In recent years retail brands in the UK have been placed under the microscope in relation to the ethical manufacture and distribution of their goods. Here, Siobhan Kerley-Dunne looks at how the Modern Slavery act allows the retain industry to tackle modern day slavery and its role in brand protection.  

It has never been more important for retail brands to ensure that a correct code of conduct and procedures are in place when dealing with their supply chain. This is largely due to the publication of the Modern Slavery Act 2015, in which Section 54 imposes a duty on UK based businesses to publish the action they have taken to ensure their business and supply chains are free of modern slavery and how effective these actions are. The statement must be published on the organisation’s website in a prominent position, with many brands opting to follow the government recommendation of placing a link on their site homepage to the “Modern Slavery Statement”.

Section 54 applies to commercial organisations that supply goods or services and carry on business in the UK that meet an annual turnover of £36m or more. The statement should be updated annually and provides information to the public about the location of the factories where the items for the brand are produced and distributed and a promise from the brand to uphold ethical standards globally. This creates greater transparency regarding the production and supply of the goods, allowing consumers to have increased confidence that they are buying from businesses with ethical practices and protecting the public perception and reputation of the brand.

The reputational protection of brands afforded by compliance with Section 54 cannot be understated. In 2020 several retailers suspended the sale of items from clothing giant Boohoo after the Sunday Times exposed the working conditions at a textiles factory in Leicester where clothes were being produced for the brand. Employees at the factory were found to be working in extremely poor conditions for below the minimum wage. This led to Boohoo losing over a billion pounds in share value in the days after the article was published, prompting the brand to release its Agenda for Change in September 2020, and appoint Sir Brian Leveson to independently review the brand’s progress.

Under the Modern Slavery Act, brands are expected to carry out the correct due diligence to ensure the factories that the items they are selling are produced in and distributed from are paying a legal wage and that working conditions are satisfactory, even if they are not based in the UK. The Guidance states that it is highly recommended that brands who have non-UK subsidiaries should either cover these in the statement on the organisation’s UK website, or if they are not legally obliged to do so, encourage the non-UK entity to publish its own pledge in keeping with the requirements of the Act.

Non-compliance with the Act can lead to the Secretary of State seeking an injunction requiring compliance, and failure to comply with said injunction is a contempt of court, punishable by an unlimited fine. Whilst a fine may not seem like an appropriate punishment for a clothing retail giant with an annual turnover in the hundreds of millions, the adverse publicity generated and consequent plummet in Boohoo’s share value after its unethical practices were exposed should serve as a stark warning to retailers.

It has never been more important for brands to ensure that ethical practices are being maintained and that brands are keeping their word with regards to how they operate behind the scenes. At Beyond we can advise on how brands can ensure they remain compliant with standards regarding ethics and modern slavery and help them put in place the correct procedures to shield their brand.

If you have any questions or require any further advice on this topic, get in touch with our specialist teams today at hello@beyondcorporate.co.uk

[This blog is intended to give general information only and is not intended to apply to specific circumstances. The contents of this blog should not be regarded as legal advice and should not be relied upon as such. Readers are advised to seek specific legal advice.]