Risk & Economy » Compliance » Modern slavery “still not a mainstream concern” for UK companies, watchdog says

Modern slavery “still not a mainstream concern” for UK companies, watchdog says

One in ten companies do not comply with section 54 of the UK Modern Slavery Act, according to research from the Financial Reporting Council

The Financial Reporting Council (FRC) has urged UK companies to assess current practices after identifying “significant shortcomings” in the quality of companies’ modern slavery reporting.

A recent report published by the FRC, analysed 100 major UK companies and found that one in ten did not provide a modern slavery statement despite it being a legal requirement for them to do so under section 54 of the UK Modern Slavery Act 2015 (MSA).

While there were “pockets of good disclosure”, many companies provided “superficial commentary” on modern slavery risk, the report said, with the majority of businesses’ modern slavery statements often including “boilerplate” language and “lacking a clear focus and narrative”.

The report suggested many companies opt for a “reactive, rather than proactive, approach” to addressing modern slavery risks, with only 37% of statements clearly identifying emerging issues and only 12% of companies providing a long-term plan to tackle the issue.

“High-quality reporting is vital to shining a light on how seriously businesses take social issues in their day-to-day operations,” said FRC CEO Sir Jon Thompson in a statement.

“It is therefore unacceptable that many companies did not produce a modern slavery statement and that modern slavery considerations appear to not be a mainstream concern for many boardrooms.”

“Patchy” reporting

More than half of the companies analysed in the report said they assess modern slavery risks in their own business. However, only 40% provided sufficient disclosure on slavery risks identified in their supply chain and 28% disclosed an action plan based on risks identified.

A review of the companies’ annual reports was “consistent with evidence of patchy reporting” on risk assessment and effectiveness of modern slavery statements, the report said.

“Companies have a responsibility to demonstrate the steps they are taking to minimise modern slavery risks and to show strong leadership in this area,” said Dame Sara Thornton, the UK’s independent Anti-Slavery Commissioner.

“Businesses carry significant material and reputational risk of modern slavery being found somewhere in their supply chains.”

An estimated 16 million modern slavery victims work in the private sector globally today, with poor governance creating the conditions that allow this exploitation to thrive, according to Thornton.

 

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