LATEST: NGOs, unions and investors call on the Government strengthen the transparency provisions of the Modern Slavery Act: read the public statement, parliamentary briefing and submission to Government consultation
What’s the problem?
Many UK multinational companies are shrouded in secrecy. Complex corporate structures and global supply chains can make it difficult to find out who is in control of a business and to monitor adherence to environmental and human rights standards.
What’s CORE doing about it?
CORE believes that companies should be required to be transparent about their operations, and the risks and impacts that they cause to people and the environment.
This would enable investors, government and civil society to scrutinise corporate practices and to hold companies accountable for abuses.
Legislative reform to mandate corporate transparency is the most effective way to provide clarity for business on what’s required and to create a level playing field.
Over the last decade, thanks in part to CORE’s campaigning, several laws have been introduced to require companies to publish information about human rights and environmental issues. While this is a significant development, the requirements are vague and there are no penalties for companies that fail to provide adequate information.
We also believe that transparency alone is not enough. It should be mandatory for companies to take action to prevent and rectify human rights abuses, and they should be held accountable.
UK Modern Slavery Act 2015
CORE campaigned for the introduction of the Modern Slavery Act’s Transparency in Supply Chains (TISC) clause. This requires companies with an annual turnover of more than £36 million operating in the UK to report on their actions to prevent modern slavery and human trafficking in supply chains and operations.
While the Act has raised awareness of the prevalence of extreme labour rights abuse, only a handful of companies are disclosing meaningful information, with many undertaking compliance as a “tick-box” exercise.
CORE is pressing for reforms to the Act to improve corporate compliance, including robust enforcement and sanctions for companies that fail to publish reports.
EU Non-Financial Reporting Directive 2014
A European-wide reporting requirement was introduced in 2014 for listed companies, non-listed insurance firms and some banks with over 500 employees.
The Directive was transposed into UK law via an amendment to the Companies Act 2006. It requires large companies to publish regular reports on the social and environmental impacts of their activities.
In the UK, it builds on reporting requirements that were already in place, while for many other European countries, it creates an entirely new framework for corporate transparency.
CORE is part of the Alliance for Corporate Transparency, a three-year research project that brings together leading civil society organisations and experts. The project aims to analyse disclosure on sustainability issues by the EU’s 1000 largest companies and provide recommendations for legislative reform.
Companies Act 2006
As a result of CORE’s campaign, a requirement was included in the Companies Act 2006 for Directors of UK companies to have regard to social, environmental and community issues in their running of the company. Directors of quoted companies are obligued to include information in the annual report on how they have fulfilled this duty.
In 2012, human rights was added to the list of issues that company Directors must consider.