We need a new law to root out corporate supply chain abuses — wherever they take place

The now all too familiar, shocking allegations of forced labour at Boohoo factories in Leicester are once again grabbing headlines.

Last week Boohoo was hit with a double whammy as US lawmakers are mulling a potential import ban against the company, and UK MPs are asking for a long-term bonus scheme to be linked to supply chain improvements.

It’s abundantly clear that despite repeated scandals and inquiries — and share prices fluctuating in line with each new development — the problems of Boohoo and other companies tackling abuses in supply chains, whether in the UK, China or anywhere else, remain far from solved.

Consumers simply don’t want human rights abuses or environmental destruction tainting the products or services they buy. But it is not the consumer’s responsibility to ensure that the products they buy have been produced responsibly.

This June will be 10 years since the adoption of the United Nations Guiding Principles on Business and Human Rights (UNGPs) which, to this day, the UK government claims as its lodestone for realising rights in global business operations.

The UNGPs took a phrase familiar to the business world, “due diligence”, and repurposed it for human rights. To fulfil the “corporate responsibility to respect” human rights, companies should undertake “human rights and environmental due diligence” across their supply chains, with legal liability potentially accruing when they fail to root out abuses.

In the decade since, there has been a global trend of embedding the UNGPs in domestic law. The Modern Slavery Act pioneered a trend, but it’s since been superseded by France’s Corporate Duty of Vigilance Law, new laws under development in Switzerland and Germany, and a potentially transformative new EU initiative which is expected to apply to all UK businesses operating in the Single Market.

While these foreign laws offer real potential for tackling the complex problems of corporate supply chain abuses, as the shadow foreign secretary recently acknowledged in the context of Uyghur abuses, the Modern Slavery Act is merely “a tick box exercise”. In the space of six years, the UK has gone from leader to laggard.

The Business & Human Rights Resource Centre’s recent review of the Modern Slavery Act concluded that it “has failed in its stated intentions”, with 40 per cent of companies covered by the law having never submitted a report on supply chains and not a single company facing repercussions for non-compliance.  As the UK’s Independent Anti-Slavery Commissioner herself, Dame Sara Thornton, acknowledges: “As the current law stands, companies do not have to report abuses in their supply chains, however egregious, nor are they liable for them.”

There is a better alternative. A new law mirroring existing provisions in the UK Bribery Act, could hold companies accountable if they “fail to prevent” a wide range of harmful human rights or environmental impacts — not just forced labour — wherever they occur.

There is already cross-party political traction for this. The Joint Committee on Human Rights recommended in 2017 that “the government bring forward legislation to impose a duty on all companies to prevent human rights abuses”.

Then just last year, the esteemed  British Institute of International and Comparative Law demonstrated that not only is the proposal is legally feasible, but most businesses support new legislation due to the legal certainty and level playing field it could bring.

Multinational corporations domiciled in the UK, operating via subsidiaries all over the globe, continue to be linked to human rights and environmental abuses and to act with impunity.

But the tide has turned in the UK courts. Last month, the Supreme Court handed down a landmark judgment in the case of Okpabi v Shell, which affirmed the precedent that companies domiciled in the UK have a duty of care and will be held to account at home for human rights abuses and environmental damage caused by the subsidiaries they control overseas.

As we recover from Covid-19, the government must act not just to ensure that supply chains are resilient but also that they are governed by frameworks protecting human rights and our environmental, so that resilient business is responsible business.

As the Supreme Court ruling and the reality of an imminent, new EU supply chain initiative lead to even more uncertainty and unevenness in the obligations facing business, new UK legislation becomes increasingly urgent.

And it is more evident than ever that this will also meets a market need: consumers don’t want goods tainted by abuse, and it’s on government and business to ensure this simple, moral ask is met.

UK companies must be compelled to root out and answer for abuses in their supply chain. But to do this needs new laws — and bringing them in will restore the UK’s leadership role at precisely the moment it looks to embark on a Global Britain agenda.