section 54 (Transparency in Supply Chains), all organisations that (i) supply goods or services and (ii) have a total turnover of greater than £36 million are required to prepare modern slavery and human trafficking statement.

This report must outline either (i) the steps the organisation has taken to ensure that slavery is not taking place or (ii) that no such steps have been taken.


While such legislation is a step in the right direction, the human rights abuses in Leicester and Malaysia indicate that the reporting requirement has a limited functional impact. Indeed, the UK has fallen behind new accountability standards introduced throughout European national legislation, such as the French ‘Corporate Duty of Vigilance Law (2017) or the Dutch ‘Child Labour Due Diligence Law’ (2019).


On 22nd September 2020, the Government published its response to the Transparency in Supply Chains Consultation, which had examined proposed changes to the Modern Slavery Act following an independent review. In her foreword, the Home Secretary highlighted her resolve to ‘future-proof the Modern Slavery Act’s transparency legislation’ as a response to the ‘deeply concerning allegations of exploitation in Leicester’s garment industry’.[6] The Consultation’s three main areas of the proposed reform, which shall be examined in turn, are necessary if we are to eradicate modern slavery by 2030.[7]


(i) The Content of Statements

Currently, a statement may include information concerning matters listed under s.54(5), such as an organisation’s:


(a) Business and supply chain structure

(b) Policies regarding modern slavery and human trafficking

(c) Modern slavery due -diligence processes

(d) Identification of high-risk elements in its supply chains

(e) Effectiveness in ensuring that modern slavery is not taking place in its supply chains

(f) Availability of modern slavery training for staff


However, this is not compulsory and there are no strict requirements (indeed, the term ‘supply chain’ is left undefined). Wen has argued that this gives unfettered discretion to businesses, which has led to inconsistency in applying the provision.[8] As Iqbal has noted, this issue is exacerbated by the absence of an information verification mechanism, which allows businesses to disclose solely positive information in order to maintain an ethical public image.[9]


The consultation has proposed that all 6 areas under Section 54(5) should become mandatory. Moreover, organisations ought to justify taking no steps in eradicating modern slavery from their supply chains. Strict mandatory areas will allow comparable benchmarking and incentivise businesses to demonstrate tangible improvements. Compulsory national legislation, as opposed to voluntary ethical commitment, is required to eliminate modern slavery from UK supply chains.


(ii) Improved Enforcement


One of the strongest criticisms levied against the reporting framework is the lack of a substantial penalty for non-compliance. Currently, the Secretary of State may only bring civil proceedings for an injunction (or for specific performance of statutory duty in Scotland), which is unlikely as it is sufficient for a company to state that it has taken no steps. Iqbal has argued that the UK’s ‘soft regulatory approach’ to ethical issues, relying on the public scrutiny of organisations, is insufficient in ensuring compliance.[10] This is because consumers are often driven by the price and quality of goods, as opposed to a company’s ethics.


The consultation has proposed new civil penalties for non-compliance (in line with the proposed enforcement body for employment rights led by BEIS).[11] Financial repercussions will ensure that organisations strive to meet the Home Office’s minimum requirements (over 90% failed in April 2019). The new online government-run registry for statements (launching in 2021) and new single reporting deadline will enhance accountability and improve legal certainty.


(iii) Extension of Reporting to the Public Sector


The consultation has proposed that the Section 54 requirement should extend to public bodies with a budget of over £36 million, including local authorities. Public bodies will be allowed to make ‘group statements’, which must be signed off by an accounting officer or senior management. This would allow the Government to lead by example, ensuring that modern slavery is eradicated in both public and private sector supply chains.


Conclusion


While the Government has committed to strengthening modern slavery transparency legislation, publishing its own modern slavery statement last March, we must ensure that the required legislative changes are enacted. It is unacceptable that slavery persists 187 years after its ‘abolition’.


[1] ‘Leicester Textile Firms Flouting Lockdown’, Leicester Mercury (1st July 2020): https://www.leicestermercury.co.uk/news/leicester-news/leicester-textile-firms-flouting-lockdown-4280860 (26th October 2020) [2] ‘Boohoo’s sweatshop suppliers: “They only exploit us. They make huge profits and pay us peanuts”’, The Times (5th July 2020): https://www.thetimes.co.uk/article/boohoos-sweatshop-suppliers-they-only-exploit-us-they-make-huge-profits-and-pay-us-peanuts-lwj7d8fg2 (26th October 2020) [3] ‘QC Backs Sunday Times Boohoo Expose’, The Times (27th September 2020): https://www.thetimes.co.uk/article/qc-backs-sunday-times-boohoo-expose-bnl0z989q (26th October 2020) [4] Ibid. [5] ‘Revealed Shocking Conditions in PPE Factories Supplying UK’, Channel 4 (16th June 2020): https://www.channel4.com/news/revealed-shocking-conditions-in-ppe-factories-supplying-uk (26th October 2020) [6] ‘Transparency in Supply Chains Consultation: Government Response’ (22nd September 2020): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/919937/Government_response_to_transparency_in_supply_chains_consultation_21_09_20.pdf (26th October 2020) [7] ‘UN Sustainable Development Goal 8.7’ (2015) https://www.un.org/sustainabledevelopment/economic-growth/ [8] S. Wen, ‘The Cogs and Wheels of Reflexive Law — Business Disclosure under the Modern Slavery Act’ (2016) 43 Journal of Law and Society 327 [9] T. Iqbal, ‘The Efficacy of the Disclosure Requirement under s.54 of the Modern Slavery Act’ (2018), Company Lawyer 39(1) [10] Ibid. [11] ‘Government Response to Transparency in Supply Chains Consultation Published’, Browne Jacobson LLP (9 October 2020): https://www.brownejacobson.com/training-and-resources/resources/legal-updates/2020/10/public-sector-government-response-to-transparency-in-supply-chains-consultation-published (26th October 2020) Further Reading:


A. Spertus-Melhus & L Von Engelbrechten, ‘Checking the Chain: Achieving Sustainable and Traceable Global Supply Chains Through Coordinated G20 Action’ (2020), (26th October 2020)


The Global Slavery Index: https://www.globalslaveryindex.org/2018/data/maps/#prevalence (26th October 2020)


‘Boohoo Fashion Giant Faces Slavery Investigation’, The Times (5th July 2020): https://www.thetimes.co.uk/article/boohoo-fashion-giant-faces-slavery-investigation-57s3hxcth (26th October 2020)


‘Procurement: Modern Slavery – Government response to the transparency in supply chains consultation’, Bevan Brittan (29th September 2020): http://www.bevanbrittan.com/insights/articles/2020/procurement-modern-slavery-government-response-to-the-transparency-in-supply-chains-consultation/ (26th October 2020)


‘Mandatory Human Rights Due Diligence: An Issue Whose Time Has Come’, CORE (28th October 2019): https://corporatejustice.org/news/16793-mandatory-human-rights-due-diligence-an-issue-whose-time-has-come (26th October 2020)

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