· ‘Find it, Fix it, Prevent it’ Modern Slavery coalition now backed by 65 investors with collective assets under management and advice of £15 trillion.
- Launch of the CCLA benchmark on Modern Slavery spurs action across consumer goods, travel, retail, mining, technology and finance companies.
- Construction companies redouble Modern Slavery efforts following a roundtable with the Cabinet Office and investors.
- Dame Sara Thornton and Dr Martin Buttle of CCLA give evidence to the House of Lords review of the Modern Slavery Act and push for the UK to adopt mandatory human rights legislation.
CCLA Investment Management today publishes its annual Find it, Fix it, Prevent it report outlining progress made by investors to combat modern slavery in company supply chains.
Since its launch in 2019, the Find it, Fix it, Prevent it collaboration has become a unique and influential coalition of investors using their leverage to help companies find, fix, and prevent modern slavery in their supply chains. CCLA-led, it is now supported by investors with collective assets under management and advisory of £15 trillion and has three complementary workstreams: corporate engagement, public policy and developing better modern slavery data.
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.
In 2022 over 50 million people were estimated to exist in modern slavery, a number that has grown over recent years as Covid, conflict and climate change have disrupted labour markets. Ten million more people were experiencing modern slavery in 2021 than in 2016. Find it, Fix it, Prevent it focuses on forced or compulsory labour, and in 2022, the International Labor Organization estimated that 28 million people were victims of forced labour.
Modern slavery is increasingly a financially material risk for investors, particularly with new regulations on business to address human rights risks. The European Corporate Sustainability Due Diligence Directive (CSDDD) for example, mandates legal expectations on what constitutes responsible conduct, and applies to businesses based in the European Union and many that trade in Europe. 63% of those trapped in forced labour are in the private sector and the UK alone imports an estimated $18 billion worth of goods that represent a high modern slavery risk.
Progress of particular note made by Find it, Fix it, Prevent it over the past year includes:
· Launch of the CCLA Modern Slavery Benchmark which assesses the modern slavery statements and other disclosures of the largest 100 UK companies and has resulted in consumer goods, travel, retail, mining, technology and finance businesses investing new resources into tackling modern slavery and human rights. A number of large publicly listed companies including National Grid, Reckitt, RELX, Rio Tinto and Tesco have also now acknowledged the benchmark in their 2023/24 modern slavery statements.
· A roundtable held by the Cabinet Office, CCLA Investment Management, LGT Wealth Management and the Supply Chain Sustainability School and attended by 17 major UK-listed and private construction companies including Balfour Beatty. This spurred activity across Government, with the Cabinet Office looking to incorporate more about the Modern Slavery Act in sourcing and contract management. It also saw a potential collaboration with civil society and regulators to provide a modern slavery intelligence network discussed, which several large construction companies have indicated they are willing to support.
· Active engagement with government, policy makers and regulators to promote a meaningful regulatory environment. CCLA gave evidence and engaged with public officials on the effectiveness of the Modern Slavery Act and pushed for a mandatory human rights due diligence legislation in the UK similar to the European CSDDD. Dame Sara Thornton and Dr Martin Buttle gave evidence to the House of Lords review of the Modern Slavery Act and argued for improvements to legislation on transparency in supply chains at the Home Affairs Committee on Human Trafficking.
Peter HUGH SMITH, CCLA Chief Executive, said: “CCLA are committed to being a catalyst for change across our industry, using our influence to convene the City around the crucial issues that are not getting the attention they deserve. Modern slavery is often a misunderstood and underestimated problem and one where investor engagement has the potential to drive tangible and lasting positive change. We remain committed to leading a constructive, multi stakeholder approach to tackling modern slavery head on, working with our peers in the investment industry alongside companies and government.
We re-iterate the 2019 Find it, Fix it, Prevent it call to action for UK companies to increase their efforts to identify human trafficking, forced labour, and modern slavery in their supply chains, review, assess and disclose the effectiveness of their attempts to address these issues and support the provision of remedy to victims of modern slavery within their supply chains.”
More detailed highlights from the three Find it, Fix it, Prevent it workstreams include:
Corporate engagement:
Construction is regarded as a high-risk for modern slavery as it relies on relatively low-wage labour, a high-proportion of migrant workers, long-labour supply chains and material sourcing from countries with low levels of labour market enforcement. It was chosen as the primary sector for engagement for phase 2 of the Find it, Fit It, Prevent it programme following engagement with hospitality firms in phase 1.
