In 2017, UK central government awarded over £52 billion in new contracts for the delivery of vital public services and infrastructure projects. These contractors, many of whom are private corporations, build or run projects of national importance, with taxpayers’ money, such as railways, prisons, warships, utilities and homes. The majority of these companies, both domestic and international, have large and highly complex supply chains which stretch around the globe. Amidst growing awareness that modern slavery currently exists on an unprecedented scale, there is an increasing recognition that these businesses face considerable exposure to human rights violations. Given this context, how confident are we that the UK’s vital public services and infrastructure projects are not contributing to modern slavery?
A joint Sancroft-Tussell examination into the modern slavery reporting of central government’s top 100 suppliers, accounting for £27.5 billion of government contracts, reveals a stark reality. Of these 100 companies, 90 have published a modern slavery statement. On the one hand, this could be interpreted positively, demonstrating at minimum an awareness of the law. This statistic, however, blurs a more important concern about credible reporting and action. Firstly, only 58% of statements produced were legally compliant. And secondly, a statement alone is not commensurate with a company taking effective steps to eliminate modern slavery in its operations and supply chains.
This report explores how central government’s top contractors are facing up to the challenge of identifying and addressing modern slavery. It analyses the modern slavery reporting performance of the top 100 suppliers to central government, ranked by the value of contracts won by them in the calendar year 2017. It goes on to set out the business case for companies to do more to eliminate modern slavery in their operations and supply chains, providing guidance to business on where, how, and why they should be taking effective action to manage modern slavery risk. It also touches upon the role of central government in incentivising better performance by businesses.
Analysis of performance was guided by the legal compliance of each modern slavery statement, and the degree to which the statement responded to the six suggested reporting areas as outlined in the Modern Slavery Act (MSA) itself. An overarching trend was the wide variance in both legal compliance and quality of published statements.
- Poor legal compliance: Over 40% of the top 100 suppliers failed to meet the basic legal requirements of the Modern Slavery Act.
- Lack of understanding regarding law and management practices: In some cases companies had failed to understand the Modern Slavery Act itself, as well as what was meant by policy, due diligence and other important terms.
- Stronger reporting on organisational structure and policy architecture: Of the six recommended reporting areas, organisational structure and policies were where companies performed best.
- Absence of risk assessment and/or identification: There was a lack of understanding about the nature of modern slavery as a complex and for the most part hidden crime, evidenced by some companies neglecting the existence of any modern slavery risk in their business.
- Failure to measure performance: Companies put greater emphasis on future, and as yet undetermined, progress, than seeking to understand the effectiveness of current policies and processes in place. Only twelve companies referenced key performance indicators (KPIs) in place to quantitatively measure performance.
Addressing modern slavery should be a top priority for all businesses, particularly for those receiving taxpayers’ money. Partly because it is ethically the right thing to do, especially when using public funds and delivering public goods. And partly because addressing modern slavery is increasingly shown to make good business sense. Despite the latter, our analysis overwhelmingly found that government suppliers can, and should, be doing much more.
Effective modern slavery reporting helps a business to:
- Ensure compliance with UK law, as well as navigate and manage an emerging body of global legislation;
- Increase competitive advantage; having a strong modern slavery statement, with robust policies, action plans and KPIs, serves to enhance an organisation’s reputation as a responsible business;
- Improve security and resilience of supply, through understanding and mitigating risks and building stronger, more transparent relationships with suppliers;
- Breakdown organisational silos, through the establishment of a cross-functional team to work on modern slavery, and the wider responsible sourcing agenda;
- Manage risk by raising organisational awareness and knowledge about modern slavery and how to tackle associated risks.
Looking to the future, government suppliers, and businesses in general, must continue to evolve their approaches to modern slavery. At a time when large government suppliers are under increasing scrutiny, companies have a responsibility to ensure that they are compliant with the MSA, and that they are reporting transparently and comprehensively on progress.
At Sancroft, we hope that this report inspires business in general, and government suppliers in particular, to challenge themselves to be ambitious and to do more to contribute to the elimination of modern slavery. Not only because it is the right thing to do, but because we are confident it positions organisations for even greater success.Download PDF