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Why it makes business sense for companies to comply with the Modern Slavery Act
By Professor Brad K. Blitz, Director of the Modern Slavery Programme at the British Academy
Passing the Modern Slavery Act three years ago today, the then Home Secretary Theresa May said, “We as a nation can be proud that today we are closer to consigning slavery to the history books where it belongs.”
The legislation passed in 2015 was widely praised, not least because it covered a range of issues, including human trafficking and exploitation, and reaffirmed commitments and definitions as set out in the European Convention on Human Rights. Among many harmful practices, the Act banned slavery, servitude and forced labour; sexual exploitation and securing services from children and vulnerable persons, with life sentences for the most serious offenders. Most importantly, the Act sought to reach beyond the UK and requires companies with a turnover of at least £36 million to report annually on the steps they are taking to prevent slavery in their supply chains or any part of their business operations, wherever they may be.
The rationale for such legislation remains particularly pressing. Just this month an inner London Crown Court convicted a slave-master who had exploited several Romanian men on construction and demolition sites, keeping them contained in a one bedroom flat and extracting money from them under the threat of violence. In November another UK court charged two British nationals with facilitating the travel of an individual who was sexually exploited. The pair would take girls under the age of 16 to hotel rooms where they would be plied with alcohol and drugs before being exploited.
While much progress has been made, it is clear we still face challenges in tackling slavery in its widest form – indeed the current Independent Anti-Slavery Commissioner Kevin Hyland has said that the UK needs a “change in culture” to end modern slavery. One central challenge remains enforcement and greater efforts to prevent abuse, not simply in the UK but across the global supply chain. In February, Attorney General Jeremy Wright QC MP gave keynote speech at the Crown Prosecution Service Modern Slavery Summit where he stated that in addition to the Modern Slavery Act, the Government has used the Immigration Act 2016 to strengthen the powers of the Gangmasters Labour Abuse Authority (GLAA) to prevent, detect and investigate worker exploitation across the entire economy. This is true – the GLAA has been effective at curbing abuse, especially in the context of human trafficking - but only within the UK’s borders.
The UK economy is dependent on production sites across the globe and many of these are beyond the reach of existing national legislation. This includes, for example, textile factories as well as household businesses where workers stitch on buttons and sequins before finished garments are rebranded and eventually reach our high streets. Just this month, Human Rights Watch issued a report on the hidden cost of jewellery which scrutinised the supply chains of 13 major jewellery brands. Yet, while there has been a marked increase in the numbers of arrests of people who have engaged in criminal activities like trafficking in the UK, there are currently few tools available to address the widespread abuse occurring overseas, in both developed states and in developing countries.
The British Academy currently supports eight international research teams who are exploring ways to curb modern slavery in developing countries, in partnership with the Department for International Development. Through policy-based research, we want to understand the conditions which give rise to exploitation and trafficking. We need to know more about the social relationships between traffickers and their victims, and between unscrupulous recruiters and the people they engage, so that businesses and government can put in place mechanisms to curb exploitation at the ground level.
As corporate scandals dominate our news and as governments recognise that more must be done to prosecute those firms based in the developed world that are enabling such exploitation, the potential for reputational harm cannot be dismissed. No company wants to be associated with the charge that they profit from slaves. Yet, such accusations raise other questions which have not yet been examined, not least to what extent are firms actually benefitting financially from exploitative practices. What is the actual profit margin, once you remove the costs applied by traffickers and exploitative recruiters and the environmental and other costs that are passed on to states and donors to pick up? Is there really a ‘business case’ for modern slavery? Emerging research from the field suggests that this may be a false calculation and companies would be better off distancing themselves from such criminal activity. One argument is that companies’ lower margins cannot be attributed to solely cheap and exploited labour, especially when transactional costs, and shipping, present much more significant outgoings.
Already some global firms such as Unilever have gained much reputational capital for their commitment to end modern slavery in their supply chains by promoting greater transparency and improved reporting. Yet, in addition to the ethical rationale, many companies may be diverting profits by failing to clamp down on modern slavery practices carried out by their suppliers. Three years on, it seems we are only just beginning to build the case for businesses to comply with both the letter and spirit of the Modern Slavery Act.
Professor Brad Blitz is Professor of International Politics at Middlesex University London, Visiting Professor at the London School of Economics, and Senior Fellow of the Global Migration Centre in the Graduate Institute, Geneva. He is Programme Director for the British Academy programme on Tackling Slavery, Human Trafficking and Child Labour in Modern Business, in partnership with the Department for International Development.
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