Combatting modern slavery has become a significant focus for governments worldwide. In-House Perspective explores what legal teams must know about addressing the associated risks and ensuring compliance with the latest legislative developments.

Through its Immigration and Asylum Bill, the UK government has proposed significant changes to modern slavery reporting requirements. In doing so, it aims to address some of the criticisms levelled at the UK’s current legislation on modern slavery from a corporate governance perspective.

The UK’s Modern Slavery Act (MSA) became law in 2015. ‘If you’re a commercial organisation that has a business presence in the UK and you have an annual turnover threshold of over £36m, under the MSA, you have to make a statement that sets out the steps you’ve taken to ensure modern slavery is not taking place in your business and supply chains,’ says Anna Kirkpatrick, an officer of the IBA Business Human Rights Committee. ‘There are no further content requirements, although the Act does indicate categories of information that the statement may include.’

From a corporate governance perspective, there have been concerns raised about the MSA’s effectiveness. While the legislation has been updated to require companies to consider how their supply chains may have been tainted by modern slavery, it doesn’t contain a legal requirement to address the issues – nor does it threaten a financial penalty for non-compliance.

‘The corporate reporting element of the MSA has been widely regarded as ineffective in driving real change in supply chain risk management,’ says Sarah-Jane Denton, Director, Operational Risk & Environment, at UK law firm Travers Smith. ‘The regime requires large commercial organisations to publish annual slavery and human trafficking statements, but says remarkably little about what those statements must contain, imposes no deadline for publication and has never been the subject of enforcement action.’

Denton highlights that at the time of its introduction, the MSA did focus the minds of management on risks that were previously not high priority. However, she says ‘it is arguable that reporting for many organisations has historically been more about compliance than genuine risk management. That position might have shifted slightly in the last 18 months since the government overhauled the statutory guidance on transparency in supply chains, but the strict legal requirements remain both easy to fulfil and difficult to enforce.’

That could be about to change via the Immigration and Asylum Bill, which, as of August, was progressing through the UK’s legislative process. While this new legislation is unlikely to make supply chain due diligence compulsory, organisations in scope will be required to give details of the checks they have made in this regard. This, says Kirkpatrick, a director at Clifford Chance in London, is a major change.

‘There have been moves for reform of the MSA for quite some time,’ she explains. ‘What’s interesting from a corporate perspective is that the Immigration and Asylum Bill, which is government-backed and therefore likely to make its way, at least in some form, into law, is that you’ve got far more stringent reporting requirements on companies as well as additional requirements such as a statement of accuracy and financial penalties. This bill is currently the only piece of legislation on the table that actually progresses the reform of corporate approaches to addressing modern slavery in supply chains.’

European uniformity

It’s not only the UK that’s looking critically at the tainting effect that modern slavery has in supply chains. France, for example, introduced its Corporate Duty of Vigilance Law in 2017 while Germany’s Supply Chain Act entered force in 2023, with both having the aim of identifying and eradicating human rights abuses around the globe. Yet despite these efforts, and given that in some countries, certain industries are still particularly susceptible to the presence of forced labour in their supply chains, it’s clear that more needs to be done.

Roberto Randazzo, Secretary of the IBA Business Human Rights Committee, says that while his country, Italy, doesn’t have any specific legislation relating to supply chains, its judges ‘strongly react to forced labour’ – a practice that has been repeatedly uncovered in the fashion industry.

Yet while individual governments, aided by the courts, are attempting to take action to stamp out forced labour in supply chains, they’re taking different approaches, meaning the response required from companies operating across jurisdictions is difficult to define. The EU is seeking to bring some uniformity to the approach via its amended Corporate Sustainability Due Diligence Directive (CSDDD), which requires large companies to carry out human rights and environmental due diligence.

