Boards must do more to eradicate modern slavery

Published on Wed, 27/04/2022 - 12:56

“Significant shortcomings” remain in the quality of companies reporting on modern slavery, according to new research by Lancaster University and published by the Financial Reporting Council (FRC).

The report was published in conjunction with the Independent Anti-Slavery Commissioner and looked at a sample of 100 major companies’ modern slavery statements and their strategic and governance reports.

Despite it being a legal requirement, it found one in ten companies to do not publish a modern slavery statement. The research found of those that did publish, only one in three were considered “clear and easy to read”.

“With an estimated 16 million modern slavery victims working in the private sector, businesses carry significant material and reputational risk of modern slavery being found somewhere in their supply chains,” Dame Sara Thornton , the UK's Independent Anti-Slavery Commissioner Dame Sara Thornton said.

“Modern slavery is perpetrated by organised criminals and cynical opportunists, however irresponsible commercial practices and poor governance can also create the conditions that allow exploitation to thrive. Companies have a responsibility to demonstrate the steps they are taking to minimise modern slavery risks and to show strong leadership in this area.”

The research found modern slavery statements were often “fragmented, lacked a clear focus and narrative, and often contained boilerplate language”.

The review suggests that too many companies appear not to view human rights issues in their workforce and supply chain as a principal source of risk for their business, and that modern slavery considerations are still not a mainstream concern for many boardrooms.

Professor Steve Young from Lancaster University Management School led the research, alongside Dr Mahmoud Gad.

“Slavery, trafficking and human rights are critical issues for business and society,” Prof Young said. “Our review of corporate reporting practice suggests that these risks may be passing under the radar in some companies, while others seem to be adopting a compliance-oriented approach with processes and disclosures satisfying regulatory requirements rather than seeking to understand and address fundamental concerns.

“At the other end of the spectrum, however, we see a number of companies that are leading the way in terms of their thinking and transparency. We hope our evidence helps to promote best practice and illustrate the stakeholder benefits that are possible when boards prioritise the issue.”