The UK Modern Slavery Act 2015 (the Act) was hailed as a landmark piece of legislation that would encourage businesses to remove modern slavery from their operations and supply chains by both introducing transparency requirements for companies and inspiring a ‘race to the top’ by increasing competition to drive up collective standards. Over the past five years, Business & Human Rights Resource Centre (BHRRC) hosted the only public repository of statement – the Modern Slavery Registry – and assessed compliance from over 16,000 modern slavery statements from some of the largest global companies. Our analysis of reporting under the Act show that the Act has failed to deliver the transformational change many hoped for.

This briefing, undertaken in partnership with Walk Free and WikiRate, analyses modern slavery reporting by asset managers. Of 91 asset managers identified as required to report under the Act, 79 had published statements. We also looked at due diligence efforts taken within investment portfolios in line with standards within the sector. While the finance sector has not been subject to the same level of scrutiny as other sectors, it faces clear exposure to modern slavery risk through its direct operation, supply chains and business relations.

We recommend asset managers undertake the following due diligence, at a minumum to address modern slavery risks within investment portfolios:

• Does the investor disclose it has a human rights investment policy covering any portfolios under management?
• Does the investor disclose it requires investee companies to meet their reporting obligations under the UK Modern Slavery Act?
• Does the investor disclose it assesses investee companies prior to investment to identify potential modern slavery risk areas?
• Does the investor disclose active engagement, either directly or through intermediaries, with investee companies on their (investee companies’) modern slavery/ labour exploitation/ human trafficking risks in value chains and business relationships?
• Does the investor disclose it collaborates with industry and non-industry stakeholders to learn from experts and peers on and/or lift the industry standard for preventing, identifying, and mitigating modern slavery, labour exploitation and human trafficking risks, and enabling effective remedy for harms caused or contributed to?
• Does the investor disclose it has a human rights due diligence process in place to prevent and mitigate modern slavery/ labour rights/ human rights risks identified within its portfolio pre, during and post investment or identified in its investments?
• Does the investor disclose whether any of the following social issues (the S from ESG) inform the company’s investment decisions?
• Does the investor disclose it identified salient human rights and labour rights risks in their investments (e.g. vulnerable workers, geography, sourcing country, etc)?
• Does the investor disclose it has an exclusionary policy in place to screen out companies based on social criteria related to modern slavery and human trafficking?