SMEs are oblivious to the impact the Modern Slavery Act, which comes into force this week, will have on them.
Some 61 per cent of small and medium-sized firms surveyed by the Chartered Institute of Procurement and Supply (CIPS) were completely unaware of the new legislation, ahead of its introduction on Friday (1 April).
Impact to cascade down
The Act states that UK businesses with a turnover of more than £36 million must make an annual statement outlining what steps they have taken to stamp out child labour and slavery in their supply chains.
While it doesn’t directly target small and medium-sized businesses, the law is designed to have a “cascading effect” down to smaller firms in the supply chain, placing responsibility on them to also ensure their business practises are slavery free.
But, CIPS warned, “UK SMEs are shockingly unaware of this knock-on impact on them, and are unprepared to deal with forced and slave labour issues”.
SMEs ‘likely’ to be affected
David Noble, CEO of CIPS, said: “Ultimately, modern slavery is not an issue confined to the supply chains of large multinational corporations. On the contrary, SMEs can often have long and complicated supply chains themselves.
“They are just as likely to find enslavement in their operations, right here in the UK, as recent cases show.”
But 67 per cent of SMEs polled admitted to having never taken any steps to address forced labour, and three quarters said they wouldn’t know what to do if they came across modern slavery in their supply chains.
While 80 per cent of companies with a turnover lower than £36 million had discovered enslavement in their supply chain, CIPS argued this was a case of “ignorance over prudence”.