The phrase “modern slavery” tends to bring up all sorts of unpleasant images in our minds about forced labour, sweatshops and sex trafficking.
Few of us tend to associate it with the word “investment” or “financial services”, however.
Yet it is not just industries such as agriculture and apparel which involve this kind of exploitation. Financial services are exposed to it as well.
In this article, we’re going to explore some of the links between investment and modern slavery, and suggest some ways you can not only put your money to profit – but also towards making a real difference in the world.
Modern slavery: an overview
Many people simply are unaware of the scale of the problem of modern slavery. Globally, it is estimated that there are at least 40 million people living in “slave-like” conditions today. That’s actually more slaves than there were during the time of William Wilberforce, and the abolition of the transatlantic slave trade.
“Modern slavery” includes a number of inhuman practices such as debt bondage, human trafficking, deceptive labour recruitment, labour bondage, and child labour. Usually, people living in these conditions are exposed to regular threats, power abuses, violent acts, freedom deprivation and coercion.
Countries with a high prevalence of modern slavery include places like Somalia, Mauritania, Iran, Myanmar, Thailand and Cambodia. In fact, nearly two-thirds of the world’s modern slaves live in Asia or the Pacific regions.
Yet the Western world is not immune to the presence of modern slavery, despite various laws and norms to try and prevent it. In the UK, for instance, it is estimated that over 136,000 people lived under modern slavery conditions in 2018. Much has been done in the UK to try and address the problem of modern slavery, yet there is still more work to do.
Environments in the UK where you are more likely to encounter people living in these conditions include nail bars, car washes, cleaning areas and factories. So one way to make a difference is to keep an eye out when visiting these places and pay attention to the pricing. If your cash wash is going to cost you £5, then ask yourself if the workers there are really being paid fairly.
Yet is there more that investors can do to make a difference to help people living in modern slavery, beyond simply “keeping an eye out” in public?
Yes, we believe there is.
Investment & modern slavery
Tragically, only 0.2% of modern slaves are actually helped each year – despite the efforts of numerous NGOs, governments and international organisations.
To truly make a difference, therefore, people in the private sector need to mobilise and act. That’s where investors can step in.
It isn’t always easy to know exactly where to start in this area as an investor. Where exactly can I put my money in order to positively impact people’s lives, whilst making a return? How can I be sure that my money is actually being put towards a good cause?
We cannot possibly give a complete answer to these questions within one article, but we can suggest some good places to start.
First of all, it’s important to recognise that particular goods are more likely than others to have been produced under modern slavery conditions and within certain territories.
For instance, fish, sugarcane and cocoa from Indonesia are more likely to be produced by modern slaves compared to cars in Japan (although the latter is not risk-free).
By educating yourself about the kinds of supply chains most at risk to modern slavery, it becomes easier to select funds and investments which minimise, or avoid, these kinds of practices and conditions.
It’s also helpful to know which industries have a higher exposure risk to modern slavery. A recent study by the Australian Council of Superannuation Investors (ACSI) found that there are at least six industries which should be in your radar, as an ethical investor:
● Textiles & apparel
● Financial services
● Mining construction & property
● Food & beverages
● Agriculture
● Healthcare
The financial sector is an interesting one, as this doesn’t usually spring to mind when people talk about modern slavery. Certainly, the direct business operations of financial services are not highly exposed to modern slavery, due to the highly-skilled workforce which is needed (investment managers, accountants etc.).
However, these financial firms’ supply chains might be affected by modern slavery, such as their IT procurement and facilities management. Financial firms can also have a big impact on modern slavery through their choice of investment funds offered to clients.
By selecting funds containing companies with adequate anti-slavery policies and procedures, for instance, financial firms can offer clients more ethical investments to commit their money to.
What should we do?
It might surprise you to hear that the financial services industry, globally, is still rather underdeveloped with regards to its approach to modern slavery. Traditionally it has seen itself as “low risk” due to its skilled workforce. Yet many businesses are starting to wake up to the impact that their funds and supply-chains can have on modern slavery.
Ignoring the situation is no longer sustainable. Power and change tend to move where the money goes. So if investors can start to become more aware of the difference their money can make, and be offered viable and ethical assets and funds to invest in by the financial sector, then everyone could make much more of a positive difference.
Of course, it isn’t always straightforward. After all, what would happen to those people working in those awful factories if every investor suddenly pulled their money out of these companies, and put it into more ethical funds? Wouldn’t all those people lose their jobs and means of income, as meagre and pitiful as these might be?
Those are difficult questions and perhaps the answer lies in making people more aware of the problem of modern slavery and putting increasing pressure on the private sector to move closer towards where it should be on this subject.
As companies start to see where the winds of change are blowing, they can put measures in place to start to change course.
