Research on Modern Slavery Reveals Investors’ “Defensiveness”  

Global North remains ahead on collaborative efforts, but African investors prioritise social risks in investment approaches. 

New research and guidance for the financial sector on tackling modern slavery has put Global South investors and people with lived experience of slavery in the conversation for the first time. 

The research is based on in-depth interviews with 40 investors from Africa, South-East Asia and the Global North, civil society organisations and trade unions, and external research papers on the issue of modern slavery.  

Speaking to ESG Investor, Professor Sofia Gonzalez De Aguinaga from the Bingham Centre for the Rule of Law and co-author of the Modern Slavery and Human Rights Policy and Evidence Centre’s (Modern Slavery PEC) research, said: “We decided to do the research because the role of investors in addressing modern slavery is important, but it is usually spoken about as a homogeneous group in this context. We didn’t know exactly which actors were doing what and how. So, it was trying to fill a gap we saw in this space.”  

The Centre’s research, conducted with the Finance Against Slavery and Trafficking Initiative, found collaborative engagement practices on modern slavery were more prevalent in the Global North. Examples this include the UK’s CCLA Investment Management’s ‘Find It, Fix It, Prevent It Coalition’ which has expanded from £3.5 trillion (US$4.2 trillion) in 2019 to £12.8 trillion in managed assets in 2022. 

Interviews conducted with investors in the Global South, however, illustrated an increasing recognition on the influence of collaborative action through investor coalitions such as Investors Against Slavery and Trafficking Asia-Pacific.  

The initiative comprises 42 investors with A$4.9 trillion (US$3.1 trillion) in assets under management, together with the Australian Council of Superannuation Investors (ACSI), Walk Free, and FAST.  

The research also found that the term ‘modern slavery’ could trigger defensive responses from investors in South-East Asia, while addressing child labour was mentioned as a priority across Africa and South-East Asia.  

“We did find that investors in South-East Asia were not familiar with modern slavery as a term,” said Gonzalez de Aguinaga. “In the UK or Australia, where there is modern slavery legislation, there’s more recognition of the term.” 

In recent years, governments have introduced legislation to hold businesses accountable for exploitation that occurs in global supply chains such as the EU, USA, Germany, Norway, Switzerland, Canada, Australia and Japan.  

The UK was the first out of the blocks with the Modern Slavery Act enacted in 2015.    

Engagement with survivors of slavery  

Interviews also found that Global North and South-East Asian investors prioritised environmental factors over social considerations in their ESG framework, African investors, however, highlighted social risks as a priority in their investment approach. 

The research also found that there is limited engagement from investors with people with lived experience of modern slavery.  

Gonzalez de Aguinaga said more engagement with people affected by slavery could help the data challenge also highlighted in the research.  

“We find that investors are not capitalising on the knowledge of people with lived experience or from civil society associations,” she said. “This is hampering how much they could know in terms of data collected from these associations or people with lived experience.”  

Based on the research, the Modern Slavery PEC recommends market capital actors develop dedicated social policies that align with international human rights and labour standards and principles.  

It also advises market capital actors to partner with modern slavery knowledge experts, including civil society organisations, workers’ rights organisation, and survivors to obtain actionable data, as well as incorporating human rights and environmental due diligence processes throughout the investment life cycle to identify, prevent, mitigate, and remediate modern slavery risks.  

The research found that most capital market actors are focused on mitigation of modern slavery risks in their value chain with little efforts on remediation. In terms of reducing vulnerabilities, most capital market actors focus on providing access to finance.  

Last month, CCLA Invesment Management warned that the finance sector is not doing as much as other sectors on tackling modern slavery and called for mandated reporting on slavery risks in investing and lending portfolios.  

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