The EU’s Forced Labour Regulation, which applies from December 2027, will also mandate that companies strengthen their relationship with their supply chains, says Randazzo, a partner at Italian firm Legance. ‘The legislation is about due diligence,’ he explains, which is ‘the cornerstone of the whole regulation and reflects the need to be aware of the role played by your supplier and the way they approach the legislation on forced labour.’ Ultimately, due diligence is ‘a way to make you aware that your liabilities are not related only to your own direct actions and activities,’ says Randazzo.

Yet while EU legislation makes plain what’s required of companies, the sanctions for non-compliance aren’t so clear-cut – and, in the eyes of many, not as powerful a deterrent as was first envisaged. At one point, the CSDDD included a fine of up to five per cent of global turnover for any breach, but this sanction has since been significantly watered down.

The draft legislation, Randazzo says, originally provided for a specific sanction that was common to all EU Member States, but this has since been changed to give autonomy to each jurisdiction, he explains. ‘Each country will adopt its own approach – there won’t be a common way to put penalties in place,’ Randazzo says. ‘The original provision was related to a percentage of yearly turnover,’ which, in his view, is ‘the strongest way that you can impact a company.’

For Daniela Della Rosa, a partner at Curtis Mallet-Prevost Colt & Mosle who has previously held senior in-house roles at a number of major fashion houses, the reality is that very few companies will fall under the CSDDD’s scope, regardless of the sanctions applied. ‘It’s now only applied to companies in Europe with more than 5,000 employees and €1.5bn net turnover,’ she says. ‘Basically, it’s only for very big companies, and there are not that many in Europe.’

The European Commission says that the CSDDD ‘will ensure that companies in scope identify and address adverse human rights and environmental impacts of their actions inside and outside Europe, while avoiding unnecessary burdens for companies and smaller business partners.’

Della Rosa says that, despite the changes from the original proposal, the job of ensuring compliance for those companies affected will be significant. Counsel at companies in scope need to begin asking questions about the organisation’s supply chain and mapping it, says Della Rosa. This can be a considerable challenge as companies must now have awareness of each supplier along the chain. ‘If you have to report and collect information about your entire supply chain, that becomes a little bit harder to do and thereafter, if an issue arises, lack of awareness is no longer a strong defence,’ she says.

The Trump effect

When he took office for a second term in early 2025, US President Donald Trump quickly set about imposing trade tariffs on most countries around the world. His tariffs on US imports were later struck down by the country’s Supreme Court in February.

Since then, the Trump administration has found another way to introduce import tariffs by accusing numerous countries of failing to take sufficient action on forced labour and imposing levies on them as a result. It’s a move that’s prompting many countries around the world to take swift action on supply chain exposure themselves.

Raj Bhala, an officer on the IBA International Trade and Customs Law Committee, says the US has had a ‘strong statute’ banning goods made with forced labour since its Tariff Act was passed in 1930. A loophole that allowed exemptions was closed by the Obama administration in 2015 and a further law in this area – the Uyghur Forced Labor Prevention Act (UFLPA) – received significant bipartisan support when it was passed by the Biden administration in 2021.

Despite this, the Trump administration began investigating 60 countries under section 301 of the Trade Act 1974 earlier in 2026, leading to the imposition of tariffs. ‘The section 301 forced-labour trade remedy that the US has taken against 60 countries – all 60 were found guilty and that includes the UK and other major developed countries like Singapore, Korea, Canada, the entire European Union and Australia – I think is disingenuous,’ says Bhala, who is a University Distinguished Professor of Law at Kansas University School of Law. ‘The purpose of the action is not about forced labour, but rather reincarnating the tariffs that were ruled illegal by the Supreme Court. The investigation was brought in March 2026, [decades] after [the US legislation outlawing forced labour] was introduced, 11 years after it was tightened to eliminate the consumptive-demand exception, and five years into the UFLPA.’

In a statement about the investigations, US Trade Representative Ambassador Jamieson Greer said that ‘the United States has had a forced labor import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same.’ Meanwhile, those countries subject to the investigations and tariffs have reacted strongly, including by highlighting that they are taking adequate action on forced labour.

