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Edition 8 - Sustainable Investment Insights

The history of slavery is marking a grim milestone, but change is coming

Slavery is a term often associated with colonial periods of the 17th and 18th centuries. Unfortunately, we have never known so many people to be affected by it, with over 40 million individuals worldwide forced into various forms of modern slavery on any given day1,2. Companies worldwide can expect associated policy, legislation and disclosure frameworks to continue to evolve to address this pervasive human rights challenge.

Modern slavery is, as the United Nations describes it, a 'grave human rights' issue often exacerbated by power inequalities. It includes exploitive practices such as slavery and servitude, forced labour, debt bondage, deceptive recruiting, child labour, human trafficking, forced marriages and sexual offences. Around 71 per cent of individuals affected by modern slavery are women and girls, often shackled by the norms and forces of poverty, cultural acceptance and discriminatory laws3. A quarter of people enslaved are children4.

About half of enslaved victims are in forced labour industries, including mining and domestic services. The remainder of those victims are often forced into sex, marriage and child slavery5.

Unless 9,000 people are freed from slavery every day – and current numbers are well below this – we have no hope of eradicating it this decade6. Hundreds of years of history tell us a reliance on goodwill and charitable efforts don’t do enough to curb the growth of modern slavery. Decisive, worldwide policy action is what’s necessary.

 

The hidden problem

Dr James Cockayne, director of the Centre for Policy Research and head of UN-led research project Delta 8.7, said modern slavery is effectively a product of the way the world works. He describes modern slavery as a “feature, not a bug” of the global political and economic system. This means our daily operations and supply chains, without many even being conscious to it, accept and perversely encourage slavery.

It is a hidden, everyday problem that many of us don’t realise we’re part of. Laptops, computer and mobile phones are the products considered most at risk of having modern slavery in their supply chains, with garments and ‘fast’ fashion coming in second. So what you’re reading this on now, and what you’re wearing, could well be a product of modern slavery.

For the United Nations, solutions need to be global and system-wide, given the overlapping nature of supply chains and trade set-ups. This would address one of the fundamental issues with modern slavery – even where there is a willingness to eradicate, steps are misguided. Dr Cockayne found there is a mismatch between where modern slavery occurs, and where governments worldwide are spending and acting to solve it.

 

Fixing the system involves companies worldwide

As at the end of 2019, most forms of slavery occur in the private sector, and about half of all countries have yet to criminalise it7. As such, there is enormous potential and power in policy and action which encourages the private sector to better understand and address modern slavery. Some of the key policy changes driving action in developed economies include modern slavery disclosure laws in the UK and more recently in Australia. These laws require annual reporting by businesses of actions taken to identify and mitigate modern slavery risks through their supply chains.

This mandatory action is, without question, the right thing to do. Increasingly, separate to any legislative requirements, our clients are also seeking greater transparency on how and where their funds are being invested. This is a reflection of sentiment in the broader market which applies to companies worldwide. Research from Morningstar indicates shareholders are demanding more disclosure on issues related to human rights, as reflected in proxy seasons last year8.

Within our business, we have a modern slavery project team, who are charged with assessing, reporting and educating the teams at AMP Capital, and ultimately, the stakeholders we work with. Their areas of focus include the supply of goods and services for our day-to-day operations and the investee companies and assets we manage and own on behalf of our clients.

Our ambition continues to stem beyond what’s mandatory by law, as we seek to play a leadership role by active participation in various industry working groups, sharing our insights globally, and helping craft guidance to educate investors about how their decisions can help mitigate modern slavery risks. It’s reasonable for companies to expect that what we’re seeing now, with this legislation in operation in the UK and Australia, is just the beginning. Understanding, identifying and preventing modern slavery in business operations is likely to increasingly be a mandatory part of operations.

Acting with a big picture goal to eradicate modern slavery shows the potential of the investment industry’s force for good in the world, and its ability to contribute to a stronger, fairer society for all of us.

 Milestones for the AMP Capital modern slavery project

2019 in review

  • Publishing our modern slavery ‘position’ and 2019 UK Modern Slavery Statement.
  • Raising awareness of modern slavery issues with investment teams.
  • Engaging investee companies in high-risk sectors. 
  • Launching a supplier code of practice and risk assessment tool. 
  • Tightening our due diligence and procurement screening processes.
  • Adding contract clauses into our service agreements. 

 

What’s in the pipeline?

  • Undertaking further deep dives across the business to better understand risk.
  • Establishing grievance and remediation channels, KPIs and reporting dashboards of risk control effectiveness.
  • Delivering a BAU management model in collaboration with AMP.
  • Responding to Australian Modern Slavery Act guidance.
  • Publishing AMP Capital’s next Modern Slavery statement by June 30.

Important Notes

While every care has been taken in the preparation of these articles, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) makes no representation or warranty as to the accuracy or completeness of any statement in them including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. Performance goals are merely goals. There is no guarantee that the strategy will achieve that level of performance. The information in this document contains statements that are the author’s beliefs and/or opinions. Any beliefs and/or opinions shared are as at the date shown and are subject to change without notice. These articles have been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. They should not be construed as investment advice or investment recommendations. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

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