Results of a review of Modern Slavery Act statements

Anna Triponel

April 29, 2022
Our key takeaway: While the garment sector scores high in reporting on modern slavery, statements are still too ‘tick-boxy’ and show a lack of meaningful actions to tackle modern slavery. Garment companies can still stay in the forefront of the fight against modern slavery if they implement risk assessment tools, acknowledge and mitigate the root causes and the sector-specific risks (Covid, low wages, high-risk regions and worker voice) and commit to remedy – instead of disengaging with non-compliant suppliers. 

Walk Free Foundation and WikiRate have published “Beyond compliance in the garment industry” (April 2022) where they assess the modern slavery statements of the top 50 garment companies’ in the UK and Australia reporting under the Modern Slavery Acts. The assessment considers whether the statements meet the Acts’ minimum legal requirements, whether companies and their investors are going “beyond compliance”, highlights good practice in addressing modern slavery and provides recommendations for industry, investors, and policy makers.

·      Few companies go beyond compliance: There is a perception of compliance for the garment industry since there is a high rate of reporting on modern slavery compared to other industries. Of the companies in the study, “97 per cent released a modern slavery statement(s) between 2018 and 2021.” However, the assessment found that about 30% of UK and Australian statements did not meet the minimum legal requirements for modern slavery statements. When it comes to going beyond compliance and addressing root causes, the report highlights that “if modern slavery policies are not translated into meaningful action, they risk becoming a ‘tick-box’ activity” , which fails to address underlying risks of exploitation. For instance, 35% of companies did not identify any modern slavery risks in their statements; only 25% report having detected incidents despite operating in high-risk environments; and only 35% stated that modern slavery policies applied to beyond tier one suppliers. 

·      What about risk assessments, sector-specific risks and remedy? The report finds that “a disappointing 26 per cent (n=25) of companies in the garment industry did not describe using any risk assessment tool in relation to modern slavery.” And “[w]hile 56 per cent of statements described conducting a risk assessment which resulted in the identification of risk, 65 per cent of statements identified risk — meaning 9 companies identified risk without disclosing how.” The report also studied companies’ mitigation of sector-specific risks by measuring: support of workers during the pandemic, restriction of sourcing from certain regions, employee dialogue, living wages in the supply chain, and participation in industry collaborations. While 79% of companies met at least one of these criteria, 25% disclose looking at living wages for workers in the supply chain and 31% are looking at restricted sourcing from high-risk regions. Finally, regarding remedy, “66 per cent disclosed having a whistleblowing mechanism of some kind.” The most common forms of remediation reported were corrective action plans (70%), which shows effective engagement with suppliers, and cancelling of contracts (52%), which should be a last resort because “cutting ties with a factory or supplier could increase the risk that workers are exposed to forced labour or other forms of exploitation.”

·      How garment companies and investors can strengthen their reporting and – most importantly – their response to modern slavery risks: Companies can better comply with the reporting legislation by improving transparency on their supply chains and ownership structures and providing more detailed disclosure on due diligence processes to address modern slavery risks. They should also increase their efforts to tackle modern slavery risks in direct operations and supply chains by conducting due diligence with a focus on risks associated with the sector, strengthening dialogue with workers across supply chains, establishing due diligence processes that demonstrate duty of care for vulnerable workers, and providing remediation. Investors, on the other hand, can commit to “leveraging the crucial role they can play in driving better practices in the garment industry.” Currently, only “24% of investor statements disclose assessing investees for modern slavery risks” and, therefore, are not having “sufficient oversight of their investees” or “actively engaging with these garment companies to minimise their own exposure to modern slavery risks.”

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