Different reporting requirements should apply under the Modern Slavery Act depending on the size of firms, according to an associate professor at the University of Oxford.
Dr Steve New, a lecturer in operations management at the Saïd Business School, said turnover thresholds should be set at above £10.2 million (level one), greater than £36 million (level two) and above £1 billion (level three), to reflect firms’ ability to impact their supply chains. The figures also align with proposed EU accounting rules.
Under the Act firms above a certain size will be required to report on efforts to identify and tackle modern slavery in their supply chains, though the turnover threshold has yet to be set.
In a submission to the government’s consultation on the implementation of the Act, New said level one firms should be required only to report any known instances of modern slavery in their supply chains to the appropriate authorities.
At level two, which New said would encompass around 16,000 organisations, companies should provide a statement of risks associated with modern slavery and an explanation of how these are managed, assuming there are any.
For level three firms, of which there would be around 725, the statement should include a brief description of an organisation’s business model and supply chain relationships, policies relating to modern slavery, details of training and relevant KPIs.
New, who is also a fellow and tutor in management studies at Oxford's Hertford College, said it was “imperative that key differences of scale and resources are recognised”.
“Very large organisations often have both commercial power/influence over their suppliers and the internal operating resources to handle sophisticated business processes; for many of these firms it is correct and appropriate that society sets high expectations in relation to supply chain ethics,” he said.
“However, the vast majority of firms in the economy are not in this position. Imposing unrealistic demands on firms with little commercial power and highly constrained resources is not only foolish economically, in terms of deadweight regulatory cost, but also potentially counter-productive in terms of tackling modern slavery.”
New said this was because of the risk that firms are forced to generate “airy statements of vague intent”, which if this became the norm, would “let larger organisations off the hook”.
The government is still analysing responses to the consultation, which closed on 7 May.