This report combines information, awareness and guidance for financial institutions who wish to address their exposure to modern slavery and human trafficking (MSHT) risks within their business models. This is done through combining research, resources and implementation framework to provide insight, knowledge and awareness of companies ability and responsibility to address this issue.

The report, by Themis International Services, the UK Independent Anti-Slavery Commissioner and the TRIBE Freedom Foundation includes research using desk research, polling, interviews and public consultation to measure change in awareness and understanding through the establishment of a benchmark within the industry which can be compared with future research.

Alarmingly, research concludes that 71% of financial services employees had never received training from their current employer regarding MSHT while on 21% feel “moderately” to “very confident” in identifying potential signs of MSHT in day-to-day work.

The report provides detailed information and guidance on MSHT in areas such as:

• Culture and strategy
• Monitoring and reporting
• Investing and engaging
• Detecting and disrupting
• Empowering and supporting

Although the report provides a wealth of guidance and resources for firms consistent with specific UK modern slavery and financial crime legislation, it is also highly relevant for firms with headquarters in the UK and financial institutions worldwide who are pursuing best practice. In addition to this, the paper is rich with case studys demonstrating real-world execution of such guidance and best practice.

The report also provides counsel on topics which go beyond the standard scope of identifying and reporting MSHT risks. This includes strategy for driving change in business partners with significant MSHT risks, and strategy for supporting survivors of MSHT who are often excluded from financial services due to lack of financial literacy, identification and documentation.

There is heavy emphasis on incorporating MSHT into the heart of the traditional financial crime compliance function due to the close links between MSHT and financial crime. The report notes that financial institutions have a wealth of data available across touch points and it stresses that patterns, rather than individual pieces of evidence often identify MSHT.

Through the research conducted it is evident that MSHT is merely regarded as a tick-box issue by many firms, rather than a potential legal, reputational and material risk. The reports objectives include the need to increase knowledge in the financial sector of the risks of MSHT, to increase awareness of direct and indirect linkages between financial institutions and MSHT, to encourage cultural change at the most senior levels and provide guidance for improved framework within firms to manage and address MSHT risks while contributing research to help advance national policy.

1. 1. There are low levels of awareness of the prevalence of MSHT
   An estimated 13,600 victims are currently believed to be caught up in modern slavery conditions throughout the UK in terms of sexual, labour and criminal exploitation of children. However, 30% of financial services employees polled in the research do not believe modern slavery is occurs in the UK. This indicates an alarming lack of awareness.
   
2. 2. Insufficient procedures are in place to monitor MSHT
   43% of board level managers and employees either did not know if their organisation had a modern slavery policy or confirmed they did not have one at all. Additionally, 71% of financial services employees state they had never had any training with their current employer regarding MSHT. This may be a reflection of the “tick-box” approach to MSHT risks by many firms, rather than treating this issue as a reputational, legal and material business risk.
   
3. 3. MSHT is not considered adequately in business decision making
   68% of financial industry employees surveyed did not believe the subject had been raised “more than a few times” by senior management, if at all in the past 12 months. Only 28% of respondents believe their company factors in modern slavery risks when making investment decisions. The report addresses this culture and states that business leaders should set the tone organisation wide signalling that MSHT is an important risk which should be integrated into all decision-making framework. There is also growing consensus within the business community that good management practice in regard to MSHT issues represent both corporate citizenship and business sense.
4. 4. A small number of pioneering institutions are leading the way
   A small number of firms are pioneering MSHT prevention and compliance through risk assessments up and down the supply chain as well as across operations. Again, in some firms MSHT is regarded as a tick-box issue evident through the MSHT being dealt with as a separate concern outside anti-money laundering/counter terrorism framework. The report encourages incorporation of MSHT into the heart of the traditional financial crime compliance function due to the close links between MSHT and financial crime and stresses the need for change from a “minimum requirement mindset” into a proactive institution. Pioneering firms mentioned in the report include Barclays, CCLA Investment Management and ABN Amro.
5. 5. Why is this relevant to finance?
   Non-financial measures of performance are increasingly becoming incorporated into investors', financers' and insurers' decision making. The growing consensus in finance is that MSHT exposure in a firm's operations and supply chain represents a legal and reputational risk while also being an unsustainable business model.
   
   Good human rights practices and ethical leadership also provide firms with more resilient access to capital, insurance and brand loyalty which are critical to long-term survival. Additionally, the financial services sector is highly exposed to MSHT risks through their operations with financing, investing and procurement among many other things. This demonstrates their leverage over the industry through the flow of funds.
   
6. 6. Why hasn’t this change occurred?
   Despite being a high risk sector with legislation meant to prompt action, there is yet to be large scale changes. This movement has not occurred due to inertia and a pursuit of short-term profits over business longevity by senior business leaders, as well as throughout the business. By setting a strong tone from upper levels of management, firms can change attitudes in relation to MSHT risks. The mandatory reporting requirements are also not stringent enough to induce this change due to the ability for firms to apply a “tick-box approach” with no external audit of the quality or truthfulness of MSHT reporting.