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Modern slavery - are you helping to protect your organisation's reputation?

Technical blog by Liz Sandwith, chief professional practice advisor |  17 October 2016


A colleague at the Institute drew my attention to the annual report from the Independent Anti-Slavery Commissioner. Who knew that in 2016, 200 years since slavery was abolished in the UK there would be an Anti-Slavery Commissioner? I am certain we all knew that there was an Information Commissioner who regulated compliance with the Data Protection legislation but anti-slavery, why would we need such a Commissioner. 

Reading the introduction from Kevin Hyland OBE, who is the Independent Anti-Slavery Commissioner it is clear that with the introduction of the Modern Slavery Act and the passing of legislation in Scotland and Northern Ireland to tackle human trafficking and exploitation, the United Kingdom has made a clear commitment to be a global leader in the fight against modern slavery. There is also reference to the Prime Minister Theresa May’s creation of a new task force cements this resolve, with senior leadership directed to prioritise combating what she rightly views as “the greatest human rights issue of our time”.

The relevance of slavery to modern-day organisations

As internal auditors there is an expectation that we will challenge our organisations to comply with all relevant legislation so Modern Slavery and Human Trafficking is part of internal audits role to ‘protect’ our organisation.

The more I delved into this new piece of legislation the more aware I became that ‘slavery and human trafficking; in their broadest sense isn’t a thing of the past but is something very relevant to today and something we all need to be very aware of if your organisation is involved in global supply chains,eg for mobile phone batteries or purchasing tea.  There may be someone affected whom you haven't thought of - the young girl trafficked to pick tea in Assam or the child labourer producing cobalt for batteries in the Democratic Republic of the Congo.

The Anti-Slavery Commissioner is very clear that the role that the private sector can play in tackling modern slavery, within the UK and across the globe, cannot be underestimated.  Section 54 of the Modern Slavery Act, with its reporting requirement for large businesses (revenue in excess of £36 million) operating in the UK, has forced the business community to discuss the topic of slavery openly to an extent that has not occurred since the days of the 19th century abolitionists. While the Modern Slavery Act has undoubtedly pushed modern slavery up the agenda and into the boardrooms of large businesses, this is just the first step. There is still much more to be done to ensure that companies produce statements that both comply with the Act’s obligations and point to decisive action being taken, as opposed to merely being a ‘tick box’ exercise.

What internal audit can do to protect the reputation of the organisation 

As internal auditors this goes to the very heart of our organisation’s culture, shared values and ethical behaviours and whilst I am sure that the majority of organisations are absolutely complying isn’t it worth checking so we can provide an assurance to our Boards and Audit Committees?

So as internal auditors what ought we to be doing to ‘protect’ our organisations and potential ‘victims’ and ensure compliance with the legislation:

  1. Ensure a risk assessment, has been undertaken either by internal audit or others within the organisation, to assess the relevance of the legislation and areas in your organisation where there is the highest risk of non-compliance, internal audit cannot cover everything so we will need to focus compliance within areas of highest risk

  2. Raise awareness of the legislation to key internal audit stakeholders e.g. Board and Audit Committee, perhaps by sharing the Independent Anti-Slavery Commissioner’s report with them or perhaps even posting it on your Intranet

  3. Reviewing our internal audit plans for the remainder of 2016/17 to ensure that we have capacity to include a ‘health check’ in relation to compliance with this piece of legislation

The Institute has already produced a piece of technical guidance on modern slavery and human trafficking and there will be a brilliant article, I know because I have seen it, in the November/December Audit and Risk Magazine certainly worth reading and perhaps sharing across your organisations. The intention is that we will also produce a further piece of technical guidance in the New Year covering how to Audit compliance with the Modern Slavery and Human Trafficking legislation.

It is also worth remembering that whilst there is as yet no sanctions linked to this piece of legislation and some journalists are calling it ‘nudge’ legislation, the Anti-Slavery Commissioner has stated that ‘he will be promoting the utilisation of effective models to allow for easy scrutiny and comparison of statements’, so he will be monitoring statements and it is therefore reasonable to assume that at some point there will be external scrutiny with organisations being challenged, per has through the press in relation to their actions.  So perhaps there is a financial risk as yet in this area but most certainly there will be a reputational risk if organisations are found wanting!


Further reading:

UK government Modern Slavery Act 2015

Statutory guidance for organisations on how to ensure that slavery and human trafficking is not taking place in their business or supply chains

Legal sources:

Company disclosure requirements under the Modern Slavery Act 2015

Business and Human Rights Centre

Bond Dickinson briefing

CIPS Knowledge

Eversheds


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Content reviewed: 22 March 2018