Rathbones’ fifth Votes Against Slavery engagement (VAS) has secured support from a record 154 investors, aiming to encourage companies to disclose their efforts in combatting modern slavery.
Section 54 of the Modern Slavery Act (2015) requires companies to publish annually updated modern slavery statements to their UK websites. However, 158 FTSE AIM smaller listed companies and FTSE 350 companies are failing to comply with these disclosure requirements, leading to action from VAS.
The 2024 VAS engagement team, led by Rathbones’ stewardship team and co-ordinated through Principles for Responsible Investment’s Collaboration Platform, brings together asset managers and institutional investors with assets under management totalling nearly $2trn.
Matt Crossman, stewardship director at Rathbones, said: “This year we have identified a large number of non-compliant FTSE AIM businesses, which are yet to adhere to the law. With destabilising confrontations taking place across the globe, the horrifying problem of modern slavery will only get worse.
“In the current regulatory vacuum of enforcement, we believe investors have a crucial role in advancing protection for fundamental human rights.
“Therefore, we have gathered a coalition of 154 investors to tackle this pervasive problem. We believe investors can wield significant power through engaging on standard AGM outcomes. Through this latest campaign, we call on investors to use their strongest power of censure – voting against the annual report and accounts for companies which refuse to become compliant with the Modern Slavery Act. We believe VAS is the first investor coalition to threaten to vote against the annual report and accounts over a social issue.”
Policy engagement
Modern slavery “has a significant human and economic impact globally”, with an estimated $150bn trade in some form of slavery, including forced labour, the sale and trafficking on people, forced and servile marriage and the exploitation of children.
While the Modern Slavery Act requires all companies above a certain size operating in the UK to report on how they find and eliminate modern slavery within their supply chains, there is currently no legal redress for those companies that fail to comply with the regulations.
Therefore, Rathbones, alongside asset manager CCLA, said they would continue their policy engagement with the Home Office, aiming to strengthen the quality of Section 54 of the Act. This could include mandatory minimum reporting requirements, penalties introduced for failure to comply and a published list of sanctioned entities, regions and bodies.
“According to the latest figures from the United Nations, more than 50 million people are still trapped in some form of modern slavery,” Archie Pearson, ESG and stewardship analyst and voting lead, said.
“In 2023, 27 of 29 companies we engaged with became compliant, but there is much more to be done, including strengthening the powers of the Act which is the goal of our joint policy engagement with the Home Office.”
