Modern Slavery Legislature and How it Affects Your Business

This article examines national and international legislature on modern slavery, highlighting how it affects businesses and the steps companies should take to ensure compliance.

The Modern Slavery Act 2015

The UK’s Modern Slavery Act 2015 was one of the first significant pieces of legislation targeting modern slavery. It requires businesses with an annual turnover of £36 million or more to publish an annual slavery and human trafficking statement. This statement must detail the steps taken by the business to ensure that slavery and human trafficking are not present in their operations or supply chains.

Recently, there have been calls to strengthen the Modern Slavery Act. Proposed amendments include introducing financial penalties for non-compliance and requiring companies to publish their statements on a government-run registry. These changes reflect a growing recognition of the need for more robust enforcement mechanisms to hold businesses accountable.

The Modern Slavery Act 2018

Australia’s Modern Slavery Act 2018 is a piece of legislation that requires businesses with an annual consolidated revenue of over AUD 100 million to report on the risks of modern slavery in their operations and supply chains. Companies must detail the steps to address these risks in annual Modern Slavery Statements, which are publicly available.

The Australian government maintains a public register of these statements, increasing transparency and accountability. Non-compliance with the reporting requirements does not currently attract financial penalties, but reputational damage and potential future legal risks are strong incentives for businesses to comply. 

The Uyghur Forced Labor Prevention Act (UFLPA)

In the United States, the Trafficking Victims Protection Reauthorization Act (TVPRA) has been a longstanding tool against human trafficking and modern slavery. Recent legislative efforts have intensified scrutiny on businesses, particularly those with international supply chains. The Uyghur Forced Labor Prevention Act (UFLPA), enacted in 2021, is a key law prohibiting importing goods produced using forced labor in the Xinjiang region of China.

Under UFLPA, companies must provide clear and convincing evidence that their supply chains are free of forced labor or face severe penalties, including the seizure of goods. This legislation reflects the U.S. government’s increased focus on holding businesses accountable for ethically sourcing materials and products.

The EU Corporate Sustainability Due Diligence Directive

In 2022, the European Commission proposed the Corporate Sustainability Due Diligence Directive (CSDDD), legislation to ensure responsible company, subsidiary and supply chain partners’ operations. This directive requires companies operating in the EU of a certain scale, including non-EU businesses with significant operations there, to identify, prevent, and mitigate adverse human rights and environmental impacts throughout their supply chains.

The directive mandates that businesses establish due diligence processes to assess and mitigate the risks of adverse human rights and environmental impacts within their operations and supply chains. Companies should establish grievance mechanisms for workers and stakeholders to report any issues. They should align their business models and strategies with the 1.5°C target of the Paris Agreement, mainly if they are large companies. Additionally, companies should publicly report on their due diligence efforts through a sustainability report or their website.

Failure to comply could result in significant penalties, fines, and legal actions. This legislation marks a critical step in the EU’s broader strategy to promote sustainable business practices and protect human rights. The CSDDD took effect on July 25, 2024, and it is up to Member States to pass national laws implementing its obligations.

What These Laws Mean for Your Business

The growing body of legislation aimed at combating modern slavery has profound implications for businesses. Companies operating in jurisdictions covered by these laws must ensure that they have robust due diligence processes to identify and mitigate the risk of modern slavery in their operations and supply chains. This includes:

• Conducting Risk Assessments: Regularly assess your supply chain to identify areas at high risk for modern slavery. This may involve working with third-party auditors or using specialized software tools.
• Implementing Due Diligence Procedures: Establish clear policies and procedures for identifying and addressing modern slavery risks. This should include supplier audits, employee training, and mechanisms for reporting concerns.
• Transparency and Reporting: Ensure your company is transparent about its efforts to combat modern slavery. This may involve publishing annual reports or statements, as required by law.
• Engaging with Stakeholders: Work closely with suppliers, customers, and other stakeholders to promote ethical business practices throughout your supply chain.
• Legal Compliance: Stay informed about the latest legal developments in the jurisdictions where your business operates. Non-compliance can result in severe penalties, including fines, legal actions, and reputational damage.

The fight against modern slavery is gaining momentum, with new laws and regulations holding businesses to account like never before. As a business leader, it’s crucial to understand these legal requirements and take a closer look at your supply chain with proactive steps to ensure compliance.

The time to tackle modern slavery in your supply chains is right now. Learn more about how we help companies of all sizes be free from modern slavery.