Modern slavery backlash fears slow British company disclosures, regulator says

The Financial Reporting Council (FRC) sampled 100 reports of major companies

Joe Middleton
Monday 25 April 2022 21:57
<p>A skyline of Canary Wharf </p>

A skyline of Canary Wharf

British companies are not spelling out if they comply with modern slavery laws, partly for fears of prompting a public backlash, a regulator said on Monday.

The Financial Reporting Council (FRC) sampled 100 reports of major companies and found that one in ten companies do not provide a modern slavery statement, this is despite it being a legal requirement.

The newly published research, in conjunction with the UK Anti-Slavery Commissioner and Lancaster University, also revealed that even if companies produced a statement, that only one third of them were considered clear and easy to read.

The vast majority of the statements looked at for the report were fragmented and lacked any clear focus, while only a quarter of companies disclosed key performance indicators (KPIs) on steps they are taking to minimise modern slavery.

The report said that one reason for the lack of disclosure could be “the prospect of reputational repercussions”.

The UK’s Independent Anti-Slavery Commissioner Dame Sara Thornton 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.”

Sir Jon Thompson, the FRC’s CEO, said: “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.”

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