Investors urge UK building sector to check for modern slavery in supply chains

A group of 56 big investors with £7tn in assets is calling on UK-listed companies in the construction and materials industry to check for modern slavery in their supply chains, following a year-long campaign at hospitality groups where instances of forced labour were unearthed.

Asset managers including Schroders, Aberdeen Standard Investments and Fidelity International, and religious groups including the Church of England’s investment arms, said modern slavery was rife across many industries, adding that businesses needed to properly examine their supply chains.

The group praised InterContinental Hotels Group after the chain found, and adopted a plan, to tackle forced labour issues in its operations in Oman. But it said that, with an estimated 25m people — the population of Australia — thought to be victims of modern slavery, other companies targeted by the initiative should have uncovered examples of the problem too.

“Given the pervasiveness of modern slavery, we are frankly surprised that the other companies involved in the Find It, Fix It, Prevent It engagement have not found it and urge them to deepen their investigations because it is most likely there,” Peter Hugh Smith, chief executive of CCLA, the UK-based asset manager that has spearheaded the initiative.

Find It, Fix It, Prevent It was launched in late 2019 and initially targeted the hospitality industry, focusing on companies including IHG, Carnival, Compass Group, Whitbread and JD Wetherspoon.

The investors said they would begin targeting the construction industry in the third quarter of this year. According to KnowTheChain, a group that ranks companies on modern slavery, construction is the second-highest risk sector for forced labour.

UN agency the International Labour Organization estimates there are about 25m people in forced labour globally. Affected people can be subjected to restrictions on their movements and debt bondage, among other issues.

Last month, a group of UK politicians called for stronger laws to combat modern slavery.

Dame Sara Thornton, the UK’s independent anti-slavery commissioner, said: “No large supply chain is safe from the risk of modern slavery, but it thrives in environments where there is weak governance, poor oversight and failure to align with international human rights standards.

“Businesses must do more to root out the causes of exploitation and protect the most vulnerable workers in their supply chains.”

In its modern slavery statement, a document companies with an annual turnover of at least £36m are required to produce in the UK, IHG said it carried out an assessment in Oman in early 2020.

The group found that workers employed through third parties were more likely than those employed directly by the hotel chain to have experienced forced labour issues, such as retention of passports, poor living conditions and difficulties obtaining certifications that enabled them to change jobs.

IHG said that it had prepared an action plan to tackle the issues and was working with its hotels.

A further hospitality company that was part of the investor engagement programme also identified areas of concern but was not named. The investors said they were urging the company to investigate further.

This month, the Workforce Disclosure Initiative, a group backed by investors with $7.5tn in assets, found that 94 per cent of 141 global companies had committed themselves to eliminating modern slavery from their supply chains, but 10 of the businesses examined could not provide a description of their supply chain.

Another group of investors, including Rathbones, recently found companies in the UK were failing to publish annual anti-slavery statements, despite it being a legal requirement.