Overview
On March 24, 2025, the UK Home Office issued the first substantive refresh of its Transparency in Supply Chains Statutory Guidance under Section 54 of the Modern Slavery Act 2015 (“MSA”) since it was originally issued a decade ago (“Guidance”). The Guidance sets out how businesses should comply with the spirit as well as the letter of the law requiring preparation and publication of an annual slavery and human trafficking statement (“Annual Transparency Statement”), as well as explaining in greater depth what the spirit of the law means. The Guidance also provides additional practical tips for businesses on how to fulfil their obligations under this annual reporting requirement. While the Guidance does not alter the requirements of Section 54 of the MSA, it encourages businesses with increased vigor to be proactive in identifying and preventing modern slavery in their businesses and supply chains. Companies that are required to provide Annual Transparency Statements under the MSA should review the Guidance and promptly confirm that their current approach remains compliant with these newly articulated expectations.
Annual Reporting Requirement
Section 54 of the MSA requires commercial organizations with an annual turnover of £36 million or more that supply goods or services and conduct business in the UK to publish an Annual Transparency Statement setting out the steps the organization has taken during the financial year to ensure that slavery and human trafficking is not taking place in any of its supply chains or any part of its own business, or stating that the organization has taken no such steps. While Section 54(5) describes six areas covered organizations may wish to include information about in their Annual Transparency Statement, the MSA is not prescriptive about how individual organizations should meet their reporting obligations. However, an introduction to the Guidance by the Minister for Safeguarding and Violence Against Women and Girls clearly describes the purpose of the Guidance as “explain[ing] how businesses should comply with the letter and spirit of [S]ection 54 of the [MSA].”
The Guidance – Main Changes
A commitment to continuous improvement in responding to modern slavery and human trafficking remains a cornerstone of the Guidance, as it was in previous iterations. However, the Guidance further builds on this theme by introducing the concept of Level 1 and Level 2 disclosures, with practical examples of each type of disclosure provided throughout the Guidance. Organizations making their first Annual Transparency Statement are encourage to make Level 1 disclosures. As an organization becomes more familiar with the reporting requirements, however, the Guidance encourages those organizations to move toward including Level 2 disclosures that are more granular and sophisticated in nature, and ultimately making disclosures that go beyond Level 2.
The Guidance now includes a discussion of how an organization’s efforts to address modern slavery and human trafficking within their supply chains and businesses can be integrated with existing international frameworks such as the UN Guiding Principles on Business and Human Rights (“UNGPs”) and The Organisation for Economic Co-operation and Development’s Due Diligence Guidance. Additional, practical advice is also provided in the Guidance regarding how organizations should work with internal and external stakeholders (e.g., (in)direct suppliers, non-governmental organizations, trade unions, etc.) across all aspects of their approach to tackling modern slavery and human trafficking.
The Guidance provides a clearer definition of what is meant by “supply chain” in the context of compliance with the Annual Transparency Statement requirements. Specifically the term includes the primary value chain (i.e., the goods sold or services delivered by an organization), as well as the secondary value chain (i.e., activities that support the primary value chain such as human resource management, catering, and cleaning services) and can also include the labor supply chain (i.e., how and from where workers have been recruited to work in the primary and secondary value chains).
The Guidance has significantly increased in length, a change that is due in significant part to the provision of practical guidance about information that organizations may wish to include in their Annual Transparency Statements, and the key actions they should consider taking to support such disclosures, to address the each of the categories of information identified in Section 54 of the MSA as being suitable for inclusion in an Annual Transparency Statement; namely, information about: (i) organizational structure and the nature of the organization’s business and its supply chains; (ii) organizational policies; (iii) assessing and managing risk; (iv) due diligence in relation to modern slavery (including the organization’s approach to remediation); (v) training; and (vi) monitoring and evaluation.
Key Takeaways
The House of Lords published a report, The Modern Slavery Act 2015: becoming world-leading again, on October 16, 2024 that, among other things, recommended that the UK government “should increase awareness amongst all companies about supply chains and publish standardised and accessible guidance for compliance with [S]ection 54.” The revamped Guidance represents an effort by the Home Office to respond to this recommendation. While compliance with the Guidance remains advisory rather than mandatory, companies that are required to provide Annual Transparency Statements under the MSA should promptly take steps to determine whether their approach to reporting is aligned with the new expectations outlined in the Guidance and make any necessary adjustments to their process for preparing Annual Transparency Statements.
For more guidance on how the Guidance may impact your business, we encourage you contact the author of this post, Alexandra Melia in Steptoe’s London office.