As a result of the corporate engagement workstream businesses have enhanced their due diligence processes, identifying modern slavery risks and putting in processes to reduce them, as well as beginning to provide remedy for workers.
Public policy:
As members of the Home Office Prevention and Enforcement Forum, CCLA have advocated the need to update statutory guidance on transparency in supply chains and are pleased that this work has now been commissioned. Dame Sara Thornton and Dr Martin Buttle gave evidence to the House of Lords review of the Modern Slavery Act on the need for the UK to adopt similar legislation to the European Parliament’s Corporate Sustainability Due Diligence Directive (CSDDD), which includes legal obligations on large companies in respect of the adverse impacts of their activities on human rights and environmental protection. This would provide consistency of standards for businesses and would reduce the risk of goods made with forced labour being dumped in the UK.
CCLA have also submitted written and oral evidence making this point to the Home Affairs Committee on Human Trafficking and the House of Lords review of the Modern Slavery Act.
In addition, CCLA has argued for financial institutions to be explicitly required to report on their investing and lending portfolios and met with the Investment Association in an effort to raise standards and performance.
CCLA has also continued to raise the issue of migrant workers potentially exposed to forced labour on UK farms, arranging a briefing for investors by the Seasonal Workers Scheme Taskforce and contributing to the government’s Independent Review into labour shortages in the Food Supply Chain. Having gathered a supportive coalition of 14 investors, CCLA wrote to, and met with, the Secretary of State for Environment, Food and Rural Affairs urging DEFRA to implement the recommendations and received a positive response.
Developing better modern slavery data:
A lack of readily available data is hindering the potential for investors to act on Modern Slavery. In 2023 CCLA launched its highly successful benchmark on the top 100 UK listed companies based on the Find it, Fix it, Prevent it framework, which is described above. In the foreword to the benchmark report, the former Prime Minister Theresa May stated: “This is a great example of investors taking the lead and using modern slavery statements as a catalyst for improvement and I welcome it”.
Dame Sara THORNTON, Consultant Modern Slavery for CCLA, commented: “The number of people trapped in modern slavery has grown over the past six years as Covid-19, conflict and climate change have disrupted labour markets and so it is vital that businesses do everything they can to prevent it in their own organisations and value chains. As investors, we can have influence not just over the companies in which we invest but across the wider system. However, in order to know where to start – we need information and data, which in the case of modern slavery, can be hard to come by.”
“I’m immensely proud of our work at CCLA in driving the investor response to this vital issue, and, in particular, in producing our first Modern Slavery Benchmark. The Benchmark has already enabled investors to have constructive engagement with companies and there is evidence that companies are taking more steps to identify, mitigate and prevent forced labour. It is this kind of responsible business conduct which will prevent vulnerable workers from egregious exploitation and abuse.”
Dr Martin BUTTLE, Better Work Lead at CCLA, said: “We are seeing more and more businesses up their game on eliminating modern slavery in their supply chains, spurred on by engaged investors. However, we have a long way to go before we can be confident that all the companies we invest in are taking robust action. Transparency on this issue would be monumental in driving change, but without clear legislation, there is a disincentive for companies to disclose. That is why this group’s policy engagement work is so important, and why we will continue to advocate for more robust human rights regulation in the UK.”
“Thankfully, recent regulatory developments globally are making this an increasingly material topic for investors and companies, so we hope and expect to see much greater focus on this issue going forward.”
Jake MOELLER, Associate Director, Responsible Investment at Square Mile Investment Research & Consulting, said “CCLA’s ‘Find it, Fix it, Prevent it’ initiative is to be highly commended. Modern slavery involves the exploitation of workers by corporations and intermediaries who abuse employment practices and vulnerable people to access cheap labour. It can appear in any supply chain without committed vigilance. Through CCLA’s initiative, signatories are provided with the education and expertise to identify and stop modern slavery within their supply chains. I have witnessed first-hand the impressive work CCLA undertakes with investee companies to eliminate the sourcing of seasonal staff from predatory recruiters, complex and unreliable visa applications, and hidden costs. While this issue is more widespread than many realise, collaboration among NGOs, charities, and investors shows potential for its eradication.
Increasingly, fund gatekeepers such as us at Square Mile Research, are determining that powerful advocacy initiatives from groups like CCLA are a key consideration in deciding which fund managers we seek to build relationships with.”
