Corporate responses to modern slavery risks: an institutional theory perspective

Abstract

Purpose Drawing on statements made under the transparency in supply chains provision of the UK Modern Slavery Act, this paper aims to examine how firms are responding to modern slavery risks in their supply chains. Design/methodology/approach Using an institutional theory lens, a content analysis of modern slavery statements by financial times stock exchange (FTSE) firms is carried out. The analysis focusses on sources of modern slavery institutional pressure and changes that firms have made in their structures, policies and practices in response to modern slavery risks. Findings Three sources of institutional pressure are inferred from modern slavery statements: international human rights accords (coercive), multi-stakeholder initiatives (mimetic) and professional standards (normative). Changes made by firms in direct response to modern slavery include adopting new policies, strengthening contract terms, establishing working/steering groups and creating new key performance indicators. FTSE 100 firms have been more proactive than FTSE 250 firms in making these changes, as have firms in higher risk industries. Research limitations/implications The analysis covers FTSE firms only. Responses to modern slavery risks by non-FTSE firms deserve attention. Practical implications The UK Modern Slavery Act relies on non-government organisations and consumers to hold firms to account over modern slavery. Policymakers should be aware that while this strategy might work with high profile firms, it is less applicable to firms that operate below the public radar. Originality/value The paper shows that institutional theory has validity for explaining corporate responses to modern slavery risks.