Government has published its response to the recent consultation on transparency in supply chains. The consultation, which was launched last summer, sought views on proposed measures to strengthen the transparency in supply chain reporting provisions in section 54 of the Modern Slavery Act 2015 (Section 54).
The intention is to make reporting against each of the six areas listed in Section 54 mandatory. If organisations have taken no steps within an area, they must state this clearly. They may also provide a reason why they have not done so if they wish.
Companies that are in scope will therefore be required to report on the following:
- the organisation's structure, its business and its supply chains;
- its policies in relation to slavery and human trafficking;
- its due diligence processes in relation to slavery and human trafficking in its business and supply chains;
- the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps it has taken to assess and manage that risk;
- its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
- the training about slavery and human trafficking that is available to its staff.
This requirement for mandatory reporting will need changes to the legislation and while organisations will not be mandated to report against the new areas until the necessary changes have been made, the Home Office will publish updated guidance to help organisations prepare for the changes.
In addition to the new mandatory reporting, organisations covered by Section 54 (i.e those entities that supply goods or services and have a consolidated global turnover of £36 million per annum) will be required to publish their modern slavery statements on a new government-run online reporting service as well as their websites. The Home Office is currently developing an online registry for modern slavery statements and organisations will be encouraged to publish their modern slavery statements onto this platform once it is launched, even if the necessary amendments to the legislation are still to be made.
Furthermore, Government will make legislative changes to introduce a single reporting deadline on which all organisations must publish their statement each year. Organisations will report on the same 12-month period (April to March) and will then have six months to prepare their statement in time for a single reporting deadline of 30 September.
Government will also clarify in legislation that organisations must demonstrate compliance by stating the date of board approval and director sign off, and by providing the names of entities covered in group modern slavery statements.
The proposals represent a significant step towards increased corporate transparency and accountability in relation to transparency in supply chains. However it remains to be seen whether the increased legal obligations will be backed up by effective enforcement mechanisms.
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