© Allen & Overy 2015 Transparency in your supply chains Impact of the Modern Slavery Act 11 November 2015

© Allen & Overy Transparency and Modern Slavery 1The new requirements in context 2 Do you meet the qualifying threshold for publishing a Statement? 3When do you need to report? 4What is modern slavery and human trafficking? 5Publishing a Statement 6Due diligence and managing your supply chain risks

© Allen & Overy The headlines New obligation to publish a Statement on human rights in your supply chains Qualifying criteria First Statements from April 2016 Risk assessment and due diligence Wide discretion over content of Statement Wider offences created under the Act

© Allen & Overy The wider shift towards greater corporate transparency California TiSC Act Reporting on Payments to Governments Non-financial reporting in Companies Act 2006 EU Directive on Non-Financial Reporting Proposed EU Regulation on Conflict Minerals Shift towards mandatory transparency obligations

© Allen & Overy Do you meet the qualifying criteria? Annual turnover of ≥ £36 million Providing goods or services Body corporate or partnership wherever incorporated/formed Carrying on business in the UK Fact specific Demonstrable business presence in the UK Turnover Activity UK Link

© Allen & Overy When do you need to report? Organisation 1 | Financial year end 31 March 2016 This organisation will be in the first round of compliance It must publish a Statement covering its’ 2015/2016 financial year Statement may be limited to only that part of the financial year in which “steps” were taken Organisation 2 | Financial year end 31 December 2015 The transparency provisions do not take effect for financial years ending before 31 March 2016 This organisation must produce a Statement for the 1 January 2016 to 31 December 2016 financial year If you have a financial year end on or after 31 March 2016, you must publish a statement under the transparency provision If you have a financial year end date between 29 October 2015 and 30 March 2016, you do not have to publish a statement for that financial year

© Allen & Overy Publication “as soon as reasonably practicable” after financial year end Publication of Statement Link to prominent place on homepage Guidance recommends within 6 months of financial year end Board approval and director signature Consider most suitable website if you have several Can also link with other relevant reports May choose to publish at same time as annual report

© Allen & Overy What is modern slavery and human trafficking? Slavery or servitude Forced or compulsory labour Holding another person in slavery or servitude In such circumstances that person knows/ought to know Requiring a person to perform forced or compulsory labour in certain circumstances Arranging, facilitating travel with view to exploitation Recruit, transport, transfer, harbour, receive, transfer or exchange control UK national v. non-UK national Human trafficking with view to exploitation

© Allen & Overy Publishing the Statement – Describe all actions taken; can specify that these are initial steps – Not a guarantee that no slavery/trafficking exists in your supply chains – Follow suggested headings in guidance Content – In English and clear (easy for public to read) – Strike balance between being informative and too technical Style –Aims to show year on year progress; issues need to be followed through in subsequent statements Approach –Consider overlap with other published statements and reports (e.g. OECD/UNGPs) Context

© Allen & Overy Failure to publish Statement is not an offence under the Act Failure to publish statement Failure to report all steps taken –Not offences under the Modern Slavery Act –However, in practice this is likely to be the basis for an injunction requiring publication –Secretary of State may apply for injunction in High Court to require publication –Further failure punishable by an unlimited fine 1 2 Failure to comply with court injunction to publish statement

© Allen & Overy Risk assessment and due diligence are key Global risk assessment Sector initiatives? Boundary of organisation and supply chain Due diligence Can you build year on year? How far up the chain?

© Allen & Overy Conclusions Requirements are far reaching Voluntary v mandatory nature of reporting Establishing your scope and boundaries will be key Must consider the implications in the wider context This is the beginning

© Allen & Overy 2015 Contact details 13 Matthew Townsend Partner London Tel+00 (0) Alana Lampitt Senior Associate London Tel

© Allen & Overy 2015 Transparency in your supply chains Impact of the Modern Slavery Act 11 November 2015

© Allen & Overy These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP's affiliated undertakings.