The impact of the UK’s Modern Slavery Act (2015) on the disclosure of FTSE 100 companies
Creators: name: Mai, Nam
Publisher: name: Loughborough University
Year: 2023
Subjects: Business systems in context not elsewhere classified

description: The purpose of this study is to explore the impact of the UK’s Modern Slavery Act (MSA) (2015) on the disclosure of the FTSE100 companies. The UK Government has recently introduced MSA to combat the modern slavery that occurs within business networks. The Act mandates organisational reporting on numerous issues, including supply chain management, with companies exceeding a £36m turnover threshold being obliged to publish modern slavery statements. To date however there seems to be a lack of studies comprehensively exploring the extent to which companies comply with MSA’s disclosure requirements; the overall extent, quality and nature of modern slavery disclosures; as well as the wider impacts of the Act on reporting landscape. To fill in this lacuna, the study attempts to answer three research questions: to what extent do the FTSE100 companies comply with the social disclosure requirements of MSA (2015); what the current state of social reporting on modern slavery by the FTSE100 companies is; and how have the social accounts for modern slavery changed between the period from 2013 to 2019 in the FTSE100 companies. The study draws on the normativity theory framework proposed by Bebbington et al. (2012) and conducts a content analysis of modern slavery disclosures in the modern slavery statements, annual reports, and sustainability reports from 2013 to 2019. By utilising the framework by the Business &amp; Human Rights Resource Centre and Practical Guidance by the Home Office and the Global Reporting Initiative, the study assesses the extent, quality, and nature of modern slavery disclosures. The study contributes to the literature exploring the effectiveness and impacts of mandated regulation on CSR reporting theoretically, empirically and methodologically. Bebbington et al. (2012) attribute failures to improving CSR reporting practices following an introduction of regulation to a lack of normativity i.e., the degree to which practices become accepted and standardised. Extant research shows that attaining normativity may be subject to conditions related to the intrinsic nature of the norm. This study proposes contextual conditions for norm development in addition to intrinsic ones and examines whether conditions contribute towards adopting substantive change or act as an impediment and therefore lead to symbolic change. The study empirically contributes to the literature by finding a high level of compliance to the Act’s minimum disclosure requirements. An increase in the extent and quality of disclosures following the introduction of the Act is also noted, although quality remains low throughout the period as symbolic disclosure portraying the organisations favourably is predominantly in evidence. While the presence of intrinsic conditions has positively contributed to the extent and quality of some disclosure themes, the lack of controllability and communication with suppliers has undermined related disclosure provision and constitutes a major hurdle for improving accountability in supply chains. The constructed detailed index also provides a methodological tool that enables academics and potential users to discern the quality of reporting by organisations on supply chain activity and further allows for an identification of disclosure norms in relation to modern slavery. The findings have significant policy implications as they highlight the instrumental role the introduction of the Act has had on modern slavery reporting. Increasing trends in both disclosure extent and quality are noted throughout the examined period and for all types of disclosure, suggesting that the minimum disclosure approach has been effective towards its reporting objective and can be potentially transferred to other CSR reporting regulatory settings. Although disclosed actions may not necessarily have a positive impact on employees' working conditions, arguably, even the partially achieved transparency at this stage is still a step towards accountability.