Is Your Business Prepared to Meet the New Transparency in Supply Chains Provisions?

New provisions on transparency in supply chains, which will place reporting obligations on thousands of businesses, are due to come into force in just a matter of days.

Section 54 of the Modern Slavery Act otherwise known as the TiSC provisions will soon require all commercial organisations with a turnover of more than £36 million to produce slavery and human trafficking statements each year to increase transparency about what business are doing to tackle modern slavery within their business operations.

The government and the charity sector is heralding these provisions as an immensely positive step towards ensuring companies become directly responsible for the conditions of their supply chains and step up their efforts to tackle human trafficking and slavery linked to the provision and transportation of goods and services worldwide, not just in the UK.

Even though the provisions have been designed to minimise the burden on businesses, as with all change, the new obligations estimated to affect some 12,000 companies, will require additional consideration and bureaucracy.

Despite it’s far reaching impact, the provisions received rather limited coverage thus far, leaving many uncertain about what to expect. Here’s the most pressing information your business needs to know:

• All commercial organisations with a turnover of more than £36 million will need to publish an annual declaration statement setting out what steps, if any, the organisation has taken to ensure its own business and supply chains are free from slavery and human trafficking.
• Statements must be signed off at board level and made publicly available, with a web link featured in a prominent position on the homepage of the organisation’s webpage, or provided upon written request within 30 days in the event that the company doesn’t have a website.
• The provision covers all sectors (retail and manufacturing), goods and services, and applies to the global operations of all companies operating in the UK.
• Transitional provisions will be developed so that statements are not required for businesses whose financial year end falls within close proximity to the date the provisions come into force.
• The government will publish Statutory Guidance by the end of this month to help businesses understand what a slavery and human trafficking statement might include and how they can best implement the requirements of this legislation. While the guidance will contain good practice for businesses to consider, the government will not dictate what action businesses need to carry out.
• The provisions are intended to make it clear what action a business is or is not undertaking in order to allow investors, consumers and the general public to decide who they should and should not do business with.

The Home Secretary will have the power to force compliance of the publication of the annual statement requirement via a High Court injunction, but is most likely to use this avenue sporadically and only against high profile organisations to set an example when she does.

While enforcement action may be rare, we can expect investors, competitors, consumer groups and customers to play the biggest role in policing the duty. They may choose to do this by applying public and media pressure, naming and shaming or deciding not to deal with businesses that do not fully comply or take little or no action to tackle slavery and human trafficking in their supply chains. Although legal enforcement mechanisms are an extremely effective tool for ensuring compliance, our hunch is that the latter approach may prove to be much more powerful.

Paulina Jakubec, Account Executive, Public Affairs