Modern slavery is a global problem. Millions of people suffer because of it, and it generates billions of dollars for criminal networks worldwide. It also poses a serious risk for businesses that may have modern slavery in their operations or supply chains, damaging their reputation and profitability. The UK’s Modern Slavery Act of 2015 marked a significant step in addressing this issue. It mandates companies to publish annual modern slavery and human trafficking statements signed off at the board level. However, recent research by Professor Steve Young and myself, working with the Financial Reporting Council and the UK Independent Anti-Slavery Commissioner reveals varying degrees of transparency in reporting practices among companies listed on the London Stock Exchange (LSE). We analysed the quality of reporting practices for a sample of 100 LSE-listed companies, across the FTSE 100, FTSE 250, and Small Caps. Our analysis covered reporting in the latest available modern slavery statements and annual reports as of June 2021. Our assessment framework is based on a disclosure template developed by the Business and Human Rights Resources Centre to evaluate FTSE 100 companies’ modern slavery statements published in 2018. The template covers six areas of reporting recommended by the Modern Slavery Act: organisation structure, policies, due diligence, risk assessment, training, and effectiveness. We added additional dimensions of reporting practice, such as readability, accessibility, cross-referencing, etc. We measured the quality of reporting at three levels: no/immaterial disclosure, some/moderate disclosure, and comprehensive/full disclosure. REPORTING ISSUES Some of our main findings in the modern slavery statements are: • Around one in ten companies did not provide a modern slavery statement at all. • Only one third of modern slavery statements were clear and easy to read. • Less than half of companies provided a clear and comprehensive discussion of modern slavery concerns in their organisational structure, operating and supply chains. • Only a quarter of companies disclosed results against their key performance indicators (KPIs), and just 12% confirmed they have made informed decisions based on those KPIs. • Only a third of statements clearly identified emerging issues or a long- term strategy. • Most companies provided a link to their modern slavery statement on the Home Office’s online registry, but many failed to provide a direct link to the document or to link to their most recent statement. For annual reports, some of our main findings are: • Reporting on modern slavery issues was surprisingly minimal. • Only 13% of companies referred directly to forced labour and slavery issues in their section 172 statement 24 |
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