How investors can help tackle modern slavery

Ensuring peaceful and inclusive societies, as well as providing access to justice for all, is a huge task and a universal responsibility. Unfortunately, as events with Russia and the Ukraine are highlighting today, along with the continued displacement of families from places such as Syria, the world is a long way from achieving much of this. Hundreds of millions of people are living in fragile and conflict-affected countries and the pandemic has exposed and intensified inequality and discrimination, disproportionately effecting the most vulnerable worldwide.

“Poverty is not an accident. Like slavery and apartheid, it is man-made and can be removed by the actions of human beings.” — Nelson Mandela

The UN’s Sustainable Development Goal #16

The UN’s Sustainable Development Goal #16 of peace, justice and strong institutions, is broad, complex and multifaceted, and addresses priorities such as global governance and the rule of law. The aim is to promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.

Much still needs to be done to address a number of issues including the displacement of people due to persecution, conflict or generalised violence; the risk of exploitation, trafficking and child labour; and ending bribery.

Spotlight on modern slavery

The hidden nature of slavery today means it can be easily overlooked but it’s a global problem. Although most prevalent in countries marked with conflict and in emerging markets, we have seen slavery and exploitation of workers in developed economies as well, even as close to home as Leicester.

In fact, in one of its many reports on the subject, EdenTree, who’s Responsible and Sustainable UK Equity fund is rated by FundCalibre, says that tens of thousands of people in the UK could be affected by modern slavery*.

The UK Modern Slavery Act 2015 categorises four types of offence – slavery, servitude, forced compulsory labour and human trafficking – with debt bondage the most common method of labour exploitation, accounting for about half of all victims of modern slavery.

Risk to children increasing

Millions of children around the globe also face different forms of exploitation, including trafficking and child labour.

The risk to children is increasing due to the combined effects of pandemic-rated school closure and economic distress. As a direct result, global trends point to a rise in child labour for the first time in two decades**.

The continued impacts threaten to push an additional 8.9 million children into child labour by the end of 2022**, as families send children out to work in response to job and income losses.

How can investors help?

A largely policy-focused goal makes it harder to scrutinise from an investment point of view. But investors can still play a role by incorporating global principles into their investment processes to address egregious practices such as human rights abuses and labour rights failures.

This is one of the focuses of Rathbone Greenbank Global Sustainability fund and, by holding companies accountable for their progress towards the wider objectives of SDG 16, investors can actively tackle and engage on issues like corruption and modern slavery.

Edentree is one of the few companies that has started to engage on the subject, particularly with companies in the UK construction industry, where the problem has been highlighted. “Whatever the reason for the historic lack of investor engagement in this area, we as an industry can and must do much more to tackle this affront to society, starting now,” it said.

Jamie Jenkins, co-manager of BMO Responsible Global Equity, also discussed his engagement with companies around labour and human rights issues in this podcast:

Alquity, who’s Indian Subcontinent fund has just been rated by FundCalibre, tackles some of these issues in different ways. Since the launch of the business in 2009 all of the firm’s portfolios are aligned to the UN Social Development Goals, and the business donates 10% of revenues to high impact projects in the regions the funds invest, through the Alquity Foundation. So far it has awarded over $2 million to help transform more than 65,000 lives.

For example, in India, Alquity has a ‘Transforming Lives’ project called Phool – Hindi for flower. It’s a social enterprise that employs women from the lowest castes to collect used flowers from temples and recycle them into incense sticks. It now employs over 300 women and recycles tonnes of flowers that would otherwise pollute the rivers when discarded by the temples.

Consumers can also act

According to M&G, the Global Slavery Index has found that $18bn of goods imported to the UK every year are “very likely” to have slave labour incorporated into their production.

As consumers, we are more empowered than ever, and both choice and social media have made it easier than ever for us to boycott brands and inflict reputational damage on a company. Modern slavery is a global systemic issue which requires collective action to address.

Interconnected goals

Poverty (SDG 1) is considered to be the most important cause of child labour and it deprives children of proper education (SDG 4). Several other Sustainable Development targets address specific forms of violence and harm towards children, such as child marriage (SDG 5) and the eradication of child labour (SDG 8).

 

*Source: https://esgclarity.com/investment-industry-must-stop-ignoring-modern-slavery/
**Source: UN Sustainable Development Goals, 2021 Report
***Source: M&G Modern Slavery report

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.