Companies looking to import goods into the US must continue to abide by the country’s legislation – such as the Trade Act 1974 and the UFLPA – while also bracing for the prospect of new rules being introduced at home in reaction to the Trump administration’s approach. For example, a UK government minister has said he expects some form of ‘forced labour ban’ to be passed within the next few years.

Mary Mikhaeel, an officer of the IBA Business Human Rights Committee, says the variety of approaches being taken across jurisdictions is leading to complexity for corporates. ‘There is some distinction between the UFLPA and EU regulations, and if you have two prominent forced-labour regulations with different scopes, how can companies build one system around that?’ she says. ‘And now it’s not two, now it’s maybe an undefined number so how do companies deal with this?’

Mikhaeel, a lawyer at US firm Covington & Burling, says there are companies that have thought about this in the context of broader human rights due diligence and ‘have really rooted their programmes in the UN guiding principles then have broadened that out to make it fit for purpose under the UFLPA.’ Meanwhile, she says that there are also companies that have focused their compliance efforts on the UFLPA, which is ‘very narrow’ in that it’s primarily focused on ‘one specific legal regime’ in that it targets goods made with forced labour in the Xinjiang region of China.

For Mikhaeel, supply chain transparency is a very important building block. ‘You have to understand your supply chain, do a related risk assessment and identify, categorise and rank risks,’ she says. ‘That could be different depending on the specific legal risks you’re looking at in any particular regime. It’s going to be something we’ll continue to watch,’ especially regarding how other forced labour bans develop around the world ‘because that might further inform how companies do this,’ she adds.

A ‘matter of routine’

John Balouziyeh, Co-Vice Chair of the IBA Human Rights Law Committee, says the fact that so many other countries are bringing in specific legislation of their own – and others are being forced to look at it – means companies increasingly have no choice but to act.

‘Modern slavery has become a major focus of governments worldwide, prompting countries to enact legislation requiring businesses to identify and report forced labour and human trafficking within their operations and supply chains,’ says Balouziyeh, a partner at Curtis Mallet-Prevost Colt & Mosle. ‘As the number of these regimes grows, addressing modern slavery risk is becoming a legal obligation rather than an optional best practice.’

He says that these initiatives have transformed modern slavery from a reputational concern into a matter of compliance and liability, pushing businesses to audit their supply chains and embed human rights due diligence into procurement and governance. ‘As a result, multinational corporations now incorporate modern slavery statements into their human rights policies as a matter of routine,’ explains Balouziyeh.

‘Historically, companies adopted modern slavery statements either for reputational reasons or because they had a nexus to a jurisdiction that required them,’ he adds. ‘Today, however, most multinational companies adopt modern slavery statements, or human rights policies that incorporate them, because of the growing number of jurisdictions that mandate such disclosures,’ Balouziyeh says.

And, though the legislative landscape may present challenges due to the differing approaches being used, Kirkpatrick says companies will need to find ways of ensuring their policies make them complaint on all fronts. ‘There are some companies that have voluntarily taken a proactive approach to [implementing due diligence within] their supply chains and they will be well ahead of the game because they will already have processes in place,’ she says. ‘Also, there may be businesses that are already caught by the US legislation on modern slavery reporting and customs restrictions and will have ways of doing things that they can hopefully map across to their other supply chains – into the EU, for example.’

Kirkpatrick says companies must carry out legal analysis regarding whether what they do to comply with one law will be fit for purpose for other legislation. If it isn’t, alignment of approaches is going to be one of the biggest problems a company is going to face, she says. ‘The legislation is all drafted slightly differently, especially as we see new legislation focusing on making mandatory the wider concept of human rights due diligence,’ she says. ‘Fundamentally businesses will want – as far as possible – the same or similar processes across their supply chains, regardless of which country they are operating in or selling into. Companies are only just grappling with that.’