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Modern Slavery: a key element of the ‘S’ in ESG

Recent headlines relating to the abuse of migrant care workers and the use of slave labour in the production of PPE are some examples of how the Life sciences & Healthcare sector is at risk of modern slavery issues. The key exposure for businesses is currently reputational damage but plans by the government to tighten the rules on the content of modern slavery statements, the proposed creation of a new enforcement regime and increasing legislation relating to human rights reporting, are pushing this issue up the agenda.

In this article we consider the current status of the law on modern slavery and what is coming down the track for Life Sciences & Healthcare companies to be aware of.

What are the current requirements and what changes are proposed?

Section 54 of the Modern Slavey Act requires certain commercial organisations with an annual global turnover of £36 million or more which are carrying out all or part of their business in the UK to publish an annual modern slavery statement, setting out what they have done during that year to ensure that modern slavery and human trafficking is not taking place in either their business or supply chains. There is the option to publish a statement stating that no such steps have been taken but, given the negative implications, this option is unlikely to be suitable for the vast majority of organisations.  A group may publish one statement on behalf of all the companies within the group as long the statement makes clear which entities it covers and the contents are relevant to all those entities.

The government’s statutory guidance states that an organisation should aim to include certain information in its statement, including the organisation’s structure, its business and its supply chains; relevant policies, due diligence it has undertaken, areas of its business and supply chain where there is a risk of modern slavery and human trafficking taking place (and the steps it has taken to assess and manage that risk); its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains and training available to its staff. 

Following the Queen’s Speech in 2022 the government has confirmed its intention to tighten the reporting requirements and introduce tougher sanctions for non-compliance.  

Key elements of new requirements

  • To make the reporting on specific topics compulsory. It will be mandatory for organisations to report on the areas set out above, although there will be some flexibility if organisations explain why they have not included any area. 
  • A fixed date in April for the relevant look-back reporting period and statements must be published by the following September.  This is aimed at creating consistency and increased scrutiny of an organisation’s engagement with the issues.
  • Mandatory publication of the statement to the government’s online registry. The registry already exists but organisations currently submit to it on a voluntary basis.
  • Greater enforcement.  Whilst currently the government can take injunctive action to require an organisation to publish a statement no such action has been taken.  The government intends to establish a new enforcement body, which will have the power to impose civil penalties for those that fail to publish a statement.

Overall, the above proposals should enhance the accountability and enforcement of this element of the Modern Slavery Act.  However, the actual timing of their introduction is uncertain as the government has indicated relevant changes to the law will be introduced ‘when Parliamentary time allows’. 

Why should your organisation have this as an area of focus?

Many organisations choose not to publish a statement, either because they are not caught by the Act or because there are currently no specific sanctions for not doing so. Where they are published, statements can vary considerably in detail and quality, which can be misleading in reflecting the importance of this issue to an organisation.  Life sciences & Healthcare companies should not underestimate the importance of this area for their business. In particular, those who contract with the public sector will be subject to strict procurement requirements, and an expectation that a modern slavery statement has been published, potentially even if the organisation is not legally required to do so. Notably, the government has incorporated the Social Value Model into its procurement processes for public sector buyers, including the NHS. Using this framework, tenderers are asked to demonstrate the initiatives they have to identify and manage the risks of modern slavery in the delivery of the relevant contract, including the use of on-site audits and factory checks as well as use of the government’s Modern Slavery Assessment Tool.

Risks from modern slavery can exist at any level of an organisation’s supply chain, with supply chains extending into high-risk countries and sectors including manufacturing, construction, agriculture and personal services.  Organisations risk not only being excluded from tender processes but also suffering reputational damage from issues highlighted by independent or undercover investigations and press coverage.

Important wider developments are also taking place in relation to human rights and environmental due diligence obligations, in particular with the Corporate Sustainability Reporting Directive expected to come into force by early 2026 which will impose mandatory supply chain diligence requirements for both certain EU and non-EU companies with potential sanctions and civil liabilities for non-compliance.

In summary:

  • Consider whether your organisation is required to publish a modern slavery statement, and even if not whether it should consider publishing one on a voluntary basis;
  • Identify who within your organisation has responsibility for preparing the statement, noting that it needs to be approved at board level and signed by a director;
  • When publishing a statement, consider carefully the contents of the statement, and what it says to third party stakeholders about your organisation’s stance on the relevant issues;
  • Monitor and prepare to respond to new obligations on transparency and/ or reporting that will affect your organisation.

Key contact

Sarah Ozanne
Of Counsel
London
T +44 20 7367 2650