Retailers have welcomed a new measure announced by prime minister David Cameron to prevent child or slave labour, but warned of practical problems and “added bureaucracy”.
From October more than 12,000 UK firms with a turnover over £36m will be required to publish an annual statement setting out what steps they are taking to ensure slave labour is not being used in their supply chain, under the Modern Slavery Act.
The £36m threshold is at the lower end of the scale considered during a consultation that ended in May, meaning it will impact the largest possible number of companies.
One managing director of a UK high street multiple played down the challenges of meeting these requirements, arguing that stringent supply chain checks are routine. “A business of our size does background checks as a matter of course, so additional costs would be minimal. Given the terrible nature of slavery, anything that can help to deter it has got to be good.”
One boss of a footwear chain said: “[The new reporting requirement] should make companies more aware of the issue when they are sourcing goods and ensure that they do more due diligence as to where products are being made. This is especially true at the discount end of the market where the pressure to get lower prices can cause companies to turn a blind eye to where they are being sourced.”
However, he added that there may be practical problems with the new legislation: “We do a detailed audit of all our suppliers, but to investigate all of the component factories as well would be a major undertaking and very difficult to execute.
“We rely on the integrity of our suppliers to ensure they only use suppliers who meet acceptable ethical standards. The government needs to avoid creating just another layer of bureaucracy and in the process lose sight of what is trying to be achieved.”
Equalities lawyer Schona Jolly of London-based firm Cloisters said the new requirement puts added pressure on businesses to monitor their supply chain policies. “Most retailers already have a code of conduct for supply chains, particularly as it is a known problem in fashion; they now have to enforce it.
“The size of the burden depends on how much they are already doing. While aspirational, the measure is an important step as its starts the conversation in large businesses and the mentality will trickle down to medium and smaller firms.”
There will be no repercussions for companies that admit they have done nothing to check their supply chain. However, Cameron is hoping they will be shamed into action by having to reveal this publicly.
He said: “This measure is one of the first of its kind in the world and will be a huge step forward, introducing greater accountability on business for the condition of their supply chains.”