The implementation of the UK Modern Slavery Act is a significant milestone in the country's commitment to ethical business practices. This legislation not only mandates transparency in supply chains but also holds companies accountable for their actions. While the UK was an early adopter of anti-slavery and human trafficking legislation, it's far from the only jurisdiction where this type of regulation exists, which serves as a clear indication that governments are taking supply chain due diligence seriously and proactively promoting ethical supply chains. 

The good news is that many organizations are taking this ethical imperative seriously and adopting robust policies and procedures to combat the scourge of modern slavery issues across the globe. A key requirement of the UK Modern Slavery Act is to publish a modern slavery statement, which outlines information about a company's anti-slavery efforts. To help you better understand this legislation and its requirements, we discuss the following topics: 

What the UK Modern Slavery Act is and its impact on businesses 

The challenges of complying with the UK Modern Slavery Act 

Key considerations for complying with the Act 

How technology can aid in complying with the UK Modern Slavery Act and other similar legislation 

What is the UK Modern Slavery Act, and what implications does it have for businesses? 

The UK Modern Slavery Act, enacted in 2015, requires businesses operating in the UK with an annual turnover of £36 million or more to publish an annual statement outlining the steps they have taken to ensure that slavery and human trafficking are not present in their supply chains or business operations. 

Under the Act, businesses must pay special attention to the implementation of Section 54, also known as the Transparency in Supply Chains (TISC) provision. 

 qualifying organizations to publish an annual statement detailing the actions they have taken to ensure that slavery and human trafficking are not occurring in any part of their business or supply chains. 

 information about the organization's structure, policies, due diligence processes, risk assessments and training programs related to modern slavery. It should also highlight the steps taken to monitor and evaluate the effectiveness of these measures. 

While there are currently no monetary penalties for businesses not in compliance with the UK Modern Slavery Act, businesses are subject to reputational damage should they not properly address the ethical practices associated with preventing modern slavery and human trafficking. Organizations should remain vigilant, as reforms to the Act could be on the horizon, including stricter enforcement and penalties. 

Who is required to comply with the UK Modern Slavery Act? 

To determine if a commercial organization is required to publish an annual statement under the UK Modern Slavery Act, the following criteria must all apply: 

The organization has an annual turnover of £36 million or more 

The organization is a ‘body corporate’ or a partnership, regardless of where it is incorporated or formed 

The organization conducts business, or a portion of its business, within the UK 

The organization supplies goods or services 

More information regarding these requirements can be found on the 

Complying with the UK Modern Slavery Act presents several challenges for businesses, the most significant being the complexity of supply chains and the lack of visibility. Many companies have intricate, global supply chains, making it difficult to trace and monitor every tier of their supply network. This complexity hinders the identification and assessment of modern slavery risks across multiple suppliers and geographies. Additionally, limited visibility into lower-tier suppliers and subcontractors further complicates efforts to identify and address modern slavery risks. Obtaining accurate and up-to-date information about suppliers' practices and labor conditions becomes challenging, especially in industries with opaque supply chains. 

Complying with the Act requires dedicating resources to conducting due diligence, audits and risk assessments. Businesses may struggle to allocate the necessary time, expertise and budget to address modern slavery risks effectively. Gathering and managing data related to supply chain practices, labor conditions and supplier compliance can be complex. Businesses need robust systems and processes to collect, analyze and store relevant information, ensuring accuracy and accessibility for reporting purposes. 

With compliance requirements and expectations surrounding modern slavery continuously evolving, keeping pace with changing legislation can be daunting. Businesses must stay up to date with changes in legislation, guidelines and best practices, which can be demanding. Adapting compliance measures according to these reforms becomes necessary to ensure ongoing adherence to the Act. 

These challenges require businesses to invest in strategies and resources to overcome them. Applying a set of best practices can help organizations enhance their ability to comply with the UK Modern Slavery Act. 

Key considerations for UK Modern Slavery Act compliance 

To overcome the various challenges of complying with the UK Modern Slavery Act, organizations must go beyond mere tick-box exercises. They are expected to demonstrate a genuine commitment to eradicating modern slavery by taking proactive steps. Here are a number of steps that companies should consider: 

Establish a clear policy to combat modern slavery: Create a clear and concise policy statement that demonstrates your commitment to eradicating modern slavery. This policy should outline your company's stance on the issue and the actions you will take to prevent and address any instances of modern slavery. 

Conduct a global risk assessment: Conduct a

 to identify any potential risks of modern slavery within your business operations and supply chains. This will help you understand the areas that require immediate attention. 

