Supply chain managers unprepared for reporting requirements under Modern Slavery Act

From 1st April, businesses with a turnover of more than £36m will be required to report annually on the steps they have taken to ensure modern slavery is not taking place in their business or supply chains.

With just over two months to go, however, the supply chain managers responsible appear unprepared for compliance with the Act’s requirements.

According to the Chartered Institute of Procurement & Supply (CIPS), almost one in five UK supply chain managers falling under the new rules are unaware of the requirements, with 38% unable to say when their first modern slavery report will be due. Indeed, 40% have not even read the government guidance.

As a result, more than a quarter (27%) admit that they do not fully understand what their business is required to do. Even if they did find modern slavery in their supply chain, more than half (52%) of UK supply managers admit they would not know what to do.

The new rules are part of the Modern Slavery Act passed in March 2015. The Act aims to prevent the use of forced labour in the UK economy by encouraging businesses to take a greater interest in the practices of their suppliers.

According to CIPS, just a third of supply chain managers claim to have mapped their suppliers to understand the potential risks and exposure to modern slavery, while only 41% have ensured all workers in the UK in their supply chain receive the minimum wage and apply robust immigration checks. Less than 28% of businesses in this group claim to have provided training to employees and local suppliers on modern slavery, despite a quarter of the procurement professionals surveyed citing lack of skills as the main obstacle in dealing with the issue.

Failure to comply with the Act currently holds no automatic sanction. 68% of supply chain managers surveyed said they agreed that companies who fail to comply with the new rules should face legal or financial penalties.

“The Modern Slavery reporting requirement means that businesses can no longer afford to ignore slavery issues, morally and commercially," says David Noble, CEO of CIPS. "If they are unable to convincingly outline the steps they are taking to eradicate human exploitation from their supply chain, they risk damaging both their reputation and their bottom line.

“The Act means it’s no longer acceptable for businesses to ignore what they can’t see. It’s true that the modern supply chain is becoming longer and more complicated, but it is possible to take definite steps to put a process in place to achieve the level of transparency and traceability to ensure that their procurement practices do not contribute to modern slavery at any stage in their supply chains.

“Our findings suggest that good intent is not yet translating into action. With little motivation and no sanctions to speak of, this requirement rests on goodwill and general awareness. Consumers, communities and businesses deserve better.”

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