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“Rather than reducing across the globe, I’m afraid [modern slavery] is increasing,” Dame Sara Thornton, the former independent anti-slavery commissioner, told Financial News. “It’s not just an issue in far flung places; it is an issue in the UK.”

Thornton joined CCLA Investment Management in November and is consulting on its investor-led initiative urging UK companies to review their supply chains for signs of labour exploitation.

So far, 62 investors with £13.4tn in assets under management have signed up to Find it, Fix it, Prevent it.

Pressure is mounting on the private sector to spearhead company engagement efforts to prevent modern slavery from becoming an even bigger problem in the UK.

In October, the government reclassified modern slavery as an illegal immigration issue, transferring the brief away from its safeguarding minister to its immigration minister. Charity Anti-Slavery International warned that the move will result in more victims slipping through the cracks.

Thornton said: “To look at the crime of modern slavery through an immigration lens is problematic, not least because a lot of victims are British.”

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CCLA chief executive Peter Hugh Smith told FN he is “grateful” for the support the initiative has received. But he is also keenly aware there are “a lot of firms in the City who haven’t signed up”.

“There are all sorts of reasons for that, and many of them are good. But ultimately, I think the wider finance industry can and should do more with actually taking on some of those responsibilities,” he said. “This is not about sacrificing return; this is about responsible capitalism.”

Under Section 54 of the UK Modern Slavery Act, introduced in 2015, businesses with a turnover of £36m or more are required to publish an annual statement explaining how they are addressing the risk of slavery in their operations and supply chains.

However, a study published by the Financial Reporting Council in April found that one in 10 companies failed to produce one.

By refusing to inspect supply chains, working conditions, and recruitment practices, companies run the risk of reputational damage, Thornton said.

Fast fashion firm Boohoo learned that the hard way. Its share price has tanked nearly 90% since an investigation by The Times revealed workers in some of its Leicester factories were being paid as little as £3.50 an hour — £5.22 below the national living wage at the time.

On 22 November, an undercover investigation by the same paper reported that staff in its warehouse in Burnley, Lancashire, who referred to themselves as “slaves”, were being forced to walk the equivalent of a half marathon in temperatures of up to 32°C during the course of their working day.

As of 30 September, Fidelity and Schroders, which are part of CCLA’s anti-slavery initiative, were among Boohoo’s biggest backers, each owning a little over 5% of the business. Norges Bank Investment Management, which oversees Norway’s government pension fund, was the largest institutional investor, owning just under 7%.

A Fidelity spokesperson said that rather than divestment, the company “considers positive engagement is the most effective way to improve corporate responsibility and behaviour”.

“We recognise the concerns being raised and have engaged with Boohoo specifically on key ESG considerations, including human rights. We will continue to monitor this issue closely and will raise directly in future engagement.”

Schroders said it expects the companies it engages with to establish and implement a human rights policy in line with the United Nations’ guiding principles.

“Businesses should carry out effective human rights due diligence and provide access to effective remedy for any victims of human rights abuses,” a spokesperson said. “Working conditions for both direct employees and in supply chains is an important area of focus and engagement on this topic is a constant process.”

Norges Bank declined to comment.

Thornton says that pushing for greater transparency through company engagement is the best strategy, and divestment should only happen “in the most extreme circumstances” because “vulnerable workers” will suffer.

READ Ninety One sustainability boss: Divesting from oil and coal doesn’t work

Following the first year of CCLA’s initiative, which targeted the UK hospitality industry, InterContinental Hotels Group identified high-risked indicators of forced labour in its Oman operations and disclosed this for the first time.

The investor cohort has since turned its attention to construction, a sector it says is prone to forced labour abuses due to high turnover on building sites and heavy reliance on temporary migrant workers. Investors are engaging with 17 companies, including FTSE 100 builders such as Barratt Developments and Taylor Wimpey.

Thornton said the Modern Slavery Bill announced in May would also “make a difference” by raising standards and creating a “level playing field” for companies.

The bill would give companies greater guidance on what needs to be included in a modern slavery statement, require both the public and private sector to report according to set deadlines, and fine companies that fail to comply with the law.

Avoiding possible legal blowback might also force some companies to take modern slavery issues more seriously.

“If you look at what is happening across the globe, you’ve got a movement from voluntary codes to hard law,” said Thornton. “So, if companies are thinking about being successful in the future, they do need to be watching what’s happening in terms of import bans in the US, which have been used to great effect, but also the EU mandating sustainability disclosure and also looking at forced labour bans as well.”

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To contact the author of this story with feedback or news, email Kristen McGachey