Implement due diligence procedures:Establish effective 

 to identify, prevent and mitigate modern slavery risks in your supply chain. This involves conducting regular audits, engaging with suppliers and assessing their compliance with anti-slavery measures. 

Monitor and evaluate your program: Regularly monitor and evaluate the effectiveness of your anti-slavery measures. Review your policies, procedures and supplier compliance to identify areas for improvement and ensure ongoing compliance. 

Employee education: Educate your employees on the risks of modern slavery, detection methods and reporting procedures. By raising awareness and promoting vigilance, you can ensure that everyone within your organization plays a role in combating modern slavery. 

Promote collaboration with relevant stakeholders: Engage with relevant stakeholders, such as NGOs, industry associations and government bodies. By sharing best practices and collaborating with others, you can collectively work towards creating a more impactful program. 

Continuous improvement: Regularly review and enhance your anti-slavery efforts. Stay updated on evolving legislation and industry standards to ensure that your compliance measures remain effective and aligned with the latest requirements. 

As was stated earlier, complying with the UK Modern Slavery Act does come with challenges, but the most important step is to continually demonstrate your organization's commitment to eradicating modern slavery. The good news is that technology — specifically, robust, purpose-built GRC software — can help your business reach its compliance goals more efficiently. 

Using technology to overcome compliance challenges and implement best practices 

With the enactment of the UK Modern Slavery Act, along with other similar legislations such as the Uyghur Forced Labour Prevention Act in the United States, Australia's 2018 Modern Slavery Act and the 

, businesses are now compelled to prioritize due care in their supply chains. They must assess risks, implement remediation measures and provide comprehensive training to their employees. By doing so, companies comply with the law and contribute to fostering a fairer and more ethical business environment. 

For many organizations, technology is crucial in mitigating supply chain risks and effectively meeting new compliance requirements. Centralized platforms, like 

, offer AI-powered monitoring, detailed audit trails and the ability to store third-party information in a single location. These capabilities enable businesses to proactively respond to current and future legislation, ensuring ethical practices and staying ahead of global supply chain regulations, including the UK Modern Slavery Act. 

By leveraging technology and embracing responsible business practices, companies can navigate the complexities of supply chain compliance, protect against modern slavery risks and contribute to a more sustainable and ethical global business landscape.

Navigating the challenges of complying with the UK Modern Slavery Act: A guide for businesses 

The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) heralds new obligations for corporations operating in the European Union (EU), with lawmarkers in the European Parliament 

voting — 374 to 235 — overwhelmingly

 in favor of the Directive. In line with a growing trend towards scrutiny of 

environmental, social and governance (ESG)

 considerations throughout companies’ value chains, the CSDDD brings challenges for boards, Chief Compliance Officers and their teams.

The CSDDD, now poised to be formally approved by the EU Council, aims to hold corporations accountable for their impact on people and the planet. Compliance professionals will be responsible for managing social and environmental impacts along the entire value chain, including direct and indirect suppliers, their own operations, products and services.

In the course of my work, I have seen my share of challenging human rights situations. These have left me in no doubt that there’s a moral obligation to address ESG issues, and especially human rights abuses, in corporate value chains. 

— Ezekiel Ward, founder of North Star Compliance Ltd.

Diligent’s partners Steele and Ezekiel Ward, founder of North Star Compliance Ltd., wrote about the draft directive’s implications and noted:

“In the course of my work, I have seen my share of challenging human rights situations. These have left me in no doubt that there’s a moral obligation to address ESG issues, and especially human rights abuses, in corporate value chains.”

To respond effectively, companies will need to implement a program of seamless, comprehensive and global supply chain 

What is the Corporate Sustainability Due Diligence Directive?

On 23 February 2022, the European Commission adopted a proposal for a directive on Corporate Sustainability Due Diligence.

The Directive will require companies in scope to carry out 

environmental and human rights due diligence

“foster sustainable and responsible corporate behaviour and to anchor human rights and environmental considerations in companies’ operations and corporate governance.”

Importantly, the Directive will cover value chains inside and outside Europe, impacting corporations globally. It builds on — and interacts with — other regulations that focus on supply chain ESG, such as the 

, which aims to improve transparency in the sustainable investment product market, the 

Corporate Sustainability Reporting Directive (CSRD)

California Transparency in Supply Chains Act

Fighting Against Force and Child Labour in Supply Chains Act

, further underscoring the global emphasis on ethical supply chains.

