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Modern Slavery Act: what it means for global businesses

By Simone Preuss

Mar 11, 2016

With an estimated 21 million people worldwide being victims of modern slavery or enforced labour and illegal profits estimated at 150 billion US dollars per year, modern day slavery is very real. The majority of modern slaves are exploited in manufacturing, construction and agriculture, leaving the garment and textile industry not out of its clutches.

A new UK law is set to tackle this issue, the Modern Slavery Act, which will require any UK-based company or international company with a business presence in the UK and a global turnover of more than 36 million pounds per year to report annually on its steps taken to identify and address the risks of forced labor and trafficking in its own workforce and supply chain and the workforces of its business partners and contractors.

Companies to check supply chain, workforce and contractors

The new law is the third of its kind worldwide to act against modern slavery with the aim to improve human rights at the value chain level and to create legally binding guidelines. It will also help in stopping the import of goods from those countries that violate the law. The UK's Modern Slavery Act is modeled after the California Transparency in Supply Chains Act that was adopted in 2012. Currently, the EU is working on a similar legislative initiative.

In the UK, trade associations and unions welcome the new law as a "clear signal". Should an organisation fail to produce the required statement, civil court action can be taken to enforce compliance and unlimited fines can be issued. In terms of a time frame, government guidance recommends that statements should be published as soon as reasonably possible at the end of the financial year, ideally not more than six months later.

Companies below the 36-million-pound threshold are not off the hook: They may be required to assist larger companies in preparing their statements if they are part of their supply chain.

For global players in the garment and textile industry, this means they have to check and protect their supply chain against one more threat; yet they have also one more chance to prove their commitment, which in turn can give them an edge over the competition and have end consumers decide in their favour when making that crucial purchasing decision.

Image: Zari worker in Mumbai, India / Kay Chernush via End Slavery Now