Why are fewer businesses setting goals to combat modern slavery?

Under section 54 of the Modern Slavery Act 2015 (MSA), qualifying businesses are required to publish an annual statement setting out the steps they have taken to prevent modern slavery in their business and their supply chains. However, it is not mandatory for businesses to set goals within this statement, or to undertake due diligence on their supply chains. They merely need to state the steps they have taken (or that they have taken no steps) to combat modern slavery in their business and supply chains.

This low legal bar is compounded by a lack of specific penalties for non-compliance. The secretary of state may bring civil proceedings in the High Court for an injunction, requiring the organisation to publish such a statement. To date, it appears this power has never been exercised.

Decrease in measures taken

Recently published UK government data shows in 2024-2025 just over half of businesses required to publish an annual statement included set goals as part of their reporting. This is the lowest figure recorded since 2020 (when the data releases began), falling from over three-quarters of companies in 2023.

The theory was that annual statements would enable businesses to show progress year on year on identifying and addressing modern slavery risks in their business and supply chains. A lack of goal setting may suggest a business is not taking a strategic approach to improve performance, and is potentially settling for a more limited approach of technical compliance. No good corporate citizen likes the idea of modern slavery in their business or supply chains: in recent years there has been an increasing focus on transparency in supply chains and taking responsibility for their impact on people and the environment. But the data may point to fewer companies being willing now to commit to actions to back up the words.

Pressures influencing this decrease

When there is no specific legal obligation to take an action, businesses have a decision to make about how much they want to do. There are inevitably competing demands for limited budgets, so priorities need to be identified and often compromises have to be made. Specific factors may also be influencing the apparent trend for less ambition and proactivity on modern slavery.

Firstly, there can be real fears within a business that publishing a detailed and pro-active modern slavery statement exposes them to risks of negative publicity and perceptions should issues come to light in future. This can lead businesses to be more cautious in public.

Secondly, actions by the EU and in the US have led to increased uncertainty about what is expected of businesses and what will be expected in the future. The EU Omnibus Directive has been taken by some as an indicator that supply chain issues are being deprioritised, while developments in the US have been interpreted in certain quarters as a signal that the world is "past peak ESG". These contrary currents may have led businesses to question how far and how fast they should go in taking responsibility for the people in their supply chains.

Thirdly, unlike other legal issues where the expectation is that organisations will respond to breaches by stopping doing business with the breaching parties, when actual or potential modern slavery is identified the consistent expectation is that businesses will work with suppliers and other organisations to try and improve the position of the people affected, and that ending contracts is a last resort. The unintended, and perhaps unspoken, impact of this could be that more businesses are disinclined to go looking for modern slavery in their supply chains because of the time and resources that will be required if issues are identified.

While these concerns are understandable, there remain good legal and commercial reasons to take a more active approach to identifying and addressing modern slavery risks in businesses and their supply chains.

Changing regulatory landscape

UK

Although currently section 54 of the MSA sets a very low threshold for legal compliance, there is growing pressure for the UK to adopt more proactive requirements relating to due diligence of supply chains and ensuring UK markets exclude access to those products that may have slavery in supply chains. The UK has faced criticism for falling behind global standards on risks in supply chains and corporate reporting.

For example, the House of Lords Select Committee published its report on the MSA in October 2024 calling for urgent reforms. If adopted, its series of recommendations would see greater alignment with the EU and other countries, by imposing greater obligations on businesses and requiring commitment to a more pro-active approach to identifying and mitigating modern slavery.

While there may be a reticence to put further obligations on business, particularly in a tough economic climate, development in this respect should not be entirely ruled out. Many businesses are already contemplating going further than UK law requires to enable them to access EU markets, even if they are not being vocal about it.

In addition, the UK government has signalled how it intends to use public procurement, including for the NHS, to eradicate modern slavery in supply chains. It has also comprehensively updated its Transparency In Supply Chains guidance, aligning it with international standards on how businesses should identify and mitigate actual and potential modern slavery in their supply chains. The "spirit" of the law, as the guidance calls it, does not change the underlying legal obligations but it is a step to aligning the UK with global expectations.

EU

While the EU Omnibus Directive looks to make amendments to the application of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D), the direction of travel towards increased legal duties requiring more of businesses in addressing risks in their supply chains remains. CSRD and CS3D will be implemented in some form, and in specific areas, such as deforestation, the supply chains due diligence expectations are still far reaching.

The EU is also pushing forward with the Forced Labour Regulation, which seeks to prevent goods made with forced labour in the supply chains from being imported, exported or sold on EU markets. While it does not come into full effect until 14 December 2027, it again highlights the EU's continued appetite for active measures to identify and mitigate modern slavery in businesses and wider supply chains.

Activist momentum

In addition to these legislative considerations, there is a continuing trend of activists, victims groups and other non-governmental organisations seeking to bring legal proceedings to raise awareness and encourage businesses to take responsibility for the issues in their supply chains..

In the UK, the Court of Appeal's decision in R (on the application of World Uyghur Congress) v National Crime Agency has introduced the spectre of committing a money laundering offence if a business is trading in goods known or suspected to have been produced with forced labour or other criminality.

Osborne Clarke comment

While the narrative of ESG momentum has certainly been disrupted, there are still good legal, commercial, reputational and ethical reasons for businesses to increase the transparency in their supply chains. Given myriad current and forthcoming laws in this area, businesses should develop an efficient and effective approach to modern slavery (and broader ESG risks and expectations) by first understanding their obligations and risks in their specific operations and sectors, across their global footprint and throughout their supply chains. That foundation will then guide the systems and procedures they can adapt and develop to meet those obligations and expectations.

This Insight was written with the assistance of Katie Strange, trainee solicitor at Osborne Clarke.