The EU CSDDD underpins the European Union’s focus on driving a climate-neutral approach and increased supply chain sustainability. And it’s in line with corporate priorities; as companies realize the benefits of ESG, not just for the planet and for society, but from a commercial perspective as well. Indeed, a number of businesses in the apparel sector recently signed an open letter supporting the EU in its moves to introduce corporate sustainability due diligence.

What does EU CSDDD require companies to do?

The draft European Commission corporate sustainability due diligence legislation requires in-scope companies to manage their operations' environmental and social impacts along their entire value chain. This means within their own operations, as well as those of their subsidiaries and value chains both within and outside of Europe.

Whatever current [due diligence] setup you have in place, it may need ‘lifting’ or re-positioning to meet the draft directive’s requirements.

 — Ezekiel Ward, founder of North Star Compliance Ltd.

The Directive covers a broad range of issues that existing due diligence processes might not address. These issues include human rights, social and labor rights, and environmental impacts — essentially the entire ESG spectrum.

Issues like integrity and corruption will be in scope, meaning that, as Ezekiel Ward of North Star Compliance Ltd notes, “Whatever current [due diligence] setup you have in place, it may need ‘lifting’ or re-positioning to meet the draft directive’s requirements.”

So, who does the EU Corporate Sustainability Due Diligence Directive apply to? The revised legislation significantly scales back the number of companies who are mandated to comply.

With the adoption of the CSDDD by the European Parliament, the regulation will be applicable to:

EU companies with more than 1000 employees and a net worldwide turnover of more than €450 million

Non-EU companies with at least €450 million in net turnover generated in the EU

The latest draft excludes the previous high-risk sector approach

It's important to note that, although small and medium-sized companies do not fall directly into the scope of the EU CSDDD, they are impacted indirectly, as they will need to meet standards in their role as suppliers to larger, in-scope businesses.

The EU due diligence directive will cover companies run as stock corporations, partnerships limited by shares, limited liability companies, regulated financial companies and insurance companies.

How does the EU CSDDD impact organizations outside the EU?

Though the Corporate Sustainability Due Diligence Directive comes from the EU, it will likely have a ripple effect around the globe, as certain companies that operate in the EU will need to comply.

As mentioned above, countries not headquartered in the EU are covered by the proposed EU due diligence directive if they meet certain criteria: doing a certain amount of business in the EU and/or making money in specific high-risk sectors.

Any organization meeting those thresholds must comply with the EU due diligence legislation without delay. In-scope third-country companies, for example, must designate an authorized representative within the EU.

Even if you fall out of scope of the EU CSDDD, growing pressure to align operations and supply chains with ESG objectives is likely to drive similar legislation in other jurisdictions. Getting your arms around your supply chain and reviewing your compliance with human rights and environmental requirements can only be a positive step.

What steps does your organization need to take to comply with CSDDD?

In-scope companies must take the following steps to comply:

Identify any actual or potential negative impacts on the environment and human rights within your operations and along your value (supply) chain.

Put in place measures to prevent, mitigate and remediate these impacts.

Fully integrate your supply chain due diligence into your company policies, management systems and internal controls.

Implement a complaints procedure that everyone along your supply chain can access.

If your annual turnover is more than €150 million, you must outline a transformation plan that intends to enable you to meet the Paris Climate Agreement emission reduction targets.

As mentioned above, if you’re an in-scope third-country company, designate an authorized representative located within the EU.

Publicly report on your organization’s success in fulfilling its supply chain due diligence obligations. This includes including relevant data in your annual report.

Failure to comply with the EU Corporate Sustainability Due Diligence Directive comes with penalties:

A relevant regulatory authority (designated by the EU Member States) will be able to impose sanctions, including fines and compliance orders.

Any victims of noncompliance with CSDDD obligations will have a right to apply for compensation for damages resulting.

Corporate Sustainability Due Diligence Directive timeline for compliance

Now that the EU has voted in favor of the Corporate Sustainability Due Diligence Directive, organizations will have varying timelines to comply. Here are the specifics:

Companies with over 5,000 employees and a turnover exceeding €1.5 billion

Companies with over 3,000 employees and a turnover above € 900 million

Companies with over 1,000 employees and a turnover above € 450 million

Due diligence software can be invaluable in helping you to comply with supply chain due diligence legislation — including the EU CSDDD.

A software-led approach to due diligence will enable you to gather the intelligence you need to make informed decisions and move beyond checkbox compliance with in-depth investigations into all partners along your value chain. Find out more about how 

 from Diligent can enhance your approach and ensure you comply with the upcoming EU Corporate Sustainability Due Diligence Directive along with other due diligence regulations.

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