Rathbones has launched its third Votes Against Slavery engagement, securing support from 122 investors with assets under management totalling £9.6 trillion.
Rathbones targets modern slavery for third year with biggest collaborative engagement yet
We are pleased to announce that Rathbones has launched its third Votes Against Slavery engagement, securing support from 122 investors with assets under management totalling £9.6 trillion.
The engagement, led by the Rathbones stewardship team and co-ordinated through the PRI Collaboration Platform, includes 29 asset managers and institutional investors, including pension funds, and targets FTSE 350 companies which fail to comply with Section 54 of the Modern Slavery Act (2015).
Modern slavery has a significant human and economic impact globally. It is estimated to be a $150 billion trade which involves approximately 40.3 million people in some form of slavery, including forced labour, the sale and trafficking of people, forced and servile marriage and the exploitation of children. We believe that UK businesses have a critical role to play in tackling modern slavery and, as long-term investors, that it is fundamental that companies comply.
Section 54 of the Act requires all companies above a certain size operating in the UK to report in detail on how they find and eliminate modern slavery within their supply chains.
In our view, the quality of reporting delivered under Section 54 serves as an important signal for how seriously senior management teams take this risk. Failure to comply can range from statements missing clear board approval to a failure by a company to update its statement on an annual basis, or not achieving director sign-off. We believe the moral imperative is unquestionable, and companies which meet the reporting requirements, clearly disclosing the areas of their businesses most susceptible to modern slavery, benefit from increased investor confidence. But despite the legal requirement to do so, there is currently no legal redress for companies that fail to comply.
Additionally, the UK Government ran a public consultation into the Modern Slavery Act, which concluded in 2019. The recommendations from this consultation have not yet been implemented, some 29 months later. Corporate transparency efforts like Section 54 require oversight from Government if investees are to take them seriously. Our work has shown that the reporting requirements are not yet delivering all the positive change in UK corporate practice that they could; we believe the potential to do so is huge. Implementing the findings of its own review would be a very welcome move as it would raise the bar on corporate supply chain transparency even higher.
As a result of previous engagements through Rathbones, the 61 FTSE 350 companies targeted in 2021 became compliant by January 2022, and 20 out of 22 FTSE 100 companies contacted in 2020 became compliant by the end of that year. Whilst we’ve been pleased by the success of our previous engagements, we realise that there’s so much more to be done. Modern slavery and human trafficking remain endemic globally. And with the current geopolitical situation, supply chain disruption and refugee movement clearly increase the risks of exploitation - a terrible phenomenon we witnessed in the pandemic.
For the 2022 engagement, Rathbones, on behalf of the group of investors, has contacted 43 FTSE 350 companies which have fallen short of the reporting requirements.
As we await the implementation of new legislation to strengthen the Act, we believe voluntary initiatives such as Votes Against Slavery will be essential for driving more responsible business behaviour.
Over the longer term, we hope such initiatives can evolve to encourage companies to move beyond compliance towards a culture of continuous improvement.
ESG and Voting Analyst
PRI Collaboration Platform
The Collaboration Platform is a unique form that allows investors to pool resources, share information and enhance their influence on ESG issues. It is also a hub for academics and investors to connect and engage with research. Posts include invitations to sign join letters to companies and join investor-company engagements, proposals for research, calls to foster dialogue with policy makers and requests for support on upcoming shareholder resolutions.
For further information, please see: https://collaborate.unpri.org/
Previous Votes Against Slavery engagements
Rathbones welcomed 97 investors with £7.8 trillion assets under management to the coalition in 2021. Of 61 companies in the FTSE350 identified as non-complaint, as at 13th December 2021 59 companies (97%) had become compliant as a direct result of the engagement. The remaining two companies became compliant in January 2022. The report for the 2021 engagement can be found HERE.
In 2020, 20 investors supported with £3.2 trillion assets under management. As a result of the engagement, 20 out of 22 companies contacted (90%) were compliant as of 31 December 2020.
The Votes Against Slavery project, with its focus on disclosure should be seen as complementary to work conducted under a different investor coalition led by CCLA called “Find it, Fix it, Prevent it”, which encourages companies to discover modern slavery within their supply chains and to provide the appropriate care and remedy.
CCLA and Rathbones are mutually supportive of each other’s efforts. Rathbones has been pleased to accept a position on the supervisory board of “Find it, Fix it, Prevent It”, and CCLA is a key stakeholder in the “Votes Against Slavery” project.
The report for the 2020 engagement can be found HERE.
Combatting Slavery webinar
Matt Crossman and Archie Pearson can be viewed leading discussions on previous engagements at: https://combattingmodernslavery.withduuzra.com
ESG and Voting Analyst