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Modern Slavery Act failing

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FTSE 100, UK's Modern Slavery Act, The Business and Human Rights Resource Centrereport, Over 40 million people are victims of modern slavery and human trafficking.

In 2015, the UK government introduced the Modern Slavery Act (MSA), which requires certain companies to publish an annual statement detailing what steps they have taken to tackle modern slavery, both in their operations and in their supply chains.

The Business and Human Rights Resource Centre has tracked companies’ reporting every year since, and its findings show that the Modern Slavery Act has failed to deliver the transformational change many hoped for.

Three years on, most companies still publish generic statements committing to fight modern slavery, without explaining how.

Sadly, only a handful of leading companies have demonstrated a genuine effort in their reporting to identify vulnerable workers and mitigate modern slavery risks.

This report, ‘FTSE 100 and the UK Modern Slavery Act: From Disclosure to Action’, is the third annual assessment of transparency statements by the FTSE 100 under the Modern Slavery Act.

As in previous assessments, action reported by companies varied greatly, with only a small cluster of leaders standing out, such as Marks & Spencer, Diageo, Morrisons, and Sainsbury’s.

In view of this inaction, the Centre recommends that the UK government should:

Institute mandatory requirements for companies to conduct human rights due diligence as set out in the Centre’s report on mandatory due diligence;

Monitor compliance with the Modern Slavery Act eg establish a central registry of statements, similar to the Gender Pay Gap register and publish a list of the companies required to report;

Enforce the Modern Slavery Act by imposing impactful financial penalties where i) Companies that fail to publish a modern slavery statement and ii) Companies report they have taken no steps; and

Engage closely with key stakeholders on how to strengthen the Modern Slavery Act and incorporate recommendations from the Home Office review.

Companies should:

Carry out human rights due diligence that includes direct engagement with key stakeholders with knowledge of the local operating context who can help to identify risks;

Disclose the modern slavery risks that are identified in their operations and supply chains; and

Collaborate with their peers to investigate modern slavery risks in common supply chains and develop initiatives that can bring about industry-wide change.

And investors should:

Assess modern slavery statements and understand how they fit into wider human rights strategy of the company;

Signal to investee companies that comprehensive human rights risk due diligence and management of human rights impacts are evidence of strong governance and management; and

Use this analysis and other benchmarks to learn what companies can and should be doing to combat modern slavery, and use these resources to engage with companies.

Remarking on this, Fiona Reynolds, CEO of Principles for Responsible Investment (PRI) said: “As it stands today over 40 million people are victims of modern slavery and human trafficking.

“That’s 40 million too many.

“Every investor serious about eradicating slavery should demand more from companies.

“These results show that business on the whole has a long way to go and points to where investors can press for stronger anti-slavery efforts.”

And Baroness Young of Hornsey said: “This is the moment for the government to take stock of the impact of the Modern Slavery Act on business.

“The evidence in this report is clear; too many companies are flouting the Act allowing slavery to thrive in supply chains.

“The government needs to step up its demand on big business and follow through by enforcing the law. Not doing so will cause more suffering for vulnerable workers worldwide.”

To read the full report, click here. And to see the updates and clarifications received since the report was produced, click here.

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