April 26, 2022 Eradicating modern slavery
If you thought that modern slavery was solely the preserve of criminal gangs, think again. According to the UK’s Independent Anti-Slavery Commissioner, Dame Sara Thornton, “irresponsible commercial practices and poor governance can also create the conditions that allow exploitation to thrive.”
Dame Sara Thornton’s comments echoed the findings of new research into the way in which companies monitor and report on modern slavery practices. That report reveals a significant gulf between the worst and best performing companies.
The Modern Slavery Act 2015 requires companies with turnover in excess of £36million to report annually on the steps which they are taking to ensure that modern slavery is not taking place in any part of their business or supply chain. That report should cover six key areas, namely; policies, structures, due diligence, risk assessment, training, and effectiveness.
The recent study carried out on behalf of the Financial Reporting Council (FRC) looked at a sample of one hundred companies. Of those surveyed, 12% failed to provide the required statement in any form. Of the rest, only one third were considered to be clear and easy to read with the rest being seen as fragmented or unduly complicated.
Equally concerning, the report found that the majority of modern slavery statements were backward looking with just 28% reporting on any action plan which might be in place to mitigate identified risks. This ties in with another finding in that only 25% of companies reported on the use of KPIs to measure and minimise modern slavery risks with a scant 12% confirming they had made decisions based on those KPIs.
The report acknowledges that the Corporate Governance Code does not specifically require reporting on modern slavery risks. However, the lack of comment leads the report’s authors to the uncomfortable conclusion that “many companies appear not to view human rights issues in their workforce and supply chain as a principal source of risk for their business.”
Whilst for some, this apparent downgrading of risk may be due to strong and well managed supply chains, for others it seems as though an area of real concern that adversely affects more than forty million people globally is not being given sufficient weight or consideration. As Dame Sara Thornton comments: “Companies have a responsibility to demonstrate the steps they are taking to minimise modern slavery risks and to show strong leadership in this area.”