Fashion Roundtable’s Policy Paper on Modern Day Slavery
Profit margins and modern day slavery are worryingly interlinked. According to the Global Slavery Index no country in the world is exempt from modern slavery. In 2016 the ILO estimated that 40.3 million people were victims of modern slavery, which in turn generates annual profits of $US 150 billion. Because of these worrying figures, government leaders agreed to include modern slavery in the United Nations sustainable development goals (SDGs). In 2015 government leaders from all UN member states agreed to the SDGs to help achieve fair, inclusive, and sustainable development by 2030. Sustainable development goal 8.7 asks states to: “take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms.”
A report by the Global Slavery Index says that if we want to achieve SDG 8.7 by 2030, we need to know more about where, why, and how people are enslaved, and what progress we are making in reducing the number of modern slavery victims. The report argues that the process of tackling modern slavery effectively is hampered because of the lack of indicators on all forms of modern slavery under SDG 8.7, and the voluntary nature of the reporting on modern slavery. This latter point will be the main focus of this paper. Indeed this is something Baroness Lola Young of Hornsey has highlighted this in the UK parliament with her amendments to Section 54 of the Modern Day Slavery Act, which asks all businesses with a turnover of over £36m to declare there is no slavery within their organisation or supply chains. This was also a key ask from the EAC Fixing Fashion report last year, which along with 17 other recommendations was not taken up by the UK government. Fashion Roundtable will be secretariat for the All Party Parliamentary Group for Ethics and Sustainability in Fashion, launching later this month and will be focusing on the issue of Modern Day Slavery and Section 54 within our parliamentary events and policy work.
While the SDGs were designed and agreed on the international level, national governments play a critical role in developing and implementing the laws, policies, and programs that are needed to prevent and respond to modern slavery. In response to the SDG 8.7 various laws on both the International and the National level have been implemented. Some of which are:
- California Transparency in Supply Chains Act
- Australia’s Modern Slavery Act
- UN Guiding Principles for Business & Human Rights
- 2014 protocol to ILO convention No. 29 on Forced labour + its accompanying recommendation no. 203.
The focus of this piece lies on the UK Modern Slavery Act. In the UK the government has estimated that there are between 10.000 and 13.000 victims of modern slavery per year within its borders. As a response to these numbers and the SDG 8.7, the UK government implemented a Modern Slavery Act in 2015 to prevent and prosecute modern slavery and protect victims. This act was considered as world-leading and hailed for its breakthrough in corporate transparency. At the same time, however, its efficiency is increasingly being questioned as very little companies have managed to publish slavery disclosures.
Let us first turn to what the Act exactly does and how the Act fails to deliver corporate liability. The Modern Slavery Act holds that any business – or part of a business – that has a global turnover of £36m or more and supplies goods or services in the UK will have to produce and publish an annual slavery and trafficking statement in a “prominent” place on its website every year. The statement must set out what steps the organisation has taken to ensure there is no slavery in any part of its business, including its supply chains. A business thus has to comply if it meets the following two criteria; global turnover of over £36mn and carrying on a business or part of a business, in any part of the United Kingdom.
Offences under the Act include:
slavery, bonded, forced, or compulsory labour;
human trafficking;
criminal exploitation;
sexual exploitation; and
domestic servitude.
The Modern Slavery Act is remarkable in that it:
is the first of law of this type in Europe;
asks that companies go further in their reporting obligations than the EU Non-Financial Reporting Directive (2014/95/EU);
has wide extraterritorial implications; and
is explicit in its requirements that businesses apply more rigour in identifying and preventing the use of ill-treated labour when selecting third parties in their supply chain.
There is a lot of excitement about the act, but there is actually quite slim evidence that it is capable of spurring meaningful change in corporate behaviour. This has to do with the annual slavery statement companies have to provide as laid out in section 54 in the Act. The problems with this section are:
· What this statement has to include is not much. Companies are not required to lay out exact details, the outcome, no extraterritorial liability, or no provision of budget that is needed to make these changes;
· There are no immediate financial penalties for companies that fail to publish an anti-slavery statement in line with the Act;
· And nobody is meaningfully checking whether companies are complying with it or not.
As a result, many of the statements are of low quality, or are not even complying with the act at all. According to the registry of modern slavery statements hosted by the Business and Human Rights Resource Centre, only 12 global textile and apparel companies have so far produced statements as required by the UK Modern Slavery Act. Including more corporate liability in section 54 would address all these issues. Making section 54 more stringent is actually not that difficult, considering that such an Act was already among one of the three models that was under consideration at the beginning of the legislative process. At the start of the legislative process, the government was considering three models through which the Modern Slavery Bill could address forced labour in supply chains. The first option that was considered by the Draft Modern Slavery Bill Joint Committee was to create criminal liability for forced labour, by modelling legislation after the UK Bribery Act 2010, through which the government created an offence for corporations that can be liable for bribery committed by a person ‘associated’ with it. Criminal liability for forced labour in the supply chain would have been a strong regulatory instrument for the combatting of forced labour for several reasons.
The combined effect of extraterritorial liability and being liable for the acts of an associated person means that there is potentially far-reaching liability. However, the option to introduce criminal liability was rejected by the government. Of the three regulatory options considered by the government the current transparency approach is the least stringent. Another evidence that more stringency is possible is provided by the Australian Modern Slavery Act. This Act has mandatory reporting criteria. Considering that low stringency has proven to have little effect, we would recommend the UK government to reconsider its earlier decisions and revise section 54 of the Act so as not to fall behind the Australian legislation.
Despite the necessity of changing section 54 of the Act, the SDGs were not meant to be divisible nor achieved by a single government acting alone. This makes cooperation on the international level crucial for making SDG 8.7 possible and combat modern slavery effectively. Yet, despite a growing trend towards hard law at the national level, there are still no cross-sectoral laws requiring companies and financial institutions to act. Such a law could build on similar legislation already passed or under discussion in several national states such as the Dutch Child Labour Due Diligence Law, the EU Conflict Minerals regulation and the French Duty of Vigilance act.
Brexit might make it harder for the UK to create such a cross-sectoral law. We would nonetheless urge the UK to work together with the EU to create a level playing field for all companies in order to eradicate modern slavery. Such a measure would also deal with the concern that new workers visas after Brexit will make workers more vulnerable to exploitation. For more information on workers visas after Brexit see our previous policy work on Visas.
In conclusion, compliance with section 54 of the Act relies heavily on companies’ willingness to comply and on the potential negative publicity that would be generated by a refusal to demonstrate a willingness to take modern slavery offences seriously. But as we also demonstrated in our policy piece on Living Wage, mechanisms that rely on the willingness of corporations have proven to have little effect. Therefore, Fashion Roundtable recommends the UK government, besides working together with the EU on the international level, to make the Modern Slavery Act more stringent and include more corporate liability through changing section 54.
By Johanna Ramaer