When investors frame the conversation about the risks of
modern slavery, we tend to cite a common set of facts and a common set of arguments as to why
modern slavery and other forms of human rights exploitation can bear a financial cost as well as a pose a moral challenge.
Modern slavery is an umbrella term used to describe serious forms of exploitation, including forced labour, debt bondage, servitude, forced marriage and human trafficking. Under Australia's Modern Slavery Act 2018, reporting entities with more than $100 million in annual revenue are required to identify and disclose the risks of modern slavery in their operations and supply chains and describe the actions taken to address those risks.
As a responsible investor, U Ethical considers modern slavery risk as part of its broader assessment of environmental, social and governance (ESG) risks that may affect the long-term sustainability and value of investments.
The statistics are stark and widely acknowledged as estimates at best. According to Walk Free's Global Slavery Index 2023, 50 million people are experiencing modern slavery, with a further 28 million in forced labour as of 2021. Asia and the Pacific are particularly exposed to modern slavery, with Walk Free reporting that in our home region, an estimated 29.3 million people were living in modern slavery and 15 million people experienced forced labour during the same time period.
These are the most up-to-date estimates, but there is no reason to believe that fewer people are experiencing modern slavery and forced labour in 2026 than five years ago.
These facts are marshalled into the arguments as to why investors should have a regard to how portfolio companies manage modern slavery and wider human rights issues across their value chains, as encapsulated in the Responsible Investment Association Australasia's Human Rights in in Global Value Chains Investor Toolkit:
From an investor perspective, some of the key financial impacts include brand damage, which can lead to loss of sales, and reputational issues, which can be hard to quantify. Given that market value is increasingly made up of intangible drivers, including brand and customer / supplier relationships, human rights issues can be material and can therefore impact valuation multiples.
Even as companies and investors strategise on how to manage the risks of modern slavery in their value chains, it is worth remembering that behind all these facts are stories of misery and exploitation, which is why taking a survivor lens to evaluating proposed approaches to ameliorate modern slavery is essential. It grounds us in the human beings behind the statistics.
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