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Full Disclosure: new report explores modern slavery reporting

March 27, 2019

Modern slavery reporting requirements around the world currently fail to adequately prevent forced labour and human trafficking in global supply chains. 

This is the finding from today’s newly published joint report by the International Corporate Accountability Roundtable (ICAR) and FLEX. The report, “Full Disclosure: Toward Better Modern Slavery Reporting,” assessed the current modern slavery legislation landscape around the world and consulted experts in the USA and the UK to understand where the problems and opportunities currently lie.

“Forced labor and human trafficking are some of the most egregious human rights violations found in today’s complex global supply chains. The improvements to modern slavery laws and reporting practices identified in our new report are necessary steps to better protect human rights and reduce unfair labor practices around the world,” said ICAR Interim Executive Director Meg Roggensack.

“As the UK MSA Independent Review concludes and several other jurisdictions around the world are considering supply chains legislation, our report provides key and timely recommendations to governments and companies alike.”

The report’s findings and recommendations are drawn from 28 interviews and two in-person expert consultations conducted by ICAR and FLEX in London and Washington, D.C., which provided input from companies, civil society organizations and trade unions, governments, and investor groups. Laws examined include California’s 2010 Transparency in Supply Chains Act, the UK Modern Slavery Act of 2015, and Australia’s Modern Slavery Act of 2018. It finds that reporting must move towards a more risk and outcomes oriented approach in order to have more impact.

Ultimately, it recommends moving towards mandatory human rights due diligence legislation to generate more substantive improvements for right-holders. 

“The first wave of modern slavery reporting has now been reviewed and analysed by experts. Whilst reporting has served a purpose in highlighting the long road ahead in achieving improvements for workers in supply chains, it is now time for businesses to face up to the risks of abuse and exploitation posed to workers in their supply chains,” said Caroline Robinson, FLEX Chief Executive.

“This report sets out a roadmap to achieving risk-based reporting, in which companies undertake detailed review of the impact of their operating behaviours and environment on workers. Key to the success of this work is meaningful engagement with workers on the ground, in order to shine a light on abuses and seek urgent remedies.”

The report’s key findings include the following:

  • Companies’ compliance with current modern slavery reporting laws has been inadequate;
  • Modern slavery reporting requirements aimed at encouraging businesses to address forced labour in their supply chains have overall failed to bring meaningful improvements for workers;
  • Companies have generally failed to recognise that forced labor and human trafficking arise out of a context of widespread labour abuses and to investigate and address how their own business practices and operating models can create the conditions for such abuses;
  • The breadth and quality of information disclosed by companies does not reflect effective human rights due diligence processes, and is not detailed enough to allow civil society to adequately monitor and engage with companies in order to find effective measures to protect workers and prevent abuses; and
  • Governments’ monitoring and enforcement mechanisms are too weak to lead to effective corporate responses to and adequate reporting on modern slavery risks.

The report recommends additional and improved legal requirements, better company reporting standards, and stronger enforcement and monitoring mechanisms, including the following:

  • Modern slavery reporting requirements should provide for consequences for noncompliance, including financial penalties, corporate liability and exclusion of non-compliant companies from public procurement;
  • Governments should establish an independent body to monitor compliance and to assess the quality of modern slavery disclosures;
  • Company reporting should be risk-based and include information on corporate policies and processes in place to respond to risks of forced labor as well as on the outcomes and results of such measures; and
  • Governments should aim to move toward mandatory human rights due diligence legislation, with modern slavery laws being one tool amongst others to address forced labour and human trafficking.

In the UK context, the findings of this in-depth report echo the recommendations of the recent report published by the Independent Review of the Modern Slavery Act 2015 which calls for many of the same changes to be made.