February 17, 2026 The Modern Slavery Crisis Manufacturers Can’t Ignore

Modern slavery risks can hide deep in supplier networks. Manufacturers must act now to protect operations, compliance, and reputation.

By Allison Raley and Nikita Kulkarni

It always happens at the worst moment: an overseas supplier flagged for labor violations, a major customer demanding assurance, a container ship held at port pending verification of documentation that you didn’t even know you needed, and a sudden reputational risk of participating in forced labor or modern slavery.

For manufacturing executives, this scenario is no longer hypothetical. Global regulators are tightening the forced‑labor rules. At the center of this landscape sits the UK Modern Slavery Act (MSA). Starting as a transparency-focused disclosure rule a decade ago, the MSA has developed into a due‑diligence expectation with reputational, operational, and commercial consequences. Manufacturers with complex multi-tier supply chains are the ones who may face those consequences.

Consider a mid-sized electronics manufacturer, which produces circuit assemblies for global automotive and industrial customers. For years, the manufacturer has relied on a network of Tier 1 suppliers in Malaysia, Thailand, and Vietnam — each with its own subcontractors. The manufacturer believes its supplier code of conduct and periodic desktop audits are sufficient.

Then the warning signs surface.

First, a major UK customer requests the manufacturer’s updated modern slavery statement. In response, the manufacturer provides a short, generic document drafted years prior. The customer responds with follow‑up questions:

• Which subcontractors handle soldering and plating?
• Who supplies the raw copper foils?
• Where are labor brokers used?

The manufacturer knows the answers but doesn’t have them on hand. Soon after, it’s a domino effect.

An independent NGO links a Tier 2 metal-processing facility that the manufacturer didn’t even know was in its supply chain to dangerous working conditions and possible debt‑bondage practices. A European distributor raises concerns about future eligibility under the EU’s upcoming forced‑labor ban. U.S. shipments face longer customs holds because the manufacturer cannot provide sufficient traceability for upstream metals. Now, the manufacturer has a legal, commercial, and reputational problem.

None of this stems from intentional misconduct. It results from visibility gaps and the minimization of early red flags. This storm is what MSA’s updated guidance attempts to prevent.

The Legal Framework: What The Modern Slavery Act Now Expects

The Modern Slavery Act was first passed in 2015. The Act consolidated prior laws on slavery and human trafficking, introduced new prevention and risk orders to restrict suspected perpetrators, established an Anti-Slavery Commissioner, created new statutory protections for victims, and strengthened asset-confiscation powers to redirect profits from forced labor or trafficking toward victim compensation. Importantly, Section 54 of the Act required large commercial organizations operating in the UK to publish an annual modern slavery statement that described the steps taken to prevent modern slavery in their business and supply chains.

In March 2025, updated guidance significantly increased expectations for these annual statements, emphasizing detailed reporting, meaningful action, and transparency about supply‑chain risks. The guidance doesn’t change the law, but it does spell out the recommended reporting areas and details to include in much more practical, concrete terms.

Companies should structure their statements around six recommended reporting areas:

1. Organizational structure and supply chains
2. Policies
3. Due diligence
4. Risk assessment
5. Monitoring and evaluation
6. training

Companies should include the following details in reports:

• What a policy states.
• How the risks were identified.
• How suppliers were checked.
• How employees were trained.
• What results were achieved.

The best statement will use specific data, case examples, transparency about any gaps in visibility, and KPIs to show that the company is actively finding issues, dealing with them, and improving over time.

Forced-Labor Regulations Around the World

The MSA is not an outlier. In the United States, the Transparency in Supply Chains Act (Cal. Civ. Code § 1714.43) requires retailers and manufacturers with more than $100 million in annual worldwide gross receipts doing business in California to publicly disclose on their websites the extent of their efforts to verify, audit, certify, enforce accountability, and train around slavery and human trafficking risks in their direct supply chains. In 2024, Canada passed the Fighting Against Forced Labor and Child Labor in Supply Chains Act, requiring certain entities to file annual public reports on the steps they take to prevent and reduce forced and child labor in their operations and supply chains, with accompanying guidance that explains scope and report structure. From December 2027, Forced Labor Regulation in the EU (Regulation (EU) 2024/3015) will prohibit the sale of goods linked to forced labor, shifting from disclosure to outright market exclusion. Transparency and due diligence across the supply chain are becoming a commercial requirement across jurisdictions.

Red Flags Manufacturers Cannot Ignore

Certain supply‑chain indicators should not be ignored, including:

• Sudden subcontracting outside approved production lines or geographies.
• Inconsistent production records or unexplained gaps in material traceability.
• Recruitment through labor brokers with unclear fee structures.
• Unusually low pricing that cannot be explained by inputs or scale.
• Worker movement restrictions, such as monitored dormitories or confiscated identification.
• Resistance to audits, site visits, worker interviews, or document requests.
• Frequent workforce turnover inconsistent with normal manufacturing cycles.
• Opaque tier‑2 or tier‑3 sourcing, especially for raw materials like metals, textiles, or electronics components.

Insufficient due diligence isn’t an excuse. A forced‑labor risk may occur deep within any multilayered supply chain. A manufacturer’s internal system of accountability should be ready to address it.

A Practical Compliance Framework

A manufacturer should:

• Map its supply chain beyond the first tier. It should document every supplier that touches production, including suppliers on Tier 2 and Tier 3. UK guidance encourages manufacturers to identify and acknowledge gaps and then define a timeline to close those gaps.
• Collect and maintain traceable records by requiring production logs, worker rosters, shift records, and material‑origin documentation, and implementing systems that link raw‑material inputs to finished goods.
• Strengthen supplier contracts by adding enforceable clauses prohibiting forced labor, mandating corrective action, and requiring disclosure of subcontractors and labor intermediaries.
• Conduct meaningful due diligence through audits, onsite assessments, and worker interviews, instead of just questionnaires. It should focus on high-risk geographies and commodities, as flagged globally by the International Labor Organization and regulators.
• Train procurement quality teams, by teaching frontline decision‑makers how to identify manufacturing‑specific red flags. It should ensure that the training aligns with the updated six areas of MSA guidance.
• Document findings and act quickly to maintain evidence of investigations, remediation steps, and supplier engagement. It should also report issues transparently in annual statements; regulators now expect honesty over silence.
• Prepare a modern, accurate MSA statement that uses concrete examples, is transparent about challenges, and moves toward Level 2 disclosures as recommended for maturing organizations.

Forced‑labor compliance is as critical as product quality or workplace safety. Global regimes, the UK, the U.S., Canada, and the EU, reinforce the same direction. Manufacturers should prioritize visibility, take real action, and document progress. Companies that treat the MSA as a box‑checking exercise risk shipment delays, lost customers, regulatory holds, and brand damage. These companies may find themselves defined not by the products they make, but by the risks they failed to detect.

About the Authors:

Allison Raley is a partner at Arnall Golden Gregory LLP and the leader of the firm’s Global Trade & Sanctions team. She advises domestic and international companies engaged in cross-border commerce, providing strategic guidance on import and export regulations, trade sanctions, and service analysis to ensure seamless global operations.

Nikita Kulkarni is an attorney in Arnall Golden Gregory LLP’s Litigation & Dispute Resolution practice. She advises corporate and institutional companies on complex business disputes and government investigations.

Read more:

Modern Slavery Compliance in Cross-Border Transactions: Statutory Risks and Due Diligence for Global Supply Chains | Arnall Golden Gregory LLP, December 2025

Tariffs, Sanctions, and Trade Compliance: Insights from AGG’s Global Trade & Sanctions Team | Arnall Golden Gregory LLP, September 2025

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