UK: Modern slavery statements are lacking quality, finds Financial Reporting Council
'UK’s FRC highlights reporting obligations on modern slavery', 26 April 2022
"Companies' reporting on modern slavery is lacking quality in several areas, the UK's Financial Reporting Council (FRC) found in a review issued Monday that also offered guidance for improvement.
Modern Slavery Reporting Practices in the UK looked at a total sample of 100 FTSE-100, FTSE-250, and Small Caps companies' modern slavery statements and their strategic and governance reports.
The majority of modern slavery statements reviewed were "fragmented, lacked a clear focus and narrative, and often contained boilerplate language", the FRC said. Disclosures about KPIs measuring the effectiveness of steps to minimise modern slavery risks were particularly poor, according to the regulator. Only a quarter of companies disclosed KPI results, and just 12% confirmed they have made informed decisions based on those KPIs.
The research, commissioned by the FRC in collaboration with the UK's Independent Anti-Slavery Commissioner's Office, was carried out by Lancaster University, building on preliminary research carried out by the FRC.
Dame Sara Thornton, the UK's Independent Anti-Slavery Commissioner, said an estimated 16 million modern slavery victims work in the private sector globally, and "businesses carry significant material and reputational risk of modern slavery being found somewhere in their supply chains". She added that "irresponsible commercial practices and poor governance" can create the conditions that allow exploitation to thrive..."