CCLA reveals companies leading on modern slavery

Latest annual benchmark finds financial companies are lagging

CCLA Investment Management has named Kingfisher, Marks & Spencer, Next, Reckitt Benckiser, Tesco and Unilever as leaders on human rights innovation in its latest annual modern slavery benchmark, but found financial companies are lagging.

The measure, based on assessing companies’ public disclosures, shows which of the UK’s largest listed companies are doing most to end modern slavery in their operations and supply chains. It was created by CCLA for investors to support their engagement with companies.

Only around a quarter (25) of all the companies assessed reported finding modern slavery in their supply chain, which CCLA said is “concerning” because data suggests it is much more widespread.  

Companies ranked in the highest ‘tier one’ on the CCLA benchmark have an “evolved and mature approach” to human rights due diligence , with extensive discussion on the risks, case studies on systemic modern slavery risks, and discussion on meaningful activity to find, fix and prevent modern slavery.

All the companies appearing in tier one and half the companies appearing in tier two were consumer discretionary and consumer staples. These sectors are at greatest risk of modern slavery and are more answerable to consumers, CCLA pointed out.

Performance tiers three and four were dominated by financials, industrials and materials. Across the tiers, CCLA found a significant difference between the most and least active in addressing modern slavery in their operations and supply chains.

No remedy for victims

But while all of the companies assessed disclosed policies to manage the risk of modern slavery in their supply chains – by desk-based risk assessment and onsite audits – they failed to assess those risks or identify them. 

The provision of remedy to victims was still weak, for example. Just under a third (30) of companies assessed disclosed steps to end ongoing risks where a violation was found, and only nine reported outcomes of the remedy process for victims. 

Only one company disclosed evidence of providing remedy that was satisfactory to the victims, an improvement from the Business & Human Rights Resource Centre’s findings in 2018 where no company disclosed what remedy was provided or would be provided as part of a corrective action plan or other remediation process.

Forty-two companies disclosed a policy relating to responsible procurement practices but only 14 provided examples of their practices.

According to the Global Slavery Index, while the prevalence of forced labour is higher in low-income countries, it is closely connected with the demand from higher income countries and is in the supply chains of goods. 

For example, electronics from China and Malaysia account for the highest value at-risk imports in the G20 countries, with spending by these countries at $243.6bn in 2021.

On a more positive note, CCLA found that 20% more companies have a grievance mechanism than when the Business & Human Rights Resource Centre completed its analysis in 2018 showing that about 75% of the companies surveyed reported a grievance mechanism at that time.

Recommendations

The benchmark report outlines recommendations for companies, investors and policy makers urging all parties to closely monitor developments in legislation on corporate sustainability due diligence in Europe and the introduction of import bans in the United States and Europe.

Specifically CCLA urges companies to ensure there is board level responsibility for governance on modern slavery.

CCLA also wants companies to conduct and disclose operational and supply chain risk assessments, which includes assessment of forced labour risks in direct operations and across supply chain locations, going beyond tier one.

Another recommendation is to disclose and provide details of suspected cases of modern slavery, and the steps taken to provide remedy for victims and the outcomes

Finally, to adopt and disclose responsible procurement practices in line with international best practice.

Peter Hugh Smith, chief executive of CCLA, said: “Large, listed companies are in an influential position to set standards, implement policies and find, fix and prevent modern slavery and we will use this benchmark to engage and to push for improvements. 

“In the event that companies in tiers four and five do not engage, we will vote against their financial statement and annual accounts.”