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Although we think of the financial sector predominantly in terms of investment and the global movement of funds, the City is in a position to immensely influence social and human rights matters such as climate change[C1] and modern slavery. With regard to the latter, the Independent Anti-Slavery Commissioner has recently published a report entitled: “Preventing Modern Slavery & Human Trafficking: An Agenda for Action across the Financial Services Sector[C2] ” (the Report). It highlights that the financial sector must do more to address modern slavery and human exploitation and sets out recommendations for how this can be achieved.
With over 40 million people held in modern slavery in 2016 and a further 16 million victims of labour exploitation, such abuse is a problem for every country and the UK is no exception. For example, in 2020, the Coronavirus pandemic exposed the shocking incidents of worker exploitation in Leicester textile factories[C3] .
Generating illegal profits of around $US150 billion per year, modern slavery is one of the top three international crimes, alongside drug trafficking and trade in counterfeit goods.
While the City of London may seem far from the dilapidated textile factories of Leicestershire because money laundering and fraud are intertwined with modern slavery, the financial sector must be at the heart of steps to combat it. However, the Report shows that many who work in finance have a narrow view of the sector’s impact on worker exploitation and slavery. Often only direct examples were considered, such as whether office cleaners, caterers, and construction workers were victims of such practices. However, the Report has called for the City to focus on the wider impact its business practices have on modern slavery, particularly relating to its investments, client relationships, and lending.
Dame Sara Thornton, the UK Independent Anti-Slavery Commissioner comments in the Report’s foreword:
“Financial institutions have a significant role to detect and disrupt this serious organised criminality but this report shows that through their lending and investment decisions they can do so much more. There is a growing recognition that investors and lenders do not want to invest in companies which are harming the environment. But similarly, do they want to invest in businesses that are harming people?”
Although the UK Modern Slavery Act 2015 requires all companies with a turnover of more than £36 million to produce an annual statement on the steps taken to tackle modern slavery and human trafficking in their organisations and supply chains, Dame Thornton states that the Report’s findings show this does not go far enough to address the “spectrum of abuses”.
Below are some of the recommendations made by the Report.
As gatekeepers to capital, financial institutions are in a unique position to positively influence clients and businesses. Dame Sara Thornton comments that although human rights due diligence is not currently required by statute “surely it is better to do the right thing rather than be forced to do so by legislation?”. Furthermore, the British Academy has confirmed that ‘the purpose of business is to solve the problems of people and planet profitably and not profit from causing problems.
By implementing some of the Report’s recommendations, the financial sector can significantly contribute to ending the scourge of modern slavery and the human misery it creates.
Tanveer Qureshi specialises in white-collar crime and regulatory investigations and prosecutions. If you require legal representation, please contact Tanveer directly at firstname.lastname@example.org or via his chambers, 4-5 Gray’s Inn Square. for more about Tanveer or to subscribe to his newsletters, please go to www.tqlegal.co.uk