‘Due diligence legislation is not enough – we need long-lasting change’
Businesses, investors and civil society organizations have written to the UK Government calling for new legislation requiring companies to identify and act upon human rights and environmental impacts.
The 63 signatories want to see the introduction of a UK mandatory human rights and environmental due diligence (HREDD) law that gives victims access to justice, and requires companies to carry out HREDD across their operations and supply chains. This would involve assessing and addressing the negative impacts of their activities and those of their value chains.
However, while Slave-Free Alliance (SFA) acknowledges that legislation has its benefits, we believe that it only goes so far. Businesses must go further than this to prevent modern slavery from happening in the first place but also to remedy it when it is found.
Global trends
The call for a new due diligence law follows one of the three main trends in new laws that are being used to address modern slavery globally.
These are: transparency, as seen in California’s Transparency in Supply Chains Act 2010, Modern Slavery Act 2015, Norway’s Transparency Act 2022 and the Australia Commonwealth Modern Slavery Act 2018; attempts to make businesses increase their vigilance, such as in France; and mandatory due diligence, such as the US Uyghur Forced Labour Prevention Act, the approved EU HREDD and German Supply Chain Due Diligence Act (SCDDA), which comes into force on 1st January 2023.
Benefits to legislation
Marc Stanton, Director at Slave-Free Alliance, said: “There are, of course, huge benefits to legislation. For instance, they show a recognition from governments that businesses impact human rights and the environment, and have a responsibility to mitigate negative impacts. They also encourage or mandate businesses to take meaningful steps. National and regional level laws also reinforce international standards, such as the 2011 UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Responsible Business Conduct.
“We support the call for a HREDD law in the UK that addresses both human rights and the environment, as it recognises the intersection between the two. It would require businesses to identify, prevent, mitigate and account for human rights abuses, including modern slavery, and adverse environmental impacts caused by their operations and supply chains. However, we do not think that legislation is enough. Ultimately, businesses need to be going beyond this.”
The intersection between modern slavery and the environment
Below we outline some of the key modern slavery and environment interactions, though this list is just the tip of the iceberg.
– As with conflicts or other crises, natural disasters and climate shocks such as floods and droughts can result in forced migration. Communities dependent on natural resources and farming for their livelihood are forced to search for alternative work, leaving them vulnerable to modern slavery and human trafficking.
– Ecosystem decline in fisheries and reduction in fish stocks is causing economic pressures that are fuelling the use of debt-bonded labour in the fishing industry.
– There is a clear correlation between deforestation and debt-bonded labour. Many illegal forest-clearing activities are facilitated by unregulated labour practices.
– Human rights abuses including modern slavery are being employed in environmentally degrading industries, such as in the palm oil sector.
– A recent report by the Clean Energy Council, representing renewable energy companies and solar installers, cites detailed allegations of child labour in supply chains for battery storage. Amnesty International found that children, some as young as seven, are being employed in cobalt mines in the Democratic Republic of Congo, often for less than $2 a day.
Benefits of linking human rights and environmental obligations together
There are several commercial benefits to taking meaningful steps to address modern slavery by looking at both human rights and the environment together, including:
– Ensuring workers are safe. This also increases productivity and quality of products and services
– Enhancing business reputation, reducing the chances of negative scandals and being able to address problems when they are identified
– Protecting customers– especially in business to business scenarios
– Positive PR and praise
Laws alone are not enough
Legislation has not solved the issue of modern slavery. The latest global estimates, released by the International Labour Organization in September 2022, indicate there were 50 million people living in modern slavery in 2021. This was a rise from 40.3 million in 2017. Many laws are also not strictly enforced. Under the UK’s Modern Slavery Act, no penalties can currently be imposed for non-compliance, though it is open to the UK government to see court injunctions against businesses that fail to meet their obligations as outlined by the legislation. The letter from 63 signatories to the former UK Prime Minister, Liz Truss, stressed that while the Modern Slavery Act 2015 was “a breakthrough when introduced, a more comprehensive approach which goes beyond modern slavery issues and reporting obligations alone is urgently needed”.
The Modern Slavery Act also falls short of addressing business liability. Only this month we have witnessed the unprecedented move of a group of Burmese migrants in Thailand using negligence laws to take the first steps in UK legal proceedings against Tesco and their auditors, Interket, over allegations they were trapped in modern slavery and labour exploitation.
Furthermore, very few countries have introduced relevant laws to address modern slavery. The requirements within existing legislation can be vague and ask different things of businesses. For example, transparency laws encourage businesses to publicly show what they are doing to tackle the issue, while due diligence laws require organisations to take certain steps.
Why businesses can and should go beyond meeting the requirements under law
Looking beyond legal compliance enables businesses to consider effective approaches specific to their value chain to prevent adverse human rights impacts such as modern slavery. This, in turn, leads to them taking meaningful steps to create long-lasting change and robust human rights programmes.
One of the key ways for businesses to go the extra mile is to engage with specialists such as SFA and to collaborate with others in their sector.
Marc Stanton said: “We would like to see businesses conducting holistic due diligence as this holds them more accountable. A greater level of transparency encourages businesses to show they are making year on year progress. Awareness due diligence makes them have to carry this out.”
Case studies
Here at SFA, we have supported a company that is increasing its renewable energy production through solar panels. The firm is carrying out due diligence on its suppliers and potential suppliers of its solar panel components. Solar panel components are at high risk of utilising modern slavery. They are often produced in China, and evidence indicates that solar products and input at nearly every step of the production process in the Peoples Republic of China (PRC) are linked to known or probable forced labour programmes. Much is highlighted in this report entitled ‘In Broad Daylight: Uyghur Forced Labour and Global Solar Supply Chains’.
The SFA consultancy team carried out desktop human rights due diligence on the company’s shortlisted suppliers which fed into their wider considerations, including product quality, production capacity and timescales. This enabled the company to choose suppliers that could meet its commercial needs while also taking into account human rights.
We are also observing a number of areas of good practice across our membership base. For example, we are seeing human rights and environment teams working together as part of sustainability or environmental, social, and governance (ESG) teams, or forming sustainability working groups which have representatives from across the business. In addition, we are seeing CEOs chairing sustainability board meetings. We also want to commend those members who are measuring environment and human rights scores on supplier scorecards, alongside usual business considerations such as timeliness, quality and production capacity.
To find out how SFA can support your organisation to increase its resilience to modern slavery, get in touch with a member of our team here.