Rathbones has launched its third successive Votes Against Slavery engagement targeting FTSE 350 companies which fail to comply with Section 54 of the Modern Slavery Act.
The engagement, led by the firm’s stewardship team and co-ordinated through the PRI Collaboration Platform, secured support from 122 investors with assets under management totalling £9.6 trillion.
Modern slavery remains rife, with around 40.3 million people estimated to be in some form of slavery including forced labour, the sale and trafficking of people, forced and servile marriage and the exploitation of children.
Under the Modern Slavery Act of 2015, all companies above a certain size operating in the UK are required to report in detail on how they find and eliminate modern slavery within their supply chains but currently, there is no legal redress for companies that fail to comply.
Rathbones said that for its latest engagement, it had contacted 43 FTSE 350 companies which have fallen short of the reporting requirements.
Archie Pearson, ESG and voting analyst, Rathbones, said: “The quality of reporting delivered under Section 54 of the Act serves as an important signal for how seriously senior management take this risk. Failure to comply can range from statements missing clear board approval to a failure by a company to update its statement on an annual basis or not achieving director sign-off.
“The moral imperative is unquestionable and companies which meet the reporting requirements, clearly disclosing the areas of their business most susceptible to modern slavery, benefit from increased investor confidence. So far, we have been very pleased with the level of response that we have received in this engagement. But as it stands, there’s still no formal consequence for those companies that don’t comply.”
Matt Crossman, stewardship director at Rathbones, commented: “UK businesses have a critical role to play in tackling modern slavery and as long-term investors, we believe it is fundamental that companies comply with all provisions of the Act.
“It’s fair to say that while we’ve been pleased by the success of our previous engagements, we realise that there’s so much more to be done and will continue to tackle this issue. Modern slavery and human trafficking are still endemic globally. And with the current geopolitical situation, supply chain disruption and refugee movement clearly increase the risks of exploitation, a sickening phenomenon we witnessed in the pandemic.”
Independent Anti-Slavery commissioner, Dame Sara Thornton, added: “The continuing expansion of the Votes Against Slavery coalition demonstrates a growing appetite from the investment community to raise ethical standards and hold businesses to account. The Modern Slavery Act in its current form sets a very low bar for business. It is concerning that the coalition has found such high levels of non-compliance in its third year of engagement with FTSE companies.
“As we await the implementation of new legislation to strengthen the Act, voluntary initiatives such as Votes Against Slavery will be essential for driving more responsible business behaviour. Over the longer term, I hope such activities can evolve to encourage companies to move beyond compliance towards a culture of continuous improvement.”
