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How to Establish a Modern Slavery Process

By Matt Kelly (Updated )

We have previously discussed the topic of modern slavery: what it is, what forms modern slavery can take, and what laws and regulations are prodding companies to reduce their exposure to this pernicious risk. Today, let’s explore the next logical question: how can compliance teams establish an impactful modern slavery process?

Building a new compliance process isn’t easy, especially because modern slavery usually lurks several rungs down the supply chain, and can be hard to identify. Modern slavery is forced labor, but victims often look like “normal” workers at a construction site, a retail shop, a mine, a farm.

Moreover, global corporations must comply with multiple anti-slavery laws that are similar, but not identical. While these laws do require disclosure in the form of an anti-slavery report, a company can’t assume that one report will satisfy all compliance obligations. Let's explore the steps enterprise compliance teams should take to ensure they are reducing risk and aiding in ending modern slavery:

Set Your Objectives

The major anti-slavery laws—the U.K. Modern Slavery Act, the Australian Modern Slavery Act, the California Transparency in Supply Chains Act—don’t require businesses to prevent modern slavery in their operations outright. They only require that companies publish annual reports on what steps they are taking to prevent modern slavery (if any).

In theory, a company could report that it isn’t taking any such steps at all. That would be ill-advised from the perspective of corporate ethics and brand reputation, but under most anti-slavery laws it wouldn’t be illegal.

So the first step in developing a modern slavery compliance process is to decide what the company’s modern slavery objectives will be. Will the company take steps to review and assure anti-trafficking among its immediate suppliers, or among their suppliers as well? Will it accept self-certification from vendors, or perform anti-slavery audits?

The equation to consider here is how much due diligence, remediation, and oversight the company wants to perform; for what amount of assurance that modern slavery isn’t infecting your operations? Consider the potential harm if a modern slavery lapse does arise—reputation damage, civil litigation, and possible enforcement under other statutes—and then move forward.

Understand the Rules and Disclosure Requirements

This phase of modern slavery compliance is similar to what you do for other issues such as anti-corruption or privacy compliance. Which laws apply to your enterprise? What do those laws require you to do? 

The most prominent modern slavery laws include:

  • California Transparency in Supply Chains Act
  • U.K. Modern Slavery Act
  • Australia Modern Slavery Act
  • The French Law on Due Diligence of Corporations and Main Contractors

Most global businesses will fall under at least one of these laws, if not all. For example, the U.K. law applies to businesses working in Britain with global revenue above EUR 36M and the California law applies to all retailers and manufacturers that do business in California and have annual revenue above USD 100M.

Let’s assume that your enterprise is subject to the U.K. and Australia Modern Slavery Acts and the California supply chain law. Your next step would be to review exactly what those laws require a covered company to do.

All three require a company to publish an annual report, where the company must disclose the modern slavery risks in its operations; what steps the company is taking to reduce modern slavery risks, if any; and how the company assesses the effectiveness of those steps.

A company might be able to use the same report to comply with all three laws, but only if that statement meets the disclosure requirements for all of them. For example, the U.K. law only requires a company to say whether it performs due diligence on its suppliers; the Australia law also requires you to describe what that due diligence entails. So an Australia report could also satisfy the British law, but not vice-versa.

Choose a Set of Modern Slavery Standards

Your company will also need a framework of anti-slavery standards, upon which to base its progress. Compliance officers can choose from several, including:

Each of the above frameworks addresses modern slavery and human trafficking in various ways. Assess which one addresses the modern slavery risks most relevant to your organization, and choose that one.

Compliance officers would do well to build consensus within the enterprise before declaring any sweeping new modern slavery program. For example, consult with the procurement function since it deals directly with suppliers, and with the HR function since it might field complaints about modern slavery or be in charge of training employees on the subject.

The company might also want to solicit input from other stakeholders, especially if you work in a high-risk industry such as mining or food production—industries where outside watchdogs might already be observing your company and its supply chain to monitor for abuses. If your company is following one modern slavery framework while outside groups are trying to hold you accountable to another, that does your compliance program no favors.

Wield Your Third-Party Oversight

Modern slavery compliance is about governing your supply chain, so this is a challenge of third party due diligence and oversight. Take the third-party tools and techniques you’ve used for anti-corruption compliance, and refashion them for this new risk.

Some of those techniques can be easy to expand to modern slavery issues, such as adverse media reports or background checks of a vendor’s senior executives. Other steps might require you to revisit contract language with your suppliers so you can force the issue.

For example, if you want suppliers to certify their compliance with anti-slavery standards or to post anti-slavery hotline numbers in their locations, you may need to modify contractual obligations with your suppliers to compel those actions. If your agreements already include right-to-audit clauses, clarify exactly what subjects you are allowed to audit—and be sure that modern slavery compliance is one of them.

The good news is that you can piggyback modern slavery issues onto the “compliance infrastructure” you’ve already built to monitor third-party compliance with other issues. For example, background checks that you perform for anti-corruption purposes can be expanded to include incidents related to modern slavery. Whatever training you might already do with vendors for FCPA compliance, you could add another session on modern slavery with relatively little difficulty.

Report, Benchmark, and Evaluate

As you compile modern slavery data and publish modern slavery reports, follow the same process for periodic evaluation that you would for your FCPA compliance program.

Namely, at regular intervals, perform fresh risk assessments to see whether your operations have changed in some way that alters your modern slavery risks. Have you outsourced the manufacturing of products? Have you changed your suppliers in the wake of coronavirus? Have you expanded into new markets or offered new services? Have your suppliers come under new ownership? Have new anti-slavery laws come onto the books that cover your business?

Then, as always: perform a gap analysis against the framework you use. Find weak spots in your compliance program. Take remediation steps, and track them to assure they’re completed in a timely manner.

You can also consider how modern slavery compliance might weave into any larger program of corporate sustainability your company might pursue. For example, your modern slavery report could be included in an annual CSR report that addresses slavery, sustainable development, diversity, and related issues.

My parting reminder is this: your compliance program should keep evolving with the risk. Business operations will change, anti-slavery laws will change—and, unfortunately, the tactics of modern slavery will keep changing too. Don’t let those forces leave your compliance effort behind.

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