Companies must now report on action against labour exploitation

Rules introduced in the Modern Slavery Act 2015 requiring large companies to publish a “slavery and trafficking statement” each year come into effect today.

Eligible companies are required to publish the statement detailing what steps the company has taken in the past year to ensure slavery, forced labour and human trafficking are not taking place in any part of the company’s supply chain.

Crucially however, it does not require companies to actually take steps to eliminate exploitation and companies are entitled to produce a report stating they have taken no such steps. Proponents of the regime are hoping that consumer pressure and peer pressure among the business community will encourage a new culture of transparency.

The clause was added to the Modern Slavery Act following calls from both charities and leading businesses who wanted to create a level playing field among all companies with those with higher ethical standards leading the way.

The new requirement applies to companies operating in the UK in any sector that “supply goods or services” and have an annual turnover of at least £36m.

Guidance has been published by the Home Office to assist companies to meet these new reporting requirements.  The first slavery and trafficking statements will not be produced until 2016.

What is a supply chain?

The Council of Supply Chain Management Professionals describes a supply chain as “The material and informational interchanges in the logistical process, stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers, and customers are links in the supply chain.”

In simple terms it is all the individuals and organisations involved in producing or creating raw materials, component parts, services and products supplied to another company.

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