Business and Human Rights: Investors Call Out “Modern Slavery” and Focus on Hospitality, Construction and Materials Sectors

The “Find It, Fix It, Prevent It” initiative, which extends to some 56 large investors including M & G, Fidelity International, Schroeder’s and Edentree, seeks to increase the effectiveness of corporate action against modern slavery.

Initially, the “Find It, Fix It, Prevent It” initiative was focused on the hospitality sector, with investors seeking to engage with the largest UK-listed hospitality firms to encourage companies to develop better policies, processes and procedures for tackling modern slavery–and better disclosure. This year, “Find It, Fix It, Prevent It” will look to broaden its engagement with companies to include the construction and materials sector, with plans to commence engagement with targeted companies from the third quarter: the initiative’s activities and future focus are set out in its first annual report. The CCLA estimates that “the construction industry is estimated to contain 18% of the world’s victims of forced labor”. The term “modern slavery” extends to slavery, servitude, human trafficking and forced or compulsory labor (read more on the key indicators of modern slavery here).

Other Investor Initiatives

The “Find it, Fix it, Prevent it” initiative is complemented by a number of other investor initiatives focused on modern slavery, including the Votes Against Slavery project convened by Rathbones. Votes Against Slavery seeks to encourage companies to provide evidence of how they identify modern slavery within their supply chains, and issued its annual report on FTSE 350 companies in February 2021. The Workforce Disclosure Initiative is a further example of an investor initiative. This is a coalition of some 53 institutions which, through an annual survey and engagement program, seeks to improve corporate transparency and accountability of workforce issues, provide companies and investors with comprehensive and comparable data and help increase the provision of good jobs worldwide. In Asia Pacific, First Sentier Investors is building an alliance of investors to promote more effective action to address modern slavery. 

Legislative Developments

Mandatory due diligence legislation at the EU-level is expected this year (see our briefing here) and will broaden companies’ human rights reporting responsibilities. Legislation is also increasing at the domestic level–for example, the UK is toughening up its existing Modern Slavery Act regime (see our briefing here). This increasing legislation, together with increased investor and other stakeholder pressure (as highlighted above), adds further grounds for companies to review their supply chain human rights exposure.

Practical Questions and Responses

The challenges raised by “Find It, Fix It, Prevent It”, which will inform its engagement with the construction industry but also apply across sectors, are as follows:

1. Have you found modern slavery in your operations or supply chain?
2. If not, can you demonstrate that you have rigorous processes in place to look for it?
3. If so, can you demonstrate the steps you have taken to improve the lives of victims?
4. Have you effectively reported your actions and the steps taken to prevent a re-occurrence?

Generally, businesses can ensure they are well-equipped to meet these challenges by:

1. Integrating human rights into group policies and strategic planning processes;
2. Disclosing how human rights considerations are integrated into strategies, policies and procedures;
3. Carrying out a human rights impact assessment and taking proportionate counter-measures, as well as communicating internally and externally on what measures have been taken;
4. Reviewing and reinforcing complaints mechanisms and speak-up programs;
5. Ensuring the business is well equipped to deal with ‘crises’;
6. Reviewing the extent to which their board is equipped to address supply chain risks; and
7. Reviewing the role, resources and expertise of the legal and compliance functions, who should play a key part in addressing these new challenges.

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