A decade after the adoption of the UN Guiding Principles of Business and Human Rights (UNGPs) by the UN Human Rights Council in 2011, recent weeks have seen numerous developments that are aimed to rein in the prevalence of human rights violations in global supply chains. Among these are the U.S. government’s recent decision to issue a Withhold Release Order against a Chinese polysilicon company alleged to be involved in forced labour in the Xinjiang Uyghur Autonomous Region (XUAR) following several reports that have put the spotlight on the solar industry. Almost simultaneously, Germany and Norway followed in France’s footsteps and adopted their mandatory human rights due diligence (mHRDD) legislations ahead of the tabling of the EU mHRDD legislation scheduled for September 2021. These actions have been supplemented by numerous complaints or lawsuits filed against several corporations before national courts for their direct or indirect involvement in human and labour rights violations overseas (see here for example). And most recently, it is the UK’s Modern Slavery Act (MSA) 2015 which has gained renewed attention again for lagging behind in imposing concrete obligations of mandatory human rights due diligence. However, amid the growing pressure on the UK government to follow up on their commitment to amend the law and European countries actively closing legal loopholes, the Modern Slavery (Amendments) Bill was placed before the UK House of Lords on 15 June 2021. This move follows what has been weeks and months of MPs, civil society organisations, and a growing number of UK companies – major retailer ASOS being the most recent one – continuously calling for the enactment of legislation that will strengthen the MSA and place upon businesses’ mandatory due diligence obligations to identify, mitigate and remedy human rights abuses along their entire value chain. While the private member’s bill only had its first reading in the House of Lords and thus a long way to go, it nonetheless proposes significant amendments to the MSA. The MSA, as it currently stands, places on large companies the obligation to publish annually a Modern Slavery and Human Trafficking statement outlining their work in preventing and addressing modern slavery risks in their businesses’ operations and supply chains.
Following an independent review of the MSA 2015, and a public consultation thereto, the UK government initially announced in September 2020 that amendment plans included, among others, the tightening of reporting obligations by requiring companies to report on all areas as currently recommended within the MSA, the establishment of a publicly accessible government web portal where statements are to be uploaded to (launched on 11 March 2021), and the consideration of a civil penalty scheme. The tabled Modern Slavery (Amendments) Bill, however, goes beyond these plans and seeks the creation of two new offences as well as new disclosure requirements, thereby providing a legal basis to hold corporations accountable for non-compliance. An enactment of these amendments would mean that companies, in addition to the modern slavery statement, are required to publish and verify information about the country of origin of sourcing inputs in its supply chain; arrange for credible external inspections, external audits, and unannounced external spot-checks; and report on the use of employment agents acting on behalf of an overseas government. More significantly, a person who is responsible for a slavery and human trafficking statement – that is company directors, members of limited liability partnerships, or partners in other partnerships – would commit an offence if information in the statement is knowingly or recklessly false or incomplete in a material particular. Furthermore, a continuation of sourcing from suppliers or sub-suppliers which fail to demonstrate minimum standards of transparency after having been issued a formal warning by the Independent Anti-slavery Commissioner would also be subject to criminal charges. Depending on which of the offences are committed, a conviction on indictment would entail either imprisonment or a substantial fine calculated on a business’ turnover or both. The tabled private member’s bill would undoubtedly constitute a game changer for UK based companies if enacted in its current form. However, concerns are already being raised with regard to how much teeth it would actually have as private member’s bills rarely make it through both Houses of Parliament. Furthermore, it is criticised that the bill relies too much on external inspections and audits which oftentimes do not adequately reflect the severity of human rights violations and are rendered as tick box exercises. Nonetheless, this accumulation of legislative movement on national and regional levels strengthens the principles as set out within the UNGPs and is essential in the aim to eradicate human rights violations in global supply chains. At the same time, the enhancement of corporate accountability avenues means that multinational corporations urgently need to review their human rights due diligence policies and ensure that these are effectively implemented across their own and their business partnerships’ operations. A failure to do so may not only result in non-compliance in a singular country but entails the risk of costly litigation and liability across multiple jurisdictions as European countries are gradually closing the legal gaps. Taking immediate action to prevent, mitigate and remediate adverse human rights impacts in companies’ value chains is, in the end, not solely about insulating corporations from liability but also instrumental in raising human rights standards across all industries – businesses’ mindset require a change in awareness that, ultimately, it is the workers on the ground who are continuously adversely affected by the lack of behavioural change.
With decades of experience, Global Rights Compliance (GRC) works with companies, investors, and organisations to address the potential adverse human rights and environmental impacts resulting from business operations. We work side by side with our clients to help ensure they become leaders among their peers on these issues. Our services include legal advice, consultancy services on policies, procedures and training, global supply chain assessments and due diligence, and designing and implementation of grievance mechanisms. While we know the law and what you need to do, we also know that real change comes through behavioural change. As such we work innovatively, side by side with our clients in a very practical way to ensure they genuinely become a rights-based company that is also just a better business.