(where companies describe how directors have considered the long- term consequences of their decisions, including their impacts on the community and the environment). • Only 15% of companies discussed modern slavery in the context of principal risks and uncertainties facing the business. • Only 18% of companies referred to performance indicators in the context of slavery and human trafficking. • Only one company included modern slavery KPIs in their section 172 statement. Surprisingly, our analysis revealed minimal reporting on modern slavery issues in the annual reports. Though the UK Corporate Governance Code does not explicitly address modern slavery, it requires companies to disclose risks and opportunities related to the success of the business. With the complexity of global supply chains and the potential economic and reputational damage caused by human rights abuses, modern slavery risks are – or certainly should be – a significant concern for businesses across all sectors, and thus in need of reporting beyond specific modern slavery statements. In fact, only 14% of the annual reports we studied provided a direct link to the corresponding modern slavery statement. This lack of cross-referencing not only reduces transparency on modern slavery issues but also undermines efforts to address the risks. Companies that consistently fail to crossreference their approach to modern slavery will likely struggle to receive recognition for their work in this area. Not all patterns in reporting practices were the same across all the companies in our sample. We found some crosssectional variation according to company size, sector, and business complexity. For instance, FTSE 100 companies tend to report more information on modern slavery than FTSE 250 and Small Caps, but the difference between the latter two groups is not significant. We also found that companies operating in sectors with higher modern slavery risk, such as those working in basic materials, utilities, and consumer staples, tend to provide more detailed disclosure than companies in low-risk sectors, such as tech and financial services. Finally, multi-sector companies tend to provide more transparent modern slavery disclosures than single-sector companies, reflecting their higher operational complexity and greater supply chain diversity. EFFECTIVE ACTIONS The research also highlights areas of concern in modern slavery reporting, including due diligence processes, risk assessment and management, and the effectiveness of actions taken by companies to address the issue. It is crucial for businesses to disclose modern slavery risks in their operations and supply chains, and measure the effectiveness of their actions to promote transparency and accountability. To ensure progress in the fight against modern slavery, companies must take a proactive stance in assessing and managing the risks associated with their workforce and supply chain. Boards must provide oversight and implement effective policies to drive real action in addressing modern slavery. Furthermore, companies should demonstrate the effectiveness of these policies through comprehensive and transparent reporting. Accurate and thorough modern slavery reporting is essential in the battle against human rights abuses. By promoting transparency and accountability, businesses can contribute significantly to the eradication of modern slavery and foster a more ethical and sustainable global economy. FIFTY FOUR DEGREES | 7 Dr Mahmoud Gad is a Lecturer in the Department of Accounting and Finance, and a member of the Pentland Centre for Sustainability in Business. The report Modern Slavery Reporting Practices in the UK: Evidence from Modern Slavery Statements and Annual Reports, was authored by Professor Steve Young and Dr Mahmoud Gad, of Lancaster University Management School, and commissioned by the Financial Reporting Council (FRC) and the UK Independent Anti-Slavery Commissioner (IASC). m.gad1@lancaster.ac.uk Click to listen to the podcast
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