From upstream to downstream activities, the oil and gas sector is at high risk of modern slavery, a broad concept covering slavery, servitude, bonded and forced labour and human trafficking.
While the precise lines between, for example, forced labour and extremely poor labour conditions are not always clear, a recent incident at Aberdeen highlights one of the key risk areas for the energy sector – shipping and offshore services. The incident involved an offshore supply vessel detained by the UK Maritime and Coastguard Agency with Indian nationals working on board who had allegedly been unpaid for two months, a situation the RMT union described at the time as modern day slavery. Although this may not amount to ‘modern slavery’ for the purposes of the UK’s
Modern Slavery Act (MSA) (it depends very much on the facts), it highlights the risks associated with exploited migrant workers servicing the sector, something the new supply chain transparency provisions under the Act are likely to cast a spotlight on.
The MSA includes landmark provisions requiring ‘commercial organisations’ supplying goods or services with a global turnover of £36 million or more and who carry on business in the UK to publish a ‘slavery and human trafficking statement’ on their website each financial year. This is a statement of the steps taken to ensure modern slavery is not taking place in their business or supply chains. A ‘soft’ disclosure deadline for organisations required to report arrived in September for those with a financial year ending 31 March 2016. This comes at a time when the
Government has refocused its attention on tackling modern slavery with the Prime Minister, Theresa May, re-affirming her commitment to tackle the issue by establishing a taskforce on modern slavery and pledging over £33 million to create a five-year International Modern Slavery Fund focused on high-risk countries.
For those tasked with preparing slavery and human trafficking statements, the Business and Human Rights Resource Centre (BHRRC) has continued to update its central register of statements.
With over 600 collected so far, this is an excellent benchmarking tool for organisations yet to publish statements. The Global Slavery Index (2016) has also been updated and shows a 10 million increase in the estimated number of people trapped in modern forms of slavery over the 2014 figures (from 35.8 to 45.8 million globally). As an alternative, Verisk Maplecroft has developed its own modern slavery index which is aligned to the definition of modern slavery under the MSA. These indexes can be useful tools for assessing and mapping country risks in supply chains.
It is apparent that so-called strategic litigation is set to increase where organisations are linked to, or complicit in, modern slavery. Larger organisations with reputations to protect are more likely to be targeted, particularly if they are in higher risk sectors such as energy. The Freedom Fund has released a guide to using strategic litigation to combat modern slavery, which the NGO describes as a “roadmap to create an international strategic litigation network to punish and deter human traffickers”. One of the key takeaways from a May 2016 seminar hosted in London by BHRRC on modern slavery and strategic litigation was a comment by the UK’s Anti-Slavery Commissioner, Kevin Hyland, that a company’s statement should be a good indicator of whether it “ought to have known” that modern slavery was occurring in their supply chain (ie, evidence of a criminal offence). This is a signal that statements need to be approached with the gravitas they deserve and that organisations should not overreach or exaggerate the steps they have actually taken to tackle the issue.
Wherever there is modern slavery there will inevitably be some form of corruption, whether a payment is made to a border guard to turn a blind eye to human trafficking or to pay a local official to keep quiet about labour conditions on a construction site. The issue for organisations is that anti-bribery legislation, such as the Bribery Act 2010, has harsh penalties when it comes to bribery. This fact has not been missed by NGOs, with the Freedom Fund, together with other NGOs such as Liberty Asia, releasing a comprehensive analysis of the application and use of the Bribery Act and the US Foreign Corrupt Practices Act in the fight against modern slavery. As the focus on this issue intensifies, organisations need to be conscious of potential exposure to corrupt practices associated with modern slavery, particularly when it comes to ensuring they have adequate procedures in place under the Bribery Act to prevent bribery by associated persons within their supply chains.
The focus on modern slavery and supply chains is clearly intensifying and various stakeholders are pushing to increase the bite of the MSA’s supply chain transparency provisions. There are clear warning signals to industry – organisations can no longer afford to ignore the issue of modern slavery in their supply chains.
Recommended for you
