The U.K. Modern Slavery Act

April 20, 2015 EcoVadis

The Next Big Step To Abolishing A 21st Century Obscenity: Is Your Company – And Supply Chain – Ready?

The U.K. Modern Slavery Act became law on March 26th, 2015. This new law has the potential to set a new European precedent in the eradication of slavery, and could have far-reaching implications for how businesses operating in the U.K. must evaluate and manage what is happening in their supply chains.

The EcoVadis analyst team has prepared a white paper on U.K. Modern Slavery Act – Overview and Implications that summarizes this law and its implications, and how companies can prepare for it. Here’s a brief excerpt:

The Act sets a new European precedent in the eradication of slavery, and it transcends recent legislation including the California Transparency in Supply Chains Act (TISC), and the Dodd-FrankAct-Section 1502.

REPORTING REQUIREMENTS

The Modern Slavery Act requires companies to explain and publish their efforts to do the following with regard to trafficking and slavery in their supply chains:

– Verify them to evaluate and address risks.

– Conduct audits and evaluate supplier compliance with company standards.

– Require direct suppliers to certify that materials incorporated into the product comply with the laws of the country or countries in which they are doing business.

– Maintain internal accountability standards and procedures for employees or contractors failing to meet company standards.

– Provide company employees with direct responsibility for supply chain management, appropriate training to mitigate risks.

– Reporting can be limited to a statement declaring no implementation of due diligence measures. But this will be publicly available and subject to scrutiny.

WHO WILL BE AFFECTED?

Although details are still being finalised, it seems that companies with a minimum turnover threshold, headquartered in, or operating in the U.K. as a subsidiary of a foreign company and supplying goods or services, will be subject to the reporting requirements.

Publicly listed companies already reporting on the UK Companies Act 2006, will be able to report in their regular annual reports. No details have yet been published for private companies.

There is a tentative implementation date of October 2015, and ongoing consultation until May to determine the exact scope of application. This new law comes at the same time as other recent due diligence reporting such as:

–  GRI-G4 and U.N. Guiding Principles Reporting Framework.

–  Draft report at the European level on conflict minerals to be voted on in April

–  Proposed bill in France for companies with more than 5,000 employees to control major CSR supply chain risk including fundamental human rights.  Non-compliance would result in civil sanctions.

HOW ECOVADIS CAN HELP

EcoVadis can help companies meet the reporting requirements proposed in the U.K. Modern Slavery Act in many ways including:

–  Supplier portfolio risk assessment;

–  Management system evaluation, including international accountability standards;

–  Integration of external audits certifications into a scorecard and buyer training;

–  Monitoring of corrective action plans by suppliers.

RISK ASSESSMENT

Through Supplier Risk Analysis, EcoVadis maps supply chains to identify and prioritize high-risk sectors and locations for potential slavery and human trafficking.

EVALUATION

CSR Assessments evaluate policies and actions implemented by suppliers to comply with internationally recognized human rights standards and frameworks for slavery and human trafficking. This includes the Guiding Principles on Business and Human Rights, the United Nations Global Compact and ISO 26001.

Suppliers provide information and supporting evidence on their policies and actions through sector specific questionnaires. These cover human rights due diligence and certification schemes used by suppliers to verify that fair labour practices are used.

The questionnaires also ask suppliers to disclose information on their sustainable procurement selection criteria, third party audits and supplier capacity building. This provides buyers with visibility of supplier’s efforts to prevent slavery and human trafficking.

The assessment also takes into account the Conflict Minerals disclosure requirements under the Dodd-Frank Act, Section 1502.

AUDITS AND PRODUCT CERTIFICATIONS

Audits reports can be incorporated into the EcoVadis CSR evaluation methodology. These can identify compliance gaps within the supply chain that can subsequently be addressed with a corrective action plan.

INTERNAL ACCOUNTABILITY STANDARDS

EcoVadis helps companies to develop Supplier Codes ofConduct that formalize expectations on internationally recognized human rights principles, including the prevention of slavery and trafficking. We also provide a qualitative assessment of internal procedures, and propose corrective actions to address potential issues in the supply chain.

TRAINING

EcoVadis also provides comprehensive training on key issues and management practices in sustainable supply chain management.

Click here to download the white paper on U.K. Modern Slavery Act – Overview and Implications

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