What Is Modern Slavery Reporting and Who Must Comply?

Your procurement team has just received a questionnaire from a key customer asking for evidence that no forced labor exists in your supply chain. Or your legal department has flagged that your company may need to publish a modern slavery statement this year. You know the term, but you're not sure exactly what the law requires, who it applies to, and what a credible compliance program looks like. Modern slavery reporting is the legal obligation for certain large businesses to disclose the steps they take to prevent modern slavery—including forced labor, child labor, and human trafficking—in their operations and supply chains. This article cuts through the confusion, explaining the specific thresholds, disclosure requirements, and practical steps procurement leaders must take to comply and protect their companies from legal and reputational risk.

What Is Modern Slavery Reporting?

Modern slavery reporting is a transparency requirement, not a certification of ethical perfection. It forces large companies to publicly disclose what they are doing to identify and mitigate modern slavery risks in their supply chains. The goal is to shame companies into action by exposing their efforts—or lack thereof—to investors, consumers, and NGOs. The first major law was the UK Modern Slavery Act 2015, which requires companies with an annual turnover of £36 million or more to publish an annual slavery and human trafficking statement. Since then, similar laws have emerged in Australia, California, and the EU, each with different thresholds and requirements.

For procurement leaders, this means your supplier relationships are now under a legal microscope. You must be able to demonstrate due diligence, not just assert that your supply chain is clean. The reporting obligation typically sits with the board, but the data and evidence must come from procurement, sourcing, and supply chain teams. If you can't show what you've done, you risk fines, reputational damage, and loss of contracts with customers who demand ethical sourcing.

• UK Modern Slavery Act 2015: Applies to companies with turnover ≥ £36 million (approx. $45 million) and a UK presence.
• Australia Modern Slavery Act 2018: Applies to entities with annual revenue ≥ AU$100 million (approx. $65 million).
• California Transparency in Supply Chains Act: Applies to retailers and manufacturers doing business in California with global annual revenue ≥ $100 million.
• EU Corporate Sustainability Due Diligence Directive (CSDDD): Phased in from 2027, applies to EU companies with >500 employees and non-EU companies with >€150 million EU turnover.
• Other jurisdictions: Similar laws are emerging in Canada, Japan, and other countries; always check local requirements.

Who Must Comply? Thresholds and Jurisdictions

Compliance is triggered by a combination of turnover, employee count, and geographic presence. The thresholds vary significantly by jurisdiction, and many multinationals find themselves caught by multiple laws. For example, a US-based company with £40 million in UK turnover and AU$120 million in Australian revenue must comply with both UK and Australian laws. The EU CSDDD is the most expansive, covering both EU and non-EU companies with substantial EU turnover, and it requires actual due diligence, not just reporting.

Smaller companies are not off the hook entirely. Even if you don't meet the threshold, your large customers will likely flow down their compliance requirements to you. For instance, a UK retailer subject to the Modern Slavery Act will require its suppliers to provide evidence of ethical sourcing. Therefore, procurement teams at large enterprises must cascade requirements to their supply base, regardless of supplier size.

Key Thresholds at a Glance

• UK: £36 million annual turnover, UK presence.
• Australia: AU$100 million annual revenue, Australian entity.
• California: $100 million global annual revenue, doing business in California.
• EU CSDDD: >500 employees and >€150 million global turnover for EU companies; >€150 million EU turnover for non-EU companies (phased from 2027).
• Canada: C$40 million annual revenue (proposed), Canadian presence.

What Must Be Disclosed?

The specific disclosure requirements differ by law, but most require a public statement covering several core areas. The UK Modern Slavery Act, for example, expects statements to cover: organizational structure, policies, due diligence processes, risk assessment, training, and key performance indicators. Australia's law goes further, requiring companies to report on modern slavery risks in their operations and supply chains, actions taken, and remediation efforts. The EU CSDDD will require companies to develop and implement due diligence plans, and to report on their effectiveness.

A common mistake is treating the statement as a marketing document. Regulators and NGOs scrutinize these statements for substance. Vague claims like "we are committed to ethical sourcing" without evidence can lead to accusations of "slavery washing." Procurement teams must provide concrete data: how many suppliers were audited, what risks were identified, what actions were taken, and how remediation was handled.

• Organizational structure and supply chain description.
• Policies related to modern slavery.
• Due diligence processes, including risk assessments and supplier audits.
• Risk assessment of parts of the business and supply chain.
• Training and capacity building for staff and suppliers.
• Key performance indicators (KPIs) to measure effectiveness.
• Remediation actions for identified cases.

How to Implement a Compliance Program

Building a modern slavery compliance program is not a one-off project; it's an ongoing process. Start by mapping your supply chain to identify high-risk categories and geographies. For example, electronics sourced from Southeast Asia or garments from South Asia may carry higher risks. Use tools like the Global Slavery Index and industry risk assessments to prioritize. Then, embed due diligence into your procurement process: require suppliers to complete self-assessment questionnaires, conduct third-party audits (e.g., via QIMA or SGS), and include modern slavery clauses in contracts.

Training is critical. Your category managers and buyers need to know how to spot red flags, such as recruitment fees charged to workers or excessive overtime. Allocate a budget: a basic supplier audit can cost $300–$500 per supplier, while a full-scale program with multiple audits and training can run into six figures annually. But the cost of non-compliance—fines, reputational damage, and lost business—is far higher. For instance, the UK government can impose unlimited fines for non-compliance, and companies have faced consumer boycotts over poor statements.

1. Map your supply chain: identify tier 1 suppliers and high-risk categories.
2. Assess risks: use industry tools and local knowledge to rank risks.
3. Engage suppliers: send self-assessment questionnaires and request evidence.
4. Audit high-risk suppliers: hire third-party auditors like QIMA or SGS.
5. Remediate: work with suppliers to fix issues; don't just drop them.
6. Report: publish a clear, specific statement with data and KPIs.

Common Mistakes to Avoid

Many companies stumble in their modern slavery reporting because they treat it as a tick-box exercise. Here are the most frequent pitfalls and how to avoid them.

• Vague statements: Avoid generic commitments; use specific data and examples.
• Ignoring lower tiers: Modern slavery risks often occur in raw material extraction or component manufacturing, not just tier 1.
• No supplier engagement: Simply sending questionnaires is not enough; verify responses and audit high-risk suppliers.
• Lack of board oversight: The statement must be approved at the board level; without buy-in, efforts fizzle.
• Not updating annually: Laws require annual statements; set a calendar reminder and review progress each year.
• Fear of transparency: Don't hide problems; disclosing challenges and remediation efforts builds credibility.

Conclusion and Next Steps

Modern slavery reporting is a legal obligation for large enterprises and a business imperative for all. The key takeaways: know your thresholds, map your supply chain, embed due diligence, and report transparently. Start by checking which laws apply to you—if you're near the threshold, assume you'll be caught soon. Next, assign ownership to a senior procurement leader and allocate budget for audits and training. Finally, engage your suppliers as partners, not adversaries. For a practical first step, download the UK Modern Slavery Act guidance and use its framework to assess your current practices. Compliance is not just about avoiding fines; it's about protecting your brand and the people in your supply chain.