Wednesday 17 March 2021 8:00 am

Laws won't make modern slavery any more illegal, investors must put their foot down for businesses to change

The first laws passed in the UK to abolish the slave trade date back to 1833.  The global treaty banning slavery came into force in 1927. We are fast approaching 100 years of human history in which the trade in people has been as illegal as it could possibly be. And yet in the UK, very conservative estimates suggest at least 100,000 people are currently living in situations of modern slavery. Globally, the figure could be as high as 40.3 million people. You might ask – if it’s so illegal, how can the numbers be so high? 

Modern slavery is a term which covers slavery as many would understand it – the buying and selling of people – but also more insidious crimes like forced labour or human trafficking. 

It’s a lucrative endeavour controlled by organised crime, worth up to $150 billion in illegal profits a year according to the International Labour Organisation (ILO). Like many of the issues in our hyper-connected consumerist society, it can hide in plain sight. 

This was brought home to many last year with the disturbing stories emerging from garment factories in Leicester. Not only was slavery happening – it was happening here, in one of the most advanced democracies in the world. 

It’s impossible to recruit enough police globally to end the trade or scrape the surface of it. We can’t leave it to the extraordinary efforts of charities and NGOs to clean up the mess. So where do we go? 

The pandemic has exposed our extreme reliance on “just in time” supply chains – from ibuprofen shortages to scandals around PPE. We have become accustomed to having everything we want. Behind that rests a vast corporate retail infrastructure, with intricate supply chains many layers thick. It’s that complexity which enables the criminal element to thrive. 

So, what if you turned your biggest problem – complex global supply chains – into your greatest asset in the fight against slavery? What if every business in the UK had an incentive to examine its supply chain, root out modern slavery and prevent it happening? 

This is the vision of responsible investors like Rathbones and others. 

It was a vision shared by policy makers in passing the landmark 2015 Modern Slavery Act that brought UK business onto the front line in the fight against slavery. By ensuring mandatory reporting on modern slavery in their business, UK companies have the chance to address this key supply chain risk in a manageable manner. Crucially, investors get the level of transparency required to make better, ESG informed decisions about which companies were aware of and managing the risk best. 

Yet, according to research by the Business & Human Rights Resource Centre (BHRRC) produced to guide Rathbones’ flagship anti-slavery project, some 74 FTSE350 companies had failed to comply with the letter of the law on modern slavery statements. 

If the biggest and best resourced companies in the UK, some of them household brand names, couldn’t get moving in five years of the law, then what hope do we have for the remaining 12-13,000 smaller companies also covered?

In this enforcement vacuum, Rathbones decided to start voting against the annual reports and accounts of companies that had failed to meet their legal responsibilities in this area. Over time we have been joined by others, and our current coalition brings together 97 investors with £7.8 trillion in assets under management.

Finance has moved in such numbers because the risks are so clear, and the solutions available. We want to send a strong message that actions to address modern slavery bring a myriad of benefits, not least ensuring supply chain resilience and reducing the impact of costly supply chain shocks. 

And yet most UK businesses see the report effort as nothing more than a box ticking exercise. According to the latest research, 45 per cent of board level managers and directors, and 30 per cent of financial services employees polled, agreed with the statement that “modern slavery is not something which occurs in the UK”.

The evidence is clear – it is still happening here. It’s illegal, and investors with £7 trillion are looking for action. Amidst all the talk of building back better, business needs to start playing its part in addressing this crime. Only they have the reach and scale to make a difference.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.