chainIn recent years, addressing human rights and labor issues in the supply chain has become a necessity for businesses in the consumer goods industry. In part, this is due to rising consumer demand for ethical products: a 2015 Nielsen report found that 66% of consumers are willing to pay more for brands committed to a positive social and environmental impact. Governments have responded in turn, enacting legislation which mandates companies to ensure the respect of human rights in their entire supply chains.

Today, a variety of anti-modern slavery regulations are in effect. In this article, we consider some of the major regulations and how companies can comply by achieving end-to-end supply chain transparency.

California Transparency in Supply Chains (United States)

The California Transparency in Supply Chains Act, signed in 2010 and enacted on January 1, 2012, was one of the first anti-modern slavery regulations of its kind. This act aims to ensure that “large retailers and manufacturers provide consumers with information regarding their efforts to eradicate slavery and human trafficking from their supply chains.”[1]

All retailers and manufacturers doing business in the state of California, with annual worldwide gross receipts over $100 million, are required to comply. They must disclose their efforts towards eliminating modern slavery in five areas: verification, audits, certification, internal accountability, and training, with this information readily available on their websites’ homepages.

In 2015, KnowTheChain conducted a study of 500 companies affected by the California Transparency in Supply Chains Act. The study found that 47% of corporations were not disclosing sufficient information on their websites in all five areas of the regulation. To increase compliance, the California Department of Justice published a resource guide to provide businesses with guidelines and best practices for adequate compliance.

UK Modern Slavery Act (United Kingdom)

The UK Modern Slavery Act, passed on March 26, 2015, is perhaps the most prominent of anti-slavery regulations. The UK Modern Slavery Act impacts commercial organizations doing business in the UK with a global turnover of at least £36 million per year.

Similar to the California Transparency in Supply Chains Act, affected businesses are required to publish statements on their websites detailing the steps that they have taken to ensure that slavery and human trafficking are not occurring at any point in their supply chains or businesses. The UK Modern Slavery Act has prompted at least 3,000 businesses in 26 sectors and 34 countries to actively issues statements addressing modern slavery in their supply chains.

In the years since its implementation, the Act has been criticized for its lack of effective enforcement. A 2017 analysis found that only 14% of company statements fully comply with the Act’s minimum requirements. Moreover, while most companies should have begun publishing their statements by the first half of 2017, a study found that only 34% of the businesses required have actually done so.

Regardless, the UK Modern Slavery Act has undoubtedly had a global impact in bringing modern slavery to the foreground, compelling companies to take steps to eradicate forced labor from their supply chains. Most recently, it has inspired a similar proposed legislation in Australia.

Devoir de Vigilance (France)

In response to human rights disasters such as the 2013 collapse of Rana Plaza in Bangladesh, France passed its own legislation—Devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre (Due diligence of corporations and main contractors)—on February 21, 2017.

French companies with at least 5,000 employees, if the headquarters is located in France, or at least 10,000 employees, if the headquarters is located abroad, must comply with the regulation. Affected companies must publish and implement a surveillance plan (“plan de vigilance”) to prevent serious violations of human rights, fundamental freedoms, and the health and safety of people and the environment.

In the regulation’s first version, a fine of up to €30 million was proposed for companies that failed to comply. However, this fine was rejected due to the ambiguity of phrases such as “fundamental freedoms,” and the penalty for noncompliance was amended to a formal notice.

This lack of serious financial consequences suggests that the Devoir de vigilance could yield similar results as the UK Modern Slavery Act, with many companies forgoing any semblance of compliance altogether. However, time will tell as to the effectiveness and lasting impact of the regulation.

Going beyond regulations

These are just a few of the many national anti-slavery regulations that have been enacted in recent years. Other countries such as Brazil, Hong Kong, the Netherlands, Qatar, and Switzerland have also joined the trend of leveraging legislation to eradicate modern slavery.[2]

Of course, regulations alone cannot eliminate forced labor and modern slavery from supply chains. Companies of all sizes also require sufficient motivation, tools, and resources to investigate their supply chains and make any difficult but necessary changes.

Transparency-One can help businesses in their goal to eliminate modern slavery by providing the technology needed to identify and digitize information in their end-to-end supply chains. Modern slavery scandals often occur in supplier facilities unknown to other supply chain stakeholders, whether direct Tier 1 or down to the source. Supply chain collaborators can use Transparency-One to not only identify their suppliers, but also track all necessary information to ensure regulatory and social compliance (supplier and facility details, country of origin, certifications, audits, workforce surveys, supplier self-assessment, and other documentation).

In all, governmental regulations play an important role in helping enact change at a large scale. By mandating businesses to clean up their supply chains, they signal to the entire consumer goods industry that the fight against modern slavery should not be left to others. The work of all retailers, manufacturers, and suppliers is needed to create lasting and worldwide change.

 

Resources

For more information on the UK Modern Slavery Act: https://www.transparency-one.com/compliant-uk-modern-slavery-act/

For more information on France’s Devoir de vigilance: https://www.transparency-one.com/regulation-devoir-de-vigilance/

Sources

https://knowthechain.org/wp-content/uploads/2015/10/KnowTheChain_InsightsBrief_093015.pdf

https://blogs.thomsonreuters.com/answerson/combating-modern-slavery-through-legislation-and-regulation/

[1] https://oag.ca.gov/SB657

[2] https://www.lexology.com/library/detail.aspx?g=93c56675-e534-48de-acde-fd4c7268f0d2

 

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