Modern Slavery Act - focus on fashion retail

Ian Guest discusses how the Modern Slavery Act impacts the fashion retail industry and outlines the steps that retailers need to take to ensure compliance with this legislation.

The UK government has said this year (2019) it will publish the names of those companies it doesn’t believe have produced an annual modern slavery statement. Although many companies have already responded to the requirements of Section 54 of the Modern Slavery Act, some are still unaware of the need to act.

Several companies will already be tackling the issue of modern slavery and promoting good labour practices in their businesses and supply chain. However, the act requires businesses to make public, via a formal statement, the actions that are being taken.

Certain sectors have faced huge publicity around this issue and there has been great focus on the clothing and footwear industry, which has been highlighted for poor labour practises.

A recent report by KnowTheChain – benchmarks 43 of the largest apparel and footwear companies and highlights that even large companies still have a way to go in tackling modern slavery in their supply chains.

Why is modern slavery an issue for the fashion industry?

The fashion industry is a large sector, with products imported by G20 countries at a value of US$127 billion. It is estimated that 60-75 million people are employed in the textile, clothing, and footwear sector around the world and more than two-thirds of employees are women. (Clean Clothes Campaign (2015), “General Fact Sheet Garment Industry February 2015.”)

This fact doesn’t mean that modern slavery is prevalent; however, customer demand for low cost clothing has driven demand for cheaper labour, which in turn can create a demand for illicit labour practises.

KnowTheChain findings

The KnowTheChain report demonstrates having the right policies and practises in place to manage supply chain risks, in relation to the labour force, isn’t an easy task, even for large companies. It highlights the need for businesses to know their supply chain and to be able to manage the risks. The first tier is just the starting point. It is necessary to look at the entire chain right to source, such as cotton fields for example.

The report evaluates companies’ disclosure and performance against seven benchmark themes and provides good practice examples and recommendations. It also evaluates corporate commitments, and compliance with relevant regulations and provides considerations for investor action.

Low scoring companies included US footwear companies such as Foot Locker (12/100) and Skechers (7/100), and European luxury brands such as LVMH (14/100) and Prada (5/100).

Interestingly Primark, a company which has received negative press in the past, scores 72/100 (ranked 4th).

The report also highlights good practice examples and encourages companies to learn from peers and recognise that forced labour is real. The 2018 report also shows that companies based in all regions improved and improvements occurred across all themes of the benchmark (since the 2017 report).

From the report, there are several recommendations or typical steps being taken that would represent the ‘average’ company. These include:

  • A supplier code of conduct that incorporates international standards prohibiting forced labour
  • Employee training on forced labour
  • A policy prohibiting unauthorised subcontracting in its supply chains
  • An audit process to assess suppliers for incidences of forced labour

Recommendations to improve practises include:

  • Working toward responsible recruitment practices, such as monitoring of recruitment agencies to ensure suppliers’ workers do not have to pay fees
  • Establishing a policy prohibiting worker-paid recruitment fees in its supply chains (which includes the Employer Pays Principle) and disclose evidence that the fees are reimbursed
  • Support and empower suppliers’ workers to understand and enforce their rights
  • Provide evidence that a grievance mechanism is communicated to and used by suppliers’ workers

Do you need support?

We can help businesses to meet requirements under the Modern Slavery Act. Please visit our Modern Slavery web page for further details.

In addition, our Insight Platform Service enables businesses to report on and manage performance, make informed decisions and demonstrate due diligence regarding compliance and sustainability.

If you would like to find out more about our services and how we can help, please do not hesitate to contact us.