Modern slavery – how financial institutions can influence the approach of global business

13 September 2023

According to a report by the International Labour Organization (ILO), Walk Free and International Organisation for Migration (IOM) there are 50 million people around the world trapped in modern slavery. Of these, 28 million were in forced labour and 22 million were in forced marriage. Women, children and migrants are disproportionately more vulnerable to being trapped.1

Modern slavery is an umbrella term encompassing slavery, servitude, human trafficking and forced or compulsory labour. Victims are controlled by debt bondage, threats, violence, deception and coercion.2

The UN 2030 Agenda for Sustainable Development, Sustainable Development Goal 8.7 3, calls for the eradication of modern slavery and human trafficking, yet according to the ILO’s latest data, the number of people trapped in modern slavery has grown over the last five years as Covid-19, conflict and climate change have disrupted labour markets.

Ten million more people were in modern slavery in 2021 compared to 2016 global estimates. Of those trapped in forced labour, 86% are in the private sector, which means that the business sector is exposed to modern slavery risk.4 The UK alone imports an estimated $18 billion worth of goods that present a high slavery risk.5

CCLA believes modern slavery exists in the supply chains of almost every business. Yet this pernicious practice is hidden and difficult to tackle.

Financial institutions should be at the heart of the global effort to tackle slavery and trafficking. As the Blueprint for Mobilising Finance against Slavery published by the Liechtenstein Initiative correctly identified, the world’s bankers, investors, insurers, and financial partners “have unparalleled influence over global business … and that finance is a lever by which the entire global economy can be moved.

Dame Sara Thornton, Consultant – Modern Slavery for CCLA

 

CCLA has been working in this area since 2012, but in 2019 we launched Find it, Fix it, Prevent it – a collaborative investor engagement programme with the aim of using our leverage as investors to help companies find, fix, and prevent modern slavery in their supply chains.

The initiative was launched at the London Stock Exchange in November 2019. Since then, the initiative has grown in both scope and depth. There are currently 65 investors in Find it, Fix it, Prevent it, with a collective asset under management and advisory of £15 trillion.

The programme has three complementary workstreams:

  1. Corporate engagement – aiding companies in developing and implementing better processes for finding, fixing and preventing modern slavery.
  2. Public policy – promoting a meaningful regulatory environment through work with the government, policy-makers and regulators.
  3. Developing better modern slavery data – working with data providers, NGOs, and academia to identify and develop better data.

The Find it, Fix it, Prevent it corporate engagement workstream aims to incentivise business to move beyond promoting better policies and processes. Put simply, it is convened with the promise of making the corporate response to modern slavery more effective.

We want companies to:

  1. Find it – proactively search their supply chain for modern slavery, on the assumption that it exists.
  2. Fix it – work towards and report on remedy for those affected.
  3. Prevent it – take meaningful steps to ensure that the situation does not continue.

Corporate Engagement

Over 2023, the Find it, Fix it, Prevent it coalition have been engaging with the supermarket sector and firms in the agricultural value chain to concerns related to debt bondage in the Seasonal Worker Scheme. In December 2022 we published an investor statement calling for firms in the UK agricultural sector to implement the employer pays principle, undertake an independent study of the fees paid by migrant workers over the 2022 season and agree a fair process for paying back the fees. We also asked firms to come together to lobby the government to address flaws in the way the scheme has operated to date.

Public Policy

In March, CCLA submitted written evidence to the Home Affairs Committee Inquiry into Human Trafficking and emphasised the need for the government to fulfil its promises to strengthen the supply chains provisions of the Modern Slavery Act 2015. On 19 April, Dame Sara Thornton gave oral evidence and re-iterated this point and the need for legislation to specifically cover the portfolios of financial institutions.

Find it, Fix it Prevent it has also fed into the Modern Slavery Working group of the Department of Work & Pensions Taskforce on Social Factors which aims to help pension schemes and the wider pensions industry seize the opportunities of the “social” element in the context of pension scheme investments.

Data

In 2022 Find it, Fix it, Prevent it worked with consultants to analyse the 2021 Modern Slavery Statements of the FTSE100 to understand whether they comply with the Modern Slavery Act and the degree to which companies publicly declare whether they ‘find, fix and prevent’ modern slavery.

The key lesson of this work was that companies had published a Modern Slavery Statement - average compliance with the Modern Slavery Act according to the evaluation framework was 89%. However, the number and percentage of companies reporting they had ‘found, fixed or prevented’ modern slavery was much lower:

  • 20% reported action to find cases of modern slavery in their supply chains.
  • Only 3% reported action to fix it.
  • And 18% reported action to prevent it.

CCLA will be publishing a new analysis of companies’ modern slavery statements later this year.

Through these related strands, CCLA is hoping to harness business’ competitive behaviour to drive better corporate disclosures on modern slavery. We are working together with others to influence powerful stakeholders in the data landscape and we are using our convening power to explore the future of ESG data and how it can be leveraged to drive new insights and behaviours on modern slavery.

1 International Labour Organization (2022), ‘Global estimates of modern slavery’.
2 Modern Slavery Act (2015), Online at http://www.legislation.gov.uk/ukpga/2015/30/section/54/enacted.  
3 United Nations 2030 Agenda for Sustainable Development. Online at https://sustainabledevelopment.un.org/content/documents/21252030%20Agenda%20for%20Sustainable%20Development%20web.pdf
4 International Labour Organization (2022), ‘Global estimates of modern slavery’.
5 Walk Free Foundation (2018), ‘Global Slavery Index 2018’. Online at https://www.globalslaveryindex.org/resources/downloads/