Februar 24. 2023

Business and Human Rights – the UK Government publishes new guidance on tackling modern slavery in Government Supply Chains

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In what marks its latest move to tackle modern slavery, on 10 February 2023, the UK Government published its new guide for commercial and procurement professionals, entitled “Tackling Modern Slavery in Government Supply Chains” (the “Guidance”). The Guidance is aimed at helping procurement and commercial practitioners at all levels who are operating in government comply with their statutory obligations in respect of modern slavery. It builds on the UK Government’s “Slavery and human trafficking in supply chains: guidance for businesses” and its modern slavery statement Progress Report.

Background

In 2015, the UK Government introduced the Modern Slavery Act (the “MSA”) to clarify modern slavery offences, toughen penalties for those committing such offences, and increase support for victims. Under Section 54 of the MSA, companies with an annual turnover of £36 million or more are required to produce an annual statement that sets out the steps they are taking to address the risk of modern slavery in their operations and supply chains.

The Guidance has been designed to primarily help public sector actors comply with their supply chain obligations, but it may also be relevant and useful to private sector actors. For further information on the MSA, read our earlier blog posts here and here.

The Guidance

The Guidance sets out four key areas of activity for the effective management of modern slavery risk and a number of accompanying recommended actions to help procurement and commercial practitioners who are operating in government comply with their obligations under the MSA:

  1. Identify and manage risks in new projects – practitioners should:
    • review and amend operating procedures, processes and any related documentation in line with the Guidance;
    • assess modern slavery risks in new procurements using Table 1 of the Guidance, which sets out a number of characteristics to help identify procurements that may be at a higher risk (including the nature of the workforce, the context in which the supplier operates, and the commodity type);
    • design new procurements in line with the associated risk level, including (if appropriate) application of the Social Value Model, which is a tool that provides a menu of social value outcomes for commercial teams to review and select with their stakeholders; and
    • review and amend contract management processes and any related documentation in line with the Guidance.
  2. Assess existing contracts – practitioners should:
    • carry out a risk assessment on existing contracts;
    • conduct supply chain mapping exercises if a supplier is deemed as medium or high risk and is unable to provide assurances regarding the systems and processes that they have in place to manage risks effectively;
    • invite suppliers to complete the Modern Slavery Assessment Tool (if appropriate), which generates tailor-made recommendations based on an organisation’s responses to a number of questions; and
    • apply strengthened contract management to manage risks and work with suppliers to improve, including through the use of supplier meetings, key performance indicators (“KPIs”) and audits.
  3. Take action when victims of modern slavery are identified – practitioners should:
    • work openly and proactively with suppliers to resolve modern slavery issues and change problematic working practices, which should include consideration of how to remediate workers involved, how to review a supplier’s policies/ systems to prevent future incidents occurring and how to introduce independent grievance mechanisms; and
    • consider terminating contracts with suppliers only as a last resort.
  4. Training – practitioners should raise awareness of modern slavery and human rights abuses amongst commercial and procurement staff involved in letting and managing contracts, whilst also delivering/making available appropriate training.

The UK Government’s publication of the Guidance follows the increasing pressure it is under to take action to address human rights abuses in the supply chains of both public and private sector actors. For example, it has faced legal action in respect of its failure to launch investigations in relation to the importation of cotton manufactured by forced labour in Xinjiang. The UK Government has also faced legal action in respect of its use of a Malaysian company accused of using forced labour as a supplier of personal protective equipment to its National Health Service. Further, there have been calls from investors and other stakeholders for the UK Government to introduce mandatory human rights and environmental due diligence legislation (for further information on this, read our earlier blog posts here and here).

Significance for private sector actors

Although the Guidance is primarily aimed at public sector actors who engage in procurement activities, the contents will be helpful to private sector actors who wish to develop a more consistent approach to comply with their supply chain obligations under the MSA.

Furthermore, the Guidance highlights the UK Government’s heightened expectations relating to the identification and management of modern slavery risk, which may prove challenging for companies with less sophisticated programmes. By way of example, the Guidance specifies that high risk new procurements bidders should detail their supply chain members and submit self-declarations for each of those supply chain members, whilst also setting out the following steps (based on the Social Value Model referred to above) that practitioners can take to mitigate modern slavery risk when engaging with new procurement bidders:

  1. Model Evaluation Questions: practitioners should ask a number of questions of potential new procurement bidders, including:
    • where subcontractors are used, how the supply chain will be managed and monitored for modern slavery risks and their action plans for tackling cases as they arise;
    • details of workforce conditions in factories used to produce goods to be delivered under the contract, including the workforce’s wages, working hours and rest breaks;
    • information on their working practices relating to the staff who will be assigned to perform the contract and to demonstrate their approach to tackling modern slavery/human rights abuses which might arise amongst those staff;
    • who in the company oversees the modern slavery risk and responsibility arising in relation to the goods/services to be delivered under the contract – who monitors it and how frequently and what resources are available to identify, manage, mitigate risks; and
    • evidence of the recruitment methods used for staff delivering the contract.
  2. Model Award criteria – practitioners should evaluate the responses to these questions against a Model Award Criteria prior to awarding any contract. This Model Award Criteria may take the form of the following scoring system:
    • Excellent: the responses exceed what is expected for the criteria and leaves no doubt as to the capability and commitment to deliver what is required;
    • Very good: the responses meet the required standard in all material respects. There are no significant areas of concern, although there may be limited minor issues that need further exploration or attention later in the procurement process;
    • Good: the response broadly meets what is expected for the criteria. There are no significant areas of concern, although there may be limited minor issues that need further exploration or attention later in the procurement process;
    • Poor: the response meets elements of the requirement but gives concern in a number of significant areas; and
    • Fail: the response completely fails to meet the required standard or does not provide a proposal.
  3. Reporting Metrics – practitioners should use numerical outputs related to how the supplier will deliver the quantitative aspects of social value under the potential contract. This should include consideration of, for example, the number of full-time equivalent employment opportunities that are created by the supplier in the contract supply chain in the performance of the contract.
  4. Possible KPIs – practitioners should ensure KPIs are in place to monitor progress against managing modern slavery risks throughout the contractual relationship, such as:
    • requiring commercial and frontline staff to complete annual training on modern slavery;
    • requiring new staff to be trained on modern slavery within six months of joining the organisation;
    • reporting any suspected modern slavery violations to an Executive Director immediately upon detection and investigating the reports within 48 hours; and
    • completing a given number of supply chain audits.

For further assistance on how to effectively manage modern slavery risk, the Guidance directs practitioners to the following additional resources:

The post Business and Human Rights – the UK Government publishes new guidance on tackling modern slavery in Government Supply Chains appeared first on Eye on ESG.

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