UK Home Office Updates Guidance on Transparency in Supply Chains

On 27 March 2025, the UK Home Office published updated statutory guidance (the Guidance) on how businesses should comply with section 54 of the Modern Slavery Act 2015 (the Act). Section 54 requires large businesses to publish annual statements detailing their efforts to prevent modern slavery within their operations and supply chains.

The updated guidance sets out the Government's expectations for these statements and practical advice, reflecting lessons from the field in the decade since the Act was introduced. The Guidance places particular emphasis on transparency, stakeholder engagement and seeking continuous improvement in how businesses respond to modern slavery.

The Guidance is significant because managing supply chain risk is an area for businesses to keep a close eye on. The EU has enacted ambitious supply chain due diligence legislation (which is currently subject to proposed simplification). In England, courts are showing a willingness to hear supply chain liability claims arising from allegations of harm overseas. They are also holding enforcement bodies to account when they fail to investigate the consequences of alleged human rights abuses within their sphere of responsibility. The UK parliament's Joint Committee on Human Rights is currently conducting an inquiry into the UK’s legal and voluntary frameworks in relation to forced labour in international supply chains – this could ultimately lead to changes to legislation.

Who must prepare a modern slavery statement?

By section 54 of the Act, a "commercial organisation" must prepare a slavery and human trafficking statement for each financial year of the organisation. A commercial organisation is: a body corporate or partnership; that carries on a business, or part of a business, in the UK; that supplies goods or services; and has an annual turnover of £36 million or more.

The question as to whether an organisation "carries on a business" in the UK will ultimately be fact specific and determined by the Courts. The Guidance does, however, note that only organisations with "a demonstrable business presence" will be caught by the Act. The existence of a UK subsidiary does not, in itself, imply that a parent is carrying on a business in the UK, provided that the subsidiary operates independently of its parent and other entities in the group. (The subsidiary independently, of course, may have to prepare a statement if it meets the turnover threshold).

Key updates in the Guidance

The updated Guidance is based on the six categories of information which are listed in section 54 of the Act and may be included in a modern slavery statement. A number of case studies have been added which provide helpful practical illustrations for global businesses. A key change is the categorisation of information for inclusion in statements as either Level 1 or Level 2. Level 2 statements are more detailed, and the level classification is intended to reflect its organisational maturity in relation to managing modern slavery. Other notable updates include:

1. Organisational structure and supply chains: businesses are encouraged to provide a detailed map of their organisational structures, how goods and services are sourced, produced and distributed, and countries in which supply chains operate. Level 2 statements include information on the organisation's specific suppliers and sub-contractors across long-term partnerships and spot purchases. It also includes an overview of the supply chain structure, which requires activities such as identifying worker recruitment channels, mapping source and transit countries and the use of labour brokers and other intermediaries.
2. Organisational policies: The Guidance underscores the importance of having a clear policy suite that demonstrates a commitment to preventing modern slavery. These policies should cover areas such as recruitment, responsible purchasing practices, freedom of movement and access to remedy for victims. Level 2 organisations are encouraged to demonstrate how they engage with stakeholders including buying teams, suppliers, subcontractors, and NGOs (for example through the use of case studies).
3. Assessing and managing risk: businesses are advised to conduct regular risk assessments to systematically identify and prioritise modern slavery risks within their operations and supply chains. The Guidance recommends that risk prioritisation include consideration by organisations of where they have the greatest leverage to influence supply chain partners. The Guidance recognises that organisations have extensive risk management frameworks and suggests that modern slavery be incorporated into existing compliance risk assessments. There is also an expectation that businesses consider risks associated with indirect suppliers. Given the large number of direct suppliers in supply chains, organisations should ensure that any assessment of indirect suppliers is proportionate to the overall risk profile of the business.
4. Due diligence: the Guidance emphasises the importance of conducting risk-based modern slavery due diligence to protect workers in supply chains. The Guidance references the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct recommending that organisations identify "actual and potential" risks and take steps to "cease, prevent and mitigate" them. The nature of specific mitigating steps will differ depending on the complexity of an organisation's supply chain but recommended steps include improving purchasing and recruitment practices, engaging with suppliers and workers, and participating in industry initiatives. The Guidance also advises organisations to consider implementing remediation measures (such as providing grievance and reporting mechanisms for victims) and notes that supplier audits can be a powerful tool.
5. Training: unsurprisingly, the Guidance identifies training as an essential way to raise awareness and equip staff with the necessary knowledge to identify and address modern slavery. The Guidance recommends tailored training for different roles within the organisation, including procurement staff, human resources and senior leadership.
6. Monitoring and evaluation: Businesses should set goals and key performance indicators (KPIs) to monitor progress in tackling modern slavery. The Guidance highlights the importance of using both quantitative and qualitative data to assess the effectiveness of anti-slavery measures.

Key takeaways and priority actions

Our key takeaways from the Guidance are as follows:

• Stakeholder engagement: the Guidance places significant emphasis on stakeholder engagement. Businesses are encouraged to work with both internal and external stakeholders such as workers, trade unions, NGOs and industry initiatives to develop and implement effective anti-slavery measures. Engaging through the right organisational channels with individuals who have lived experience of modern slavery can provide invaluable insights and improve the effectiveness of policies and programmes.
• Continuous improvement: Continuous improvement is a central theme of the guidance. Businesses are advised to build on their efforts year after year, demonstrating progress in their frameworks to counter modern slavery risk in supply chains. This includes highlighting areas of change and improvement, as well as setting new goals and KPIs to drive further progress.
• Legal and reputational consequences: failure to comply with the requirements in section 54 can potentially lead to significant legal and reputational consequences. The guidance notes that the Secretary of State may bring civil proceedings against non-compliant businesses, which could lead to an injunction and potentially an unlimited fine for contempt of court. Additionally, businesses that fail to address modern slavery risks may face reputational damage, loss of consumer trust, exclusion from commercial value chain relationships and government procurement tenders or trade agreements and increased insurance premiums.
• Businesses should not consider their Modern Slavery Act obligations in isolation: the Guidance places these obligations in their broader international context, noting the potential impact of the EU's supply chain due diligence legislation, and companies' commitments under the UN Guiding Principles on Business and Human Rights and best practice under the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. Major companies often voluntarily commit to comply with these frameworks, and the Guidance encourages this alignment.

Given the focus of governments and regulators on tackling transparency in supply chains, it would be prudent for all organisations (whether or not they are within the scope of section 54 of the Act) to review the Guidance.

Ashurst hosted a conference in February 2025 entitled "Supply chains under scrutiny: Where do businesses stand in 2025". You can read more here.