Asset managers are fighting back against modern slavery with a global benchmark, but leading banks in particular are failing to meet investor expectations around ESG.
As investor expectations around human rights due diligence escalate, particularly for financial institutions, CCLA Investment Management has launched a global version of its modern slavery benchmark, targeting 95 major companies with substantial operations in the UK. Many are failing to match basic standards of transparency.
The initiative, which scrutinises disclosures from some of the world’s largest banks, tech giants and energy firms, underscores a mounting shift in environmental, social and governance (ESG) investing from procedural compliance to real-world accountability.
For banks, many of which scored poorly in the new rankings, the message is clear: risk management must extend beyond balance sheets to include forced labour risks, buried in investment and lending portfolios.
Several leading banks, with major wealth management franchises, feature in the research. Despite the financial sector’s global influence, banks were disproportionately clustered in the lower tiers of the benchmark. Household names like JP Morgan Chase, Goldman Sachs and Bank of America all failed to meet basic expectations on modern slavery disclosures. According to CCLA, the sector remains overly reliant on desk-based compliance and has been slow to extend due diligence into its investment and lending portfolios.
Chinese banks fared particularly poorly, with all five assessed institutions — Agricultural Bank of China, Bank of China, China Construction Bank, Industrial and Commercial Bank of China and China Merchants Bank — ranking in the lowest two performance tiers.
None disclosed meaningful action to identify or remedy forced labour risks, and some failed to publish a modern slavery statement altogether. This lack of transparency, despite significant operations in the UK, highlights what CCLA described as “a glaring gap in global accountability”. It says that without minimum disclosure standards, it becomes impossible for investors to assess whether these institutions are managing systemic human rights risks.
China Merchants Bank, named Best Digital Innovator of the Year in China at this year’s PWM Wealth Tech Awards, was approached for comment but did not respond.
“We’ve done the UK benchmark for two years, but global companies with major UK footprints remained outside the scope,” says Martin Buttle, CCLA’s better work lead. “These firms employ millions and shape global supply chains. They must be held to the same scrutiny.”
Corporate disclosures
CCLA’s Modern Slavery Global Benchmark Pilot assessed corporate disclosures against its “Find it, Fix it, Prevent it” framework, developed in partnership with seventy institutional investors overseeing more than £19tn ($26tn) in assets under management. The average score was just 30 out of a possible 62, with only 23 companies disclosing any instance of modern slavery, a statistic Mr Buttle finds implausibly low.
“Fifty million people are trapped in modern slavery globally, with 28m in forced labour,” he notes. “These numbers are going up.”
He cites factors including climate change and growth of authoritarian regimes, contributing to mass migrations of vulnerable workers liable to exploitation by unscrupulous employers. “We believe it’s likely to be in the supply chains of most global businesses,” he explains.
“Fifty million people are trapped in modern slavery globally, with 28m in forced labour. These numbers are going up” — Martin Buttle, CCLA
The report reveals a telling gap between corporate policy and real-world action. While 48 companies had responsible procurement policies on paper, only nine disclosed how these were operationalised. The weakest-performing section of the benchmark, "Fix it", which covers victim remediation, averaged just 1.5 out of 8 points.
According to Mr Buttle, many firms wrongly assume that publishing a human rights policy satisfies investor expectations.
“Disclosing policies and practices doesn’t really actually tell us very much... whether their due diligence processes are actually finding the issues. Investors need to understand efficacy,” he adds.
With impending legislation across the EU and existing laws like the US Uyghur Forced Labour Prevention Act, regulatory risk is intensifying. “We could see more products barred from entering markets,” he warns. “Companies are managing these risks and ensuring that products linked with forced labour do not enter certain markets.”
High risk exposure
Sectors with complex, layered supply chains such as consumer staples and technology performed better. Yet sectors with equally high risk exposure, such as finance and energy, scored lowest, averaging just 23.9 and 23.6, respectively.
“Energy companies are going to be employing a lot of contract labour on oil rigs” and solar power is also a risky sector, says Mr Butle. “A large proportion of the world’s polysilicon comes from Xinjiang.” Meanwhile, financial institutions often ignore “downstream risks”, investments and clients linked to forced labour. That has to change, he states.
For the first time, CCLA employed artificial intelligence to score company disclosures at scale, using a large language model (LLM) developed with ESG consultancy Canbury.
“It’s a hybrid approach,” Mr Buttles explains. “We gathered documents by hand, trained the model on past benchmarks, and did extensive quality control.”
Around 30 per cent of companies responded to verify or amend their data.
Despite growing scepticism over AI's reliability in ESG assessments, CCLA insists its safeguards preserve credibility and accuracy. LLMs can analyse large volumes of text efficiently, but human judgment remains critical, he asserts.
For investors exposed to companies in Tier 4 and Tier 5, those showing the weakest responses, CCLA advocates for aggressive stewardship.
“Engagement should escalate if responses are inadequate,” Mr Buttle advises. “That can mean bypassing IR teams and going straight to boards. And if dialogue fails, investors should consider voting against financial reports.”
CCLA also recommends investors join collaborative campaigns such as Find it, Fix it, Prevent it, or support initiatives like Rathbones’ Votes Against Slavery.
CCLA has confirmed it will repeat the assessment next year. Beyond ranking companies, the firm is already in dialogue with UK and international regulators to embed findings into policy reform.
Their aim is impact, Mr Buttle concludes. “We have developed this benchmark to better understand and to guide engagement. It’s a platform for continuous improvement.”
