Protect your business or face financial disaster warning on slavery
Food companies could face disaster if they fail to prevent slavery from occurring in their supply chain, one of the world’s biggest insurance brokerage and risk management companies has warned.
The issue of slavery has again hit the headlines after the world’s largest food maker Nestle were reported to be facing claims of child slavery relating to cocoa farms in the Ivory Coast.
The company also admitted to problems in relation to slavery in the fishing industry in Thailand last year.
Now, specialists from Arthur J. Gallagher – one of the world’s biggest insurance brokerage and risk management companies – have warned that many UK firms which use overseas suppliers could be facing huge financial and legal risk and suffer inevitable reputational damage.
Garry Moseley, who leads the Gallagher Major Risk Practice food and beverage industry team, said:
“The thing for UK companies to realise is that if the world’s biggest food maker can run into problems and face these type of allegations it can happen to anyone. Any company with a global supply chain must develop a credible and accurate slavery and human trafficking statement each year. Failure to do so may see the Government seek an injunction in the High Court requiring them to comply. Failure to comply with the injunction is punishable by an unlimited fine.
The financial impact from a fine is one thing but the financial consequences of reputational damage could be immense. If problems do arise with consumers and clients seeking out business with higher ethical standards, share price and earnings could be affected.
Insurance is not a panacea but the market has developed a number of specific reputational damage-related solutions to provide for things such as the costs of consultancy services and media management support along with for example extensions of cover for adverse publicity provided with Product Recall and Contamination insurance. Solutions like that could be the difference between facing ruin and being able to effectively manage a crisis.”
Passed last October, the new Modern Slavery Act 2015 applies to all business with a turnover of £36m and above requires them toproduce a slavery and human trafficking statement for eachfinancial year.
This should set out information such as supply chain information, slavery prevention policies, due diligence details, potential risks and what is done to mitigate them as well as training information.