Finance Sector Tackling Modern Slavery
5 Jun 2019
Investors can play a pivotal role in abolishing modern slavery - a massive and fast growing industry with forced labour alone generating an estimated USD 150 billion dollars in illicit funds per year. Over 40 million men, women and children were enslaved in 2016, the last year for which we have a reliable estimate. According to the International Labour Organisation (ILO), 71 percent of victims of modern slavery are female. Described as one of the defining human rights crisis of our time it is very much an international and transnational phenomenon requiring global solutions.
Modern slavery and human trafficking touch the financial sector in a number of ways: through their transnational supply chains, through laundering illicit profits, and through possible investments to businesses that then engage in this form of exploitation. In September 2015, 193 Member States of the United Nations pledged to take immediate and effective measures to end modern slavery, forced labour and human trafficking by 2030, as one step in the UN’s Agenda for Sustainable Development.
In response, ‘The Liechtenstein Initiative for a Financial Sector Commission on Modern Slavery and Human Trafficking’ was launched at the United Nations General Assembly last year. The commission is made up of a partnership between the governments of Liechtenstein, Australia, the Netherlands, the UN University in New York and a variety of banks and associations. By September 2019 it is planning to release a roadmap for accelerated action to put the financial sector at the heart of global efforts to tackle modern slavery and human trafficking. This roadmap will offer concrete tools that the sector can use. The Initiative adds: ‘With the release of the roadmap, the work will have only just begun. We are actively engaging with financial sector actors, regulators, businesses, policy-makers, associations, civil society groups and individuals to champion the roadmap and ensure its dissemination and take-up.’
The Commission explains that: ‘Modern slavery describes patterns of exploitation arranged in the gaps in the law and its enforcement, not on the solid ground of the law itself. It refers to the de facto hidden exploitation that our economic, legal and financial systems permit and acquiesce in, rather than a de jure system of chattel slavery in which people are formally treated as property. It takes myriad forms, from bonded labour in South Asian brick kilns to slave-like practices in Amazonian charcoal farms; from labour trafficking onto farms and nail salons in the US to sex trafficking from West Africa to Europe; from slavery on fishing vessels in South-East Asia to government-enforced labour in the cotton fields of Central Asia.’
In the second of its 2019 papers, the Commission has considered ideas to identify rapid, meaningful and scalable action by the financial sector on modern slavery and human trafficking. These ideas include embracing a responsibility to take action throughout extended value chains – also a focus for Australia’s Modern Slavery Act passed into law in 2018, requiring Australian companies to examine the human rights impacts of their supply chains.
Highlighting the local dimension of this global challenge combined slavery and human trafficking charges were laid for the first time ever in December 2018 as Immigration New Zealand cracked down on what they allege is a major scam involving Samoan migrants. The accused man had allegedly imported migrant workers from Samoa since 1994 to work in stonefruit picking gangs. Immigration say the workers claim the man confiscated passports, underpaid them, subjected them to assaults and threats. They also say their movements were heavily controlled. Local media reported that the horticulture sector is rife with such scams, particularly among sub-contractors who undercut law-abiding rivals by paying workers in cash, and below minimum wage.
The responsible investment fund managers that Money Matters recommends have been asking companies to detect and address modern slavery in their supply chains for some time, so the Australian legislative requirement is a positive development. We are receiving reports that New Zealand businesses are experiencing the Australian legislation applying to them as Australia is our biggest trading partner and the legislation applies extraterritorially and to any business with revenue of over $100 million. Responsible investment managers are encouraging companies to focus on supply chain consolidation because this reduces complexity and provides them with better oversight and more leverage with their suppliers. These initiatives highlight the role investors can play in terms of driving positive change on modern slavery.
Special thanks to NZ Commission Member Anne-Maree O'Connor for briefing New Zealand Sustainable Finance Forum Working Group Members at our May 2019 meeting.
