The 2013 Rana Plaza disaster that killed over 1,100 people spotlighted two underappreciated facts. One, the people who make our clothes work in dangerous conditions. And two, the willingness of fashion brands to ignore those conditions in pursuit of profit.
The tragedy led to a civil society outcry that pressured UK lawmakers “to revise its policy on foreign commercial exploitation.” In 2014, the government amended its proposed modern slavery law to force big business “to make public its efforts to stop the use of slave labor by its suppliers”.
The change sought to shine a light on exploitation in company operations and supply chains. Businesses would need to show that they took worker exploitation in supplier facilities seriously; ‘not knowing’ was not good enough anymore.
The UK Modern Slavery Act would apply to all sectors — not just fashion brands — and compel companies to report steps taken that ensure modern slavery is not happening in their company or those they work with. Like a yearly financial report, companies would share annual reports on procedures and actions to prevent modern slavery.
After it entered into force in 2015, Australia followed with its Modern Slavery Act in 2018, which set a higher reporting standard. Today, Canada is poised to introduce a similar law, and more countries are likely to do the same.
With this flurry of legislative activity, it’s worth considering; how effective have existing modern slavery laws in the UK and Australia been?
At first glance, the UK law appears successful: The number of reports submitted to the UK’s voluntary registry doubled between its introduction in 2020 and the following year (see interactive chart).
But as the reports pile up all might not be what it seems.
Serious gaps have begun to appear; for example, most companies don’t meet the minimum reporting standards, according to an analysis done by Walk Free and Wikirate.
Here, we unpack what modern slavery is and what the UK and Australian laws require big companies to do. Then we reveal how big the reporting gap is across four business sectors: Finance, Garment, Hospitality, and Food & Beverage.
Finally, we look at the quality of the reports submitted by companies — it’s clear there is a gap there, too — before arguing that a law update is needed. The law as it stands compels companies only to report, not to act. Changing that would likely be more effective in helping to end modern slavery.
The problem of modern slavery
Forced labor, debt bondage, forced marriage, and human trafficking are all forms of modern slavery, and are at their heart about fear. This fear means a person cannot refuse or leave a workplace because of threats, violence, coercion, deception, and abuse of power.
Finding and stopping modern slavery, then, is no easy task, for it often requires the victim to overcome fear and speak out; a bonded fisherman who isn’t allowed ashore, a child forced to weave seven days a week, or a woman coerced to give her salary to her husband have no one to turn to, or a means to report their plight.
Setting a minimum modern slavery reporting standard
In 2015, the UK Government legislated to tackle modern slavery. One of its aims was to target the role business plays in modern slavery:
“Businesses have a vital role to play. Modern slavery is a brutal way of maximising profits, by producing goods and services at ever lower costs with scant regard for the terrible impact this has on individuals. But my message is clear. Businesses must not be knowingly or unknowingly complicit in this horrendous and sickening crime.” Home Secretary, Amber Rudd
In practice, this meant companies would be required to report yearly on “the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place”, in its supply chain or own operations.
To comply with the UK law, companies need the report to be:
- Signed by the board of directors
- Signed by the CEO
- Placed in a prominent place on the company’s website
In 2018, Australia followed with its law, adding more reporting criteria like modern slavery training, remediation processes, and whistleblowing policies.
These reporting criteria are what are referred to as the minimum reporting standards. It’s the least companies have to do, to be in compliance with the law.
Are companies meeting the minimum modern slavery reporting standards?
Walk Free and Wikirate analysis shows that around 80% of companies are not meeting the mandatory minimum requirements. This means they are not fulfilling the basic requirements set out in each of the laws.
Out of 1,541 modern slavery statements assessed according to the UK law, only one-fifth met the minimum reporting requirements (see interactive chart). And in Australia, where the minimum requirements are higher, a similar amount of reports met the minimum standards.
Finance, Garment, Hospitality and Food & Beverage modern slavery reporting performance
Walk Free and Wikirate also assessed statements from the different sectors as part of the analysis: to compare reporting performance in various industries. We looked into the Financial, Garment, Hospitality, and Food and Beverage sectors.
Each sector improved its reporting performance between 2016 and 2021. For example, by 2021, nearly half of the companies analyzed in all sectors met the minimum reporting standards (see interactive chart). However, over half of the companies still failed to meet the minimum.
The Australian law has more minimum legal requirements than the UK. There are 12 minimum requirements instead of three.
Probably as a result of the increased requirements, our analysis shows a lower compliance rate compared to the UK. For example, none of the assessed Finance sector statements from 2020 or 2021 meet the minimum requirements (see interactive chart).
As it was only introduced in 2019, it will take time to see more evident trends concerning the Australian law. However, there is room for improvement.
Quantity and quality modern slavery reporting
It’s clear companies are increasing the quantity of their collective reporting, but what about the quality?
Walk Free and Wikirate’s analysis of the statements show many companies are approaching modern slavery reporting as a tick box exercise, rather than engaging in high quality reporting on human rights and modern slavery due diligence.
However, by the letter of the law companies are not doing anything wrong. Unfortunately the law, “doesn’t get to the quality of those disclosures, it is just about reporting”, explains Abigail Munroe from Walk Free, “what it means in practice is that a company operating in a really high risk modern slavery industry could submit a statement that says they have absolutely no reason to believe there’s modern slavery in their supply chains. And as long as it met the three requirements, it would be considered compliant with the legislation.”
So what can be done to close such a loophole? A soon-to-be-finalized EU law may point to a possible way forward. The Corporate Sustainability Due Diligence Directive will sanction companies that do not end or mitigate negative human or environmental impacts of their operations.
The way forward, then, is to compel companies to act. “Ultimately,” Munroe concludes, “the current legislation makes the case for mandatory human rights due diligence legislation, which imposes a duty on companies not just to report, but to protect.”