FRC report reveals firms must do more to eradicate modern slavery

FRC report reveals firms must do more to eradicate modern slavery

The Financial Reporting Council (FRC) has published new research, in conjunction with the UK Anti-Slavery Commissioner and Lancaster University, which has identified significant shortcomings in the quality of companies’ modern slavery reporting.

The research looked at a sample of 100 major companies’ modern slavery statements and their strategic and governance reports. One in ten companies do not provide a modern slavery statement despite it being a legal requirement. Where companies did comply, only one-third of these statements were considered clear and easy to read.

The majority of modern slavery statements reviewed were fragmented, lacked a clear focus and narrative, and often contained boilerplate language. Disclosures about key performance indicators (KPIs) which measure the effectiveness of steps to minimise modern slavery risks were particularly poor.

Only a quarter of companies disclosed KPI results and just 12% confirmed they have made informed decisions based on those KPIs.

The review suggests that too many companies appear not to view human rights issues in their workforce and supply chain as a principal source of risk for their business, and that modern slavery considerations are still not a mainstream concern for many boardrooms.

The findings of this research are an opportunity for companies to present a more joined up approach to reporting and provide information on the effectiveness of their policies.

Dame Sara Thornton, the UK’s Independent Anti-Slavery Commissioner, said: “With an estimated 16 million modern slavery victims working in the private sector globally, businesses carry significant material and reputational risk of modern slavery being found somewhere in their supply chains.

“Modern slavery is perpetrated by organised criminals and cynical opportunists, however irresponsible commercial practices and poor governance can also create the conditions that allow exploitation to thrive. Companies have a responsibility to demonstrate the steps they are taking to minimise modern slavery risks and to show strong leadership in this area.”

The FRC’s CEO Sir Jon Thompson, added: “High-quality reporting is vital to shining a light on how seriously businesses take social issues in their day-to-day operations.

It is therefore unacceptable that many companies did not produce a modern slavery statement and that modern slavery considerations appear to not be a mainstream concern for many boardrooms. Looking ahead companies must clearly set out the actions they are taking to deal with modern day slavery in all aspects of their operations.”

Share icon
Share this article: