'Slavery reporting requirement should only apply to firms with billion pound plus turnover'

Will Green is news editor of Supply Management
12 May 2015

Modern slavery reporting requirements should initially only apply to organisations with turnover of more than £1 billion, according to the Institute of Business Ethics.

In its response to a government consultation, which closed on 7 May, the IBE said firms of this size “have sufficient resources to conduct proper due diligence”.

The Modern Slavery Act has become law but the government asked for comments on the size of companies that should be subject to the requirement to report on efforts to eradicate slavery in the supply chain.

The IBE said companies with turnovers of more than £1 billion “will be the most able to make required amendments to their due diligence processes to incorporate modern slavery concerns, if they are not doing so already”. Such a threshold would capture around 724 companies.

Philippa Foster Back, director of the IBE, said: “Businesses of this size are capable of using their scale for good, and can set standards of good practice by requiring their suppliers to comply as well.

“However, this should not be a fixed threshold. A provision to make future amendments to the company size should be included.”

The IBE said disclosures by firms under the act should include “detailed information on the organisation’s structure and its tier one suppliers, including supplier mapping” and “the steps that have been taken to encourage tier one suppliers to ensure their own operations and supply chains are free of slavery”.

Reports should also include “identification of the main risk areas faced”, particularly operations in parts of the world where “workers have fewer protections through inadequate laws and regulations” or there is “weak or non-existent enforcement”.

Other risk factors include high levels of poverty among workers, widespread discrimination against certain groups, common use of migrant and casual labour and operations in conflict zones.

Foster Back said the government should not be “overly prescriptive” about the actions firms should take if slavery is discovered. “After assessing the relevant facts, the first decision a company should make is not necessarily to terminate the contract with the supplier,” she said.

“In some cases it will be appropriate for the organisation to help educate the supplier and to work with them to rectify the situation. In others, the most prudent approach would be to cut links with the supplier, terminating the contract where necessary.”

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