14 October 2019
Four years of the Modern Slavery Act; construction sector at a crossroads
Dr Gabriela Gutierrez-Huerter O, Lecturer in International Management
The industry is still grappling with reporting, but calls for fundamental changes to practice grow
Earlier this summer, the government responded to the recommendations of the independent review of the Modern Slavery Act 2015 by launching a consultation on changes to the supply chain transparency provisions in section 54 of the Act. If implemented these changes will extend the reporting obligations to public sector bodies and also make it compulsory to report on six issues that the Act currently only suggests that companies ‘may’ include in their reporting.
This would mean that any company meeting the Modern Slavery Act reporting threshold of £36 million would now be required by law to detail the structure of their business and its supply chains; their policies and their due diligence processes. They would have to specify the parts of their business and supply chains where they consider that there is a risk of slavery, and set out the steps they have taken to assess and manage that risk; their effectiveness ensuring that slavery is not taking place and what training on modern slavery they make available to their staff.
The proposed reforms could significantly raise the standards for businesses in the construction sector where MSA reporting has been shown to lag behind other sectors (e.g., 2018 Ergon analysis of MS statements; 2017 CORE Analysis of Slavery and Human Trafficking statements). While this is welcome, the changes would not end an ongoing debate about what exactly we want reporting to achieve, and what should happen after a company publishes its MSA statement.
In the last few years I have been investigating, with colleagues in the University of Nottingham and Kassel, how the UK construction sector is responding to the MSA and developing solutions to address modern slavery in its supply chains. We have conducted a longitudinal qualitative analysis based on four sources of data: media material, organisational documents, observation notes of key events in the sector and interviews.
Our findings show that right from the very start there has been a lack of agreement in the sector about the purpose of the statements. Some firms see and use them as aspirational documents; they describe where they aim to be in the future, rather than where they are now. This is in contrast to the demands of professional associations, think tanks and NGOs who increasingly ask companies to ‘keep it real’ and focus on reporting verifiable facts that they can be held accountable for.
There is also contention over the costs and benefits of compliance and non-compliance with the provision of the statements. Under the current Act, there are no penalties for non-compliance, but we have noticed three conflicting views of what reporting should achieve:
- Non-complying firms should be punished through ‘blacklisting’ and ‘name and shame’ mechanisms
- Complying firms should be rewarded through ‘name and fame’ mechanisms
- Reporting should create an atmosphere in which information can be shared, but it’s not about pointing fingers.
It is also evident that businesses are concerned that open and honest reporting could put them at a disadvantage. They are worried about being targeted by the media if they report a case, and some have asked for protection from this reputational risk.
Additionally, businesses have been criticised for their overreliance on external auditors, consultants and lawyers and their resistance to conduct their own ‘forensic work’ in their supply chains. The problem here is that consultancy firms’ advice has effectively set limits on what information firms disclose, and has acted as a barrier to transparency.
This summer’s independent review of the MSA has highlighted that the Act has not catalysed change as we might hope.
Some construction companies have been sluggish in their response and fail to comply even with the minimum requirements of the MSA. Despite, or perhaps because of this, our findings show a growing demand for a complete paradigm shift in the sector. There are calls to move beyond auditing and reporting practices that are intended to make it difficult for particular instances of modern slavery to go unnoticed, towards addressing the entrenched practices that allow modern slavery to happen at all.
For instance, big businesses are being asked to the limit the subcontracting of labour and short-term contracts and to ensure everyone across the supply chain is paying living wages instead of minimum wages. It will clearly be challenging to get the whole of the industry on board with this, and the implications for small and medium enterprises has not yet been given consideration.
Four years after the introduction of MSA, the construction sector seems to be at a crossroad. The emergence of sector initiatives such as the Action Programme on Responsible and Ethical Sourcing (APRES) Eight Pathways to best practice, the Chartered Institute of Building (CIOB) and Stronger Together Modern Slavery Toolkit and the Gangmasters and Labour Abuse Authority (GLAA) construction protocol indicates willingness from UK construction businesses, NGOs and government agencies to find solutions to detect and prevent modern slavery in construction supply chains.
However, questions remain on how far the MSA will motivate businesses to change, given the lack of consensus about what the modern slavery statements mandated by the Act are really designed to achieve. If we want to see change fast, should we focus on making the MSA and the principle of disclosure really work, or is it time to start thinking about the complete paradigm shift that some are already asking for?
Dr Gabriela Gutierrez Huerter O will be debating these issues on the “Disclosure Session Panel” at the Responsible & Ethical Leadership in Global Supply Chains Conference on 6 November in central London. For further information and to register, visit ow.ly/f4Af30owEwt