Transparency and disclosure in supply chains: modern slavery and worker voice

Parsa, Sepideh ORCID: https://orcid.org/0000-0003-4135-2865, Roper, Ian and Hettiarachchi, Chandima ORCID: https://orcid.org/0000-0001-7489-4391 (2022) Transparency and disclosure in supply chains: modern slavery and worker voice. Project Report. Middlesex University, London & University of Essex, Colchester, UK. . [Monograph] (doi:10.57685/eprints.mdx.ac.uk.00034618)

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Abstract

Under section 54 of the Modern Slavery Act 2015 (MSA), large British companies are required to report on their efforts to monitor and protect the labour rights of their employees and workers on an annual basis. There are however criticisms. First, there is no requirement to audit Modern Slavery statements and this raises question over the credibility of the information that companies report. Second, the MSA is a soft governance tool that allows too much reporting flexibility. While the original intention behind this was to encourage companies to get to know their supply chains in the first place and subsequently focus on improving their reporting over time, there have been general calls to tighten up the non-mandatory reporting requirements of the MSA in the hope that this would in turn result in better quality of reporting.

In this report, we present the key findings for our detailed examination of the Modern Slavery Statements of the largest 100 British companies. In order to examine the statements, we devised a detailed index, based on (a) the mandatory and optional aspects of the Modern Slavery Act (2015, s. 54), (b) content recommended by CORE (2017) and (c) additional criteria based on consultation with The Business and Human Rights Resource Centre, an internationally based labour rights NGO with an office in London. We focus on 6 information categories. Apart from the General Information, which covers mostly mandatory disclosures, the remaining five categories were optional under section 54. These five categories are: Organisation and Structure of Supply chains, OS; Due Diligence, DD; Risk Assessment, RA; Codes of Conduct/Policies/Strategy(ies), CPS; and Training collaboration, TC.

We find that of the five non-mandatory information categories, companies prioritise reporting on two: RA procedures and DD processes These are the categories of most importance to investors. We find that any changes to reporting on these two categories are positively linked to reporting on CPS but not to those on OS and TC. While the level of reporting for all the three latter categories were lower than reporting on RA and DD, the reason why changes in CPS is closely linked those of the RA and DD lies in the way companies report to illustrate their parallel efforts to devise the necessary CPS to support the outcome of RA and facilitate the implementation of DD processes. However, the same could not be said about OS and TC. It was evident that while companies are reluctant to draw attention to potential challenges and problematic areas along their supply chains, they show limited efforts on their training programmes, raising questions over how in-depth corporate efforts have been in changing their culture on labour rights issues and/or perhaps the more serious challenges that they encounter in the process of devising training programmes.

While our findings reveal an interesting reporting pattern, we can see areas that we still have very limited knowledge of before any meaningful proposals can be made to move the labour rights reporting agenda forward. We anticipate that there are complexities and challenges that companies face along their supply chains, especially in areas that are outside their national jurisdictions and where the legal framework can be either weak or non-existent and/or regional norms and cultures are in a way that can make it controversial or costly for companies to devise training programmes at local level.

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