The Modern Slavery Act came into force in the UK in October 2015, requiring companies with a turnover in excess of £36m to publish an annual slavery and human trafficking statement, detailing what the company has done to assess and tackle modern slavery within its supply chain and its own business. Companies that have a financial year ending on 31st March 2016 will be the first required to publish a statement. The UK government has published guidance which sets out who needs to comply, recommendations on how the statement should be written and published, and what to do if slavery is identified within the supply chain.
Modern slavery occurs across many industries, but some are higher risk than others, particularly those with complex supply chains, extended or complex employment relationships, those with high flexibility and low profit margins and those reliant on low-skilled, temporary or seasonal work.
With ERM’s global reach, and our wide array of experience in sustainbility issues and supplier engagement, we are well-positioned to support businesses in understanding the implications of the Modern Slavery Act and the management of risks in downstream supply chains. ERM’s strategic approach begins with helping clients obtain a clear understanding of the critical nature of the supplier relationship on business continuity and the impact that environmental, health, safety and social compliance can have on productivity, product quality, overall brand reputation and on the company’s bottom line.
The Modern Slavery Act for Corporates
ERM has been working with a number of corporate clients to implement effective bespoke supply chain management programmes that address modern slavery and other social and sustainability risks. We help corporate clients understand their risks (including carrying our human rights impact or risk assessments), develop corporate policies, establish baseline expectations for suppliers (e.g. code of conduct) and follow-on verification and monitoring processes to ensure potential modern slavery risks are being effectively managed and controlled through bespoke tools (e.g. supplier questionnaires) and on-site audit programmes. We have engaged with suppliers to raise awareness on issues such as modern slavery and increased capacity development through skills training and coaching to educate suppliers on risk management and improving overall performance. We also develop procedures for reporting concerns over modern slavery and other human rights issues within the company’s operations, including grievance mechanisms and other remedy processes.
The Modern Slavery Act for PE Firms
ERM has been working with a number of leading Private Equity (PE) firms to integrate environmental, social and governance (ESG) considerations throughout their investment lifecycle. ERM has provided reliable, time-sensitive and commercial advice to PE firms not only during pre-acquisition due diligence but also during on-going portfolio monitoring covering a broad range of social issues including but not limited to potential for slavery and forced labour issues in their portfolio company operations and associated supply chain. Our advice is helping PE firms add value to their investments through reducing risks, maximising returns and enhancing their and portfolio companies’ reputation by executing an effective engagement strategy with their stakeholders.