1. The Modern Slavery Act - 2015

2. The Modern Slavery Act - 2015
Supply Chain
Transparency Requirements

3. MSA 2015 – Supply Chain Transparency
Morning session
Introduction – why are we here?
MSA in Context – what’s it all about?
MSA – specific terms
Section 54 – supply chain transparency
Supply Chain Mapping
Policy and Compliance
Attestation and Audit

4. MSA 2015 – Supply Chain Transparency
Afternoon session
Developing Country Index – understanding risk areas
Proportionality
Roadmap for 2016 – 2018
Levels of Supplier Due-diligence
Does Kraljic Help?
Summary and next steps

5. MSA 2015 – Supply Chain Transparency
Why are we here?

6. MSA 2015 – Supply Chain Transparency

7. MSA 2015 – Supply Chain Transparency

8. MSA 2015 – Supply Chain Transparency

9. MSA 2015 – Supply Chain Transparency

10. International Best Practice Frameworks (NGOs etc) Primary Legislation
UN Guiding Principles on Business & Human Rights
UK MSA
2010
California Transparency in Supply Chains Act
2015
ECHR – Article 4 – Prohibition of Slavery 2014
EU Convention on Human Trafficking
Minimum wage legislation
BT ?
Walk Free Foundation etc
Global Coalition against Trafficking
Coca Cola
IKEA
BG Advance
Other major corporates ???
Corporate Best
Practice
Social Performance
& CSR initiatives

11. MSA 2015 – Supply Chain Transparency
Today’s Focus
Science of corruption
Rent seeking
Money Laundering
Avoidance / Evasion
Proceeds of Crime Act
Bribery Act
Public Relations

12. MSA 2015 – Supply Chain Transparency
Today’s Focus
Science of corruption
Rent seeking
Money Laundering
Avoidance / Evasion
Proceeds of Crime Act
Bribery Act
Public Relations
Understanding
Implementation
Road Map

13. MSA 2015 – Supply Chain Transparency
From the Act
An Act to make provision about slavery, servitude and forced or compulsory labour and about human trafficking, including provision for the protection of victims; to make provision for an Independent Anti-slavery Commissioner; and for connected purposes.

14. MSA 2015 – Supply Chain Transparency
Structure
Introductory Text
PART 1 Offences
Offences
Penalties and sentencing
PART 2 Prevention orders
PART 3 Maritime enforcement
PART 4 The Independent Anti-slavery Commissioner
PART 5 Protection of victims
PART 6 Transparency in supply chains etc
54.Transparency in supply chains etc
PART 7 Miscellaneous and general
55.Gangmasters Licensing Authority
SCHEDULES
Supply chains – our focus

15. MSA 2015 – Supply Chain Transparency
Key Provisions
Require businesses + £36M turnover to disclose each year what action they have taken to ensure there is no modern slavery within their business or supply chain.

16. MSA 2015 – Supply Chain Transparency
Recognizing
Preventing
Criminalizing
FORCED LABOUR
TRAFFICKING
SLAVERY
in supply chain for organisations > £36M turnover in UK

17. MSA 2015 – Supply Chain Transparency
Failure to comply ?
Require businesses + £36M turnover to disclose each year
Legal Obligation
Failure to Comply ? (No annual Statement?)
Specific Order [ by secretary of state ]
Non Compliance = contempt of court = unlimited fine
What sort of fines might the court impose?
Closest analogy = breach of anti-trust laws = fine potentially substantial (T/O)

18. Supply Chain Supply Chain Mapping Low Risk
Paper Based Q&A
Standardised Questionnaires
Box-ticking (?)
Supply
Chain
Modest Risk
Obligated
Organisation
Focused questioning
Inspection visits
Follow-up suspicions
3rd party accreditation (?)
Prequalification
Inspection visits – planned
- un-announced
Regular reviews
Innovation – progress reports
Danger Zone

19. Supply Chain Risk Graduation
TICI / DCI
High Tech
VCL
High Value - added
Low Value - added

20. ObCo MSA 2015 – Supply Chain Transparency
Tier 1 Suppliers = direct contractual relationship S1 S2 S3 S4 S5 S6 S7 S8 S9
S [n]
Tier 2
SC1
SC2
SC3
SC4
SC5
SC6
Tier 3
SSC1
SSC2
SSC3

21. Proportionality specifically mentioned Primary Legislation
International Best
Practice Frameworks
(NGOs etc)
Proportionality specifically
mentioned
Primary Legislation
UN Guiding Principles on Business & Human Rights
2010
UK MSA
California Transparency in Supply Chains Act
ECHR – Article 4 – Prohibition of Slavery 2014
2015
EU Convention on Human Trafficking
Minimum wage legislation
BT ?
Walk Free Foundation etc
IKEA
Other major corporates ???
BG Advance
Corporate Best
Practice
Social Performance
& CSR initiatives

