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April 26, 2022

UK’s FRC finds modern slavery reporting shortcomings

The UK’s Financial Reporting Council (FRC) has identified significant shortcomings in the quality of companies’ modern slavery reporting, according to research it conducted with the UK Anti-Slavery Commissioner and Lancaster University.

Out of a sample of 100 major companies’ modern slavery statements and their strategic governance reports, on 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.

FRC CEO Jon Thompson 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.”

The UK’s Independent Anti-Slavery Commissioner 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.”

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