Businesses are relying too heavily on policy over practice in tackling modern slavery within their supply chains, new analysis has found.
Ten years after the UK’s landmark Modern Slavery Act came into force, a new benchmark survey from investment manager CCLA raised questions about the due diligence process companies are undertaking to weed out modern slavery.
The inaugural ‘Global modern slavery benchmark pilot’ assessed the efforts of the 100 largest globally listed companies by market capitalisation that provide goods or services within the UK and are therefore subject to the UK Modern Slavery Act. It found a significant gap exists between the numbers of companies disclosing policies on responsible procurement (48) versus those that disclose how this works in practice (9).
CCLA said the fact only 23 companies reported finding a case of modern slavery raises questions about the effectiveness of their due diligence processes. It also expressed concern that only 13 companies reported having provided redress to victims and just one disclosed that survivors had been satisfied with the redress provided to them.
Sectors like financial services and energy, perceived to have a lower risk of forced labour, were lower scoring than historically higher-risk sectors like consumer staples and materials.
The International Labour Organisation (ILO) estimates that globally there are around 28 million people in a situation of forced labour, of whom 3.3 million are children, and that forced labour in the private sector has generated US$236bn (£173bn) in illegal profits per year since 2014.
Forced labour, as defined by the ILO, is “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily”. It refers to situations in which people are coerced to work either through the use of violence or intimidation, or by more indirect means such as manipulated debt, retention of identity papers or threats of denunciation to the immigration authorities.
The EU recently passed a law prohibiting products made with forced labour from being placed on the EU market or exported from the EU. The new rules will become fully effective three years after the law was passed (on December 12th 2027) and will apply to all industry sectors and all products, including food, regardless of their origin.
The rules are considered stronger than the UK Modern Slavery Act, which has been criticised for its weak supply chain oversight. “The UK Modern Slavery Act was world-leading in 2015, but that was a decade ago now,” said Dame Sara Thornton, director, modern slavery at CCLA. “As peer nations continue their progress to toughen legislation to combat modern slavery, notably the EU and the US, we are now falling behind, leaving the UK exposed to being seen as a dumping ground for goods tainted with forced labour.”
Thornton said as a first step CCLA would like to see the Act require companies to disclose modern slavery when they find it. “This would give investors and others good indications of how hard companies are looking for it and would focus accountability for providing redress to victims.”
