Retail surgery: Retailers face new laws over slave labour

Consumers are becoming increasingly aware of how and where the products they buy are sourced or made, making ethical business practices and supply chains more important than ever.

A recent change in the law means firms operating in the UK with a turnover of £36m and above must report annually on the steps they have taken to ensure slavery and human trafficking are not taking place in their business or supply chain.

So what happens if a business fails to report? “The Government has no power to issue fines or other penalties to companies for non-compliance. However, it would be unwise for any business not to take it seriously” says Jonathan Davey, head of the commercial group at law firm Addleshaw Goddard.

“The chief risks of non-compliance are likely to be reputational and no business would want to be the subject of the first major scandal since the new law came into force.”

Businesses that do not have a clear view of all parts of their supply chain should address this as a priority.

“Turning a blind eye, however innocently, is no longer an option,” says Katie Kinloch, commercial lawyer at Addleshaw Goddard. “Even if you are confident your suppliers do not use slave labour, you need to be able to explain why.

Prepare to have this scrutinised by your competitors and customers.”

The full extent to which supply chain transparency will affect customer behaviour is not yet clear so this is a real opportunity for businesses that already have robust supplier due diligence processes to put themselves ahead of the market.