5 A Pentland Centre Research & Impact Digest, 2023 Protecting vulnerable individuals and groups from modern slavery presents a major challenge for firms. Dr Mahmoud Gad and Professor Steve Young are working to help address reporting and practice issues in the UK. More than 50 million people live in modern slavery, according to the International Labour Organization. In response, UK businesses with a turnover greater than £36 million are required by Section 54 of the UK Modern Slavery Act of 2015 to make an annual statement explaining their steps to address the risk of slavery in their operations and supply chains. Using a sample of 100 major UK companies, we analysed their modern slavery statements and annual reports. We focused specifically on six reporting areas recommended by the statutory guidance: policies, structures, due diligence, risk assessment, training, and effectiveness. Our evidence reveals that one in 10 firms fail to provide a modern slavery statement. Further, two-thirds of compliant companies’ statements lack a clear focus and narrative. Amongst the six key areas, reporting on risk assessment and key performance indicators (KPIs) to measure the effectiveness of the steps taken to minimise modern slavery risks are particularly poor. Only 54% of companies in our sample reported assessing forced labour or modern slavery risks before signing contracts, and only 15% disclosed that they work with suppliers to improve labour rights practices. In addition, only 39% reported one or more KPIs relating to modern slavery risks, along with the rationale for choosing the KPI(s). Moreover, only a quarter disclosed results against their KPIs, and just 12% confirmed they had made informed decisions based on them. We find similar results in disclosures in companies’ annual reports. Specifically, reporting on risk assessment and effectiveness in modern slavery is particularly poor. Overall, our evidence is indicative of poor reporting practice, which we find hard to reconcile with the scale of the underlying risks to business and the societal importance of addressing slavery and human trafficking. We find it both surprising and disappointing that a large proportion of companies still appear unwilling to be transparent around the problem and its implications for key stakeholders. To discuss their work on modern slavery further, contact Dr Mahmoud Gad, m.gad1@lancaster.ac.uk or Professor Steve Young, s.young@lancaster.ac.uk Better modern slavery reporting An outline of the issue Concerns about Modern Slavery (an umbrella term covering forced marriage and forced labour) become relevant for business because workers might be caught in ‘forced, bonded or child labour’ in the private sector. These forms of labour abuse mean workers are not able to withdraw their labour if working conditions are unsafe and, in some instances, they are not paid for the work they undertake. The most recent estimate of the number of people in forced labour is higher than five years ago, due in no small part to an increase in economic insecurity associated with the global pandemic and the impact of climate change. The current cost of living crisis is likely to make risks to workers greater still. A number of Pentland Centre members work on this issue, as well as on how companies report on their actions to address modern slavery (see the work on this page). The Sustainable Development Goals (SDGs) also provide a clear description of what ‘good’ looks like in this context: decent work as encapsulated within SDG 8. There are many resources to support business in understanding this issue. See www.icaew.com/technical/sustainability/modern-slavery and www.charteredaccountants.ie/News/modern-slaveryand-the-role-of-accountants for guidance for accountants.
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