22. MSA 2015 – Supply Chain Transparency
Do what is right for our business
Don’t shirk
Expect to develop over time

23. MSA 2015 – Supply Chain Transparency
Developing Country Index – understanding risk areas
Proportionality
Roadmap for 2016 – 2018
Levels of Supplier Due-diligence
Does Kraljic Help?
Summary and next steps

24. MSA 2015 – Supply Chain Transparency
The Modern Slavery Act
Road Map

25. Obligated Organisation
Policies
Thinking!
Compliance
Obligated Organisation
Operations
Doing!
* Drafted
* Approved
* Published
* Timing
Statement
*Report & Accounts
* Website

26. MSA Sn 54 – Road Map to Compliance (1)
Senior Management Work-stream
Law in effect 2015
Companies with FY end 31/3/2016
Other companies
Stakeholder Engagement
Key personnel understand obligations
Report at next
Scheduled annual
return
2016
Exec Board
HR, CPO, Ops
First to report
Compliance Work-stream
Initial Policy Statement
MD/CEO signs off
HR Head and CPO sign-off
Operational Guidelines and Instructions issued internally
HR Work-stream
Employment Practices Review
Within UK
2016
Within T1 suppliers
2017
Within T2 suppliers and lower

27. MSA Sn 54 – Road Map to Compliance (2)
Procurement Work-streams
T’s & C’s
Review
Decide what is required
Draft - Approve
Up – issue Standard T’s & C’s
Amend existing Contracts by negotiation
2016
Supply Chain Mapping
Define Task
Launch exercise
Initial Report on Results
Follow-up action
2016
2017
Define Methodology
Alert major suppliers as to their collaboration in supply chain mapping
2017 – pursue Tier 2 mapping as appropriate through,
or in collaboration with, Tier 1 suppliers
2016 – Tier 1 mapped

28. MSA 2015 – Supply Chain Transparency
The Modern Slavery Act
Supplier Due Diligence

29. MSA 2015 – Levels of Supplier Due Diligence
How do we assess Contract Materiality?
Consistency is the key
BCMR

30. MSA 2015 – Levels of Supplier Due Diligence
BASIC CONTRACT MATERIALITY REVIEW (BCMR)
© Buy Research Limited 2008
Project Information:
Assessed Materiality:
MEDIUM
Project Ref No:
Proposed contract partner: (name)
Copies of BCMR, together with supporting text (see Tab 2) to be retained on project risk file for audit purposes. If high risk, relevant Director or Board Member to be briefed and to countersign prior to contract entry.
Planned commencement date:
……………………………………………………..
(select A, B or C below)
A) Sale: Goods or Services or both (G, S or G + S)
B) Purchase: Revenue OMGS expenses or Capital expenditure (R or C)
C) Special: (detail)
Five dimensions of Materiality
1) Contract Value:
4) Legal Risk - contract/performance failure will expose our company to:
Income value/Spend value = over £50M
High damages, regulatory non-compliance, loss of advanced funding, loss of intellectual property.
Income value/Spend value = £10M to £50M
Income value/Spend value = £1 M to £10M
Moderate damages, possible regulatory issues, possible loss of funding or IPR.
Income value/Spend value = up to £1M
Minor and containable impact.
2) Market Concentration Risk:
Only one or two contract partners can deliver the benefit.
5) Reputation Risk: performance failure would involve:
There are a number of potential contract partners.
Industry wide damage and/or make customers / other (third) parties cease commercial / trading relations with our company.
There are many potential contract partners.
Negative public comment and/or make other (third) parties reconsider their position re trading relations with our company.
3) Risk entailed in Partner change during contract:
Major risk to our company in changing contract partner.
Limited dissatisfaction within customer / stakeholder community.
Medium risk to our company in changing contract partner.
Minor risk to our company in changing contract partner.
BCMA Assessor (name)
(Date)
Director (name)
Summary comment on reviewed materiality (free text):

31. MSA 2015 – Levels of Supplier Due Diligence
It may be appropriate to add modern slavery type questions to your standardised Contract Materiality review methodology
Consistency is the key

32. MSA 2015 – Levels of Supplier Due Diligence
Tools
Supplier Questionnaires
Supplier Visits
Review of employment practices
Regular up-dates
Innovation / change targets ?
Country Risk Reviews / characterisation
Risk Register
Specific Conditions in commercial contracts

33. Organisational Role of Procurement
60% A B
X Professional Services
50%
X Wholesale Financial Services
40%
X Software Services
X E&P Oil and Gas
Profit Margins
X Pharmaceuticals
30%
X IT Networking Eqpt
X Retail Financial Svcs
20%
X IT Processors D
Household Products X
X Tobacco Products
10%
X Aerospace
X Chemical refining
X Food retailing
X Telecomms
X FMCG 5%
X Contract Manufacturing
X Automotive
X Computer Manufacture C
< 5%
>25% 0%
X Construction
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% of outsourced 3rd party spend