Britain’s corporate governance regulator said this week that many companies are failing to spell out clearly whether they comply with anti-slavery laws, partly in fear of triggering a public backlash, according to Reuters.
Increasingly, stakeholders of global corporations are looking at human rights indicators in their sustainability reports in which companies define credentials on the ESG (environment, social, and governance) approach. Nonetheless, the Financial Reporting Council (FRC) published a report, Modern Slavery Reporting Practices in the U.K., in which it shows that out of 100 annual reports submitted, 1 in 10 do not provide a statement on modern slavery even though it is a legal requirement.
In the case of U.K. companies, those with a turnover of £36 million ($46 million) or more are required to publish annually what they are doing to address the potential risk of slavery in their operations and supply chains. The FRC states in the document, “The prospect of reputational repercussions may, in part, explain the lack of disclosure on the performance of a company’s modern slavery approach.”
The business of modern slavery in the world
Dame Sara Thornton, the current U.K. Independent Anti-Slavery Commissioner, made the following statement in the foreword to the report:
“Modern slavery is a heinous crime that generates an estimated US$150 billion annually. According to the ILO, there are more than 40 million people in slavery globally, of whom 25 million are in forced labor. One in four victims of modern slavery are children.”
She also points out that there are 16 million victims of modern slavery working in the private sector, so organizations, therefore, have a very latent risk of encountering modern slavery in some parts of their supply chains.
Labor exploitation is present in most industries around the world: agriculture, fishing, construction, mining, textiles, technology, and hospitality. Dame SaraThornton adds, “irresponsible commercial practices and poor governance can also create the conditions that allow exploitation to thrive.”
Findings and omissions in Sustainability Reports
Listed below are a number of very relevant indicators and findings the FRC report provides to draw attention to and urge U.K. companies to report transparently, clearly, and in a timely manner regarding their actions to address modern slavery.
- 12% of companies failed to provide a modern slavery statement.
- When companies complied, only ⅓ of the statements were considered clear and easy to read.
- Only 14% of annual reports provided a direct link to the corresponding modern slavery statement.
- Overall, modern slavery statements remain largely descriptive and superficial, with little attempt to critique performance and highlight areas of concern.
- Many of the companies do not seem to consider human rights issues in their workforce and supply chain as a major source of risk to their business; modern slavery considerations are not yet a major concern for many boardrooms.
According to the FRC, modern slavery is moving up the political and legislative agenda within the U.K., while shareholder and investor initiatives on the issue are increasing. Take action this International Labor Day by adding your voice to amplify the call on fashion companies to put an end to #ForcedLabourFashion.
Chip in and help end modern slavery once and for all.