Modern slavery is a hidden problem but one that the construction industry is known to be particularly exposed to. The sector’s demand for lower paid manual labour and its global, complex and often opaque supply chains make it an attractive target for human traffickers looking to exploit migrant workers.
Cases reaching the public eye where criminals have been convicted for luring victims to the UK with false promises of well paid construction work, before trapping them into forced labour and modern slavery conditions without wages are likely to represent just the tip of the iceberg.
Worldwide, estimates indicate that there could be some 16 million victims of labour exploitation working in the private sector, across all industries. As a result, transparency and effective reporting by companies can be considered critical in order to root out the problem.
It was therefore concerning to read recently that the Financial Reporting Council – through research carried out in conjunction with the UK Anti-Slavery Commissioner and Lancaster University – has identified ‘significant shortcomings’ in the quality of companies’ modern slavery reporting.
Back in 2015, the UK became one of the first countries to introduce a Modern Slavery Act which brought in an obligation on businesses with a turnover of £36 million or more to produce an annual statement setting out the steps they are taking to address the risk of slavery in their operations and supply chains.
However the research indicated that around one in 10 in-scope firms do not provide a modern slavery statement despite it being a legal requirement. Meanwhile, the majority of statements failed to disclose the results of key performance indicators measuring the effectiveness of steps to minimise modern slavery risks, or include a plan of action based on the risks identified.
This follows previous criticism of the construction sector for its slow response to the Modern Slavery Act, including from the Chartered Institute of Building which said aggressive business models are creating an environment of unethical procurement and recruitment practices that leaves it open to labour exploitation.
The FRC’s findings appear to suggest that for many companies, bare minimum compliance is driving action on modern slavery rather than a desire to show strong leadership and do the right thing to help stamp out human rights abuses.
The report speculates that the prospect of reputational damage could to some extent explain the lack of disclosure. It can only be hoped that reports like the one published by the FRC will help to turn this situation on its head and ensure it is poor transparency that results in tarnished reputations in future.
It should also be noted that current legislation is limited in that it includes no threat of sanctions for those firms which fail to prepare an annual statement, and not does place any obligations on companies to commit to particular actions against modern slavery. In addition, questions have been raised regarding the effectiveness of the 2015 Act in engaging smaller businesses which make up supply chains.
It must be time to consider strengthening the legislation to ensure firms start to take its good intentions more seriously. Government took one positive step in this direction last year when it announced plans for a new workers’ rights watchdog with the powers to impose financial penalties for non-compliance with modern slavery statement reporting.
However with the primary legislation needed to establish this enforcement body yet to materialise, relief for the victims of modern slavery could still be a way off. But there is no need for your company to wait until then.