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Report: data for investor action on modern slavery

Press release: New report lays groundwork for developing data solutions for investors to help address modern slavery.

Published: 14th June 2021

Press release: A new report published today lays the groundwork for developing better data solutions for investors to address the issue of modern slavery in investment portfolios.

The report, entitled Data for investor action on modern slavery, maps out the potential of data in enabling investors to take effective action on modern slavery by analysing the kinds of insights investors need and examining the role that different kinds of data can play in arriving at these insights.

The report was commissioned by the Modern Slavery and Human Rights Policy and Evidence Centre (the Modern Slavery PEC) and developed by the Alan Turing Institute and the Bingham Centre for the Rule of Law. The Modern Slavery PEC is a publicly funded body created to transform the effectiveness of laws and policies designed to overcome modern slavery. The Centre is a consortium of six academic organisations and is funded by the Art and Humanities Research Council (AHRC).

There is increasing recognition that investors can play a crucial role in addressing modern slavery in the business context. However, actionable information on investee companies' exposure to and management of modern slavery risks is scarce and often presented in ways that are difficult to integrate into investment business processes.

“Investors are an important part of the puzzle in responding to modern slavery, as they can apply pressure on companies to prevent exploitation in their supply chains” said Prof. Alex Balch, Director of Research at the Modern Slavery PEC, which commissioned the research. “Improving the understanding of factors that can support businesses in preventing modern slavery in supply chains is one of our priorities. This report provides a good groundwork for investors to take more effective action.”

“Data-driven insights are critical to investors’ ability to integrate the issue of modern slavery into investment decisions and company engagement activities in ways that prioritise action where it is most urgently needed. Yet, reliable, complete, and sufficiently detailed data is often lacking, and data that does exist can be difficult for investors to use”, said Dr Florian Ostmann, Policy Theme Lead at the Alan Turing Institute, the report’s co-author.

“Investors are increasingly aware of modern slavery and that it is likely to affect the companies they invest in” says Dr Irene Pietropaoli, Research Fellow at the Bingham Centre, co-author of the report. “They need reliable external sources of data to minimise their modern slavery risks, but also increasingly require companies themselves to provide transparent data about how they manage those risks”, she added.

Based on consultation with investors, the analysis identified two main types of insights that investors need: information on the significance of modern slavery in the context of a given company and information on the company’s performance in managing modern slavery risks. The research mapped out data sources with relevance to these types of insights, grouping them into four categories: general information about the occurrence of modern slavery; information about legal and societal expectations on companies; information controlled by investee companies (such as Modern Slavery Statements); and company-specific information from independent sources (such as company ratings, information about independent audits, or information about company-specific controversies).

The report found that although recent years have seen progress in developing data resources on modern slavery, there are significant obstacles to obtaining the kinds of actionable data-driven insights needed by investors. These include data being incomplete (for example covering only certain companies or sectors), difficult to compare, or taking unstructured forms (for example in the case of Modern Slavery Statements). The fact that access to data from commercial providers often requires payment is another factor that contributes to a fragmented data landscape.

The researchers sought to identify strategies for overcoming these obstacles. The resulting analysis lays the groundwork for developing new and improved data solutions that cater to investors’ information needs.

“We lay out the ways in which data could be organised, analysed, and presented to make it accessible for investors”, said Dr Pietropaoli. “There is much to do to develop such solutions, but I believe this research provides a good basis for this work.”

Examples of strategies for arriving at improved insights identified by the research include the use of data science techniques such as natural language processing (NLP) or probabilistic inferences about missing or weak information.

“The use of NLP holds the promise of facilitating the analysis of unstructured data, such as information contained in company disclosures, at scale, thus helping to address the practical challenges often associated with the use of such data. There is also significant potential in exploring new forms of predictive modelling in relation to the various analytical tasks faced by investors seeking to address the issue of modern slavery”, says Dr Ostmann.

Crucially, the research emphasised the need for coordination and collaboration between stakeholders involved in the development of data solutions for investors. Given the diversity and fragmentation that characterise the current landscape, such coordination and collaboration is essential for ensuring that work focuses on areas where it can make the biggest difference while avoiding duplication of efforts.

“We need to mainstream modern slavery considerations into investors’ day to day practices. It’s essential that all actors in this sphere, from governments to data providers, businesses and investors work together to achieve it”, said Prof Balch.

Independent Anti-Slavery Commissioner, Dame Sara Thornton, said: “Environmental, social and governance concerns are rising rapidly up the investor agenda, creating a pressing need for standardised, measurable and accessible data that can help investors wield influence in a meaningful way to combat exploitation of people as well as of the planet.

“I welcome this report and, as various models and partnerships evolve, hope that it will help to frame discussions around the most effective and pragmatic steps that we collectively need to take towards a global solution to ending exploitation in all its forms.”

“Modern slavery represents a tragic market failure that will not end without the active engagement of the global financial sector”, said Fiona Reynolds, CEO of Principles for Responsible Investment (PRI), a UN-supported network of investors working to promote sustainable investment. “We therefore welcome this report as an important step towards empowering institutional investors to use data effectively to help uphold human rights in global supply chains.

Notes to editors:

For further information or to arrange interviews please contact Modern Slavery PEC’s Communications Director Jakub Sobik at j.sobik@modernslaverypec.org or on 07912145610.

The Modern Slavery and Human Rights Policy and Evidence Centre (Modern Slavery PEC) was created by the investment of public funding to enhance understanding of modern slavery and transform the effectiveness of law and policies designed to prevent it. With high-quality research it commissions at its heart, the Centre brings together academics, policymakers, businesses, civil society, survivors and the public on a scale not seen before in the UK to collaborate on solving this global challenge.

The Centre is a consortium of six academic organisations led by the Bingham Centre for the Rule of Law and is funded by the Art and Humanities Research Council on behalf of UK Research and Innovation (UKRI).

The Bingham Centre for the Rule of Law is dedicated to the study, promotion and enhancement of the rule of law worldwide. It does this by defining the rule of law as a universal and practical concept, highlighting threats to the rule of law, conducting high quality research and training, and providing capacity-building on the rule of law to enhance economic development, political stability and human dignity.

The Centre helps countries, international organisations, corporations and legal bodies to build rule of law commitments, whilst improving the skills and abilities of legal practitioners and governments around the world to secure access to justice for their populations. The Centre is part of the British Institute of International and Comparative Law (BIICL), an independent research institute established in London over 50 years ago. Read more about the Bingham Centre at www.binghamcentre.biicl.org.

The Alan Turing Institute is the UK’s national institute for data science and artificial intelligence. The Institute is named in honour of Alan Turing, whose pioneering work in theoretical and applied mathematics, engineering and computing is considered to have laid the foundations for modern-day data science and artificial intelligence. The Institute’s goals are to undertake world-class research in data science and artificial intelligence, apply its research to real-world problems, drive economic impact and societal good, lead the training of a new generation of scientists, and shape the public conversation around data. turing.ac.uk

The Arts and Humanities Research Council (AHRC), part of UK Research and Innovation (UKRI), funds internationally outstanding independent researchers across the whole range of the arts and humanities: history, archaeology, digital content, philosophy, languages and literature, design, heritage, area studies, the creative and performing arts, and much more. The quality and range of research supported by AHRC works for the good of UK society and culture and contributes both to UK economic success and to the culture and welfare of societies across the globe.