A coalition of Australian fund managers and super funds have written the 100 largest companies in Australia, encouraging them to examine broad supply chain risks of labour exploitation as a leading indicator of modern slavery.
The coalition of 24 investors, Investors Against Slavery and Trafficking (IAST) APAC, includes AustralianSuper, Cbus, Aware Super, HESTA, Australian Ethical and other fund managers representing $5.8 trillion in assets under management. IAST APAC sent a letter to the ASX100, signalling their shared concerns about industries and supply chains, with particular concern over "industries and supply chains where there is a significant use of vulnerable workers (e.g. migrant labour, base skilled labour), complex supply chains with many intermediaries, supply chains where oligopolistic buyers exert significant pricing power over suppliers and supply chains where there is significant pressure on lead times."
In addition to encouraging companies to take a detailed, risk-based mapping exercise of supply chains as a way to gain greater visibility of the supply chain, IAST APAC will work together in conjunction with Walk Free and the Liechtenstein Initiative for Finance Against Slavery and Trafficking (FAST) to create a common knowledge base and coordinate collaborative approaches to engaging with companies over managing disclosures of modern slavery and other labour exploitation practices.
There are multiple benefits to taking a collaborative approach at an industry level, said Kate Turner, responsible investment specialist, First Sentier Investors, one of the fund managers in the coalition.
"Obviously, as investors, as with other industries, we're all trying to grapple with the issue," she said. "How can we as a group come together and share knowledge amongst investors and amongst the companies that we invest in. There's definitely that knowledge sharing piece, and then there's a piece about how as investors we get together to create more meaningful change, by leveraging our collective assets under management and avoiding duplication of effort by coming together with a common message with the companies that we invest in, and how can we as a group provide a framework for investors to address the risks and meet their legal requirements."
Having sent the letter to ASX100 companies as the first step, the initiative will focus on providing support to Australian-based investment teams as they collect information on their operational and investment modern slavery risks, Turner said.
"The second work stream is the collaborative engagement," she said. "That's open to all our investment teams at First Sentier Investors to get involved if they want to, if they desire to. That's engagement with companies across APAC. There are opportunities for them to get involved and to benefit from the coalition's learning."
Walk Free and FAST's role will provide administrative support and act as a knowledge partner, said Shalini Samuel, financial sector engagement manager - Asia Pacific, Walk Free.
"It's about bringing the networks to the table when we're talking about modern slavery issues, but it's also about the research," Samuel said. "Walk Free is known for its research outputs. Having that means that IAST APAC not flying in the dark on this issue. There is a robust research and knowledge base that it can work with."
Walk Free and FAST are working on a knowledge partnership plan, Samuel added.
"We will first of all provide timely and up to date risk modelling around vulnerability models in in specific areas of target, and also the sectors at risk," she said. "Then also we're looking at curating content that would be usable for the investor community, at least for the IAST APAC community."
The secretariat of IAST APAC will also collaborate with civil society forums that are relevant to joint networks to gain on the ground knowledge, Samuel added. T
IAST APAC is also collaborating with global investors and peers who have previously focused on modern slavery risk and mitigation. Turner cited the work of CCLA, one of the UK's largest charity fund managers, which has developed the Find It, Fix It, Prevent It initiative, which is a framework designed to assist companies in taking the steps to address the modern slavery risks they have identified.
"CCLA approached us with the other founding investors because they recognize that a lot of the risk of modern slavery is in the APAC region," Turner said. "We are drawing a lot on the work they've done in the UK, and they've given us great engagement guidelines. We've also drawn on great work done in Australia, such as the RIAA/ASCI reporting guidelines on the Australian Modern Slavery Act."
The letter sent to ASX100 companies provided "overarching guidance and views" on where companies could start thinking about improving their approaches to identifying, monitoring and ameliorating modern slavery, Turner said.
"We note that every company and every supply chain is different and what is relevant to the apparel sector is different for the food and beverage sector," she said. "We don't set these out as expectations of what you need to do, we don't want companies to just go for straight legal compliance, but rather we're saying, here are some ways they might consider doing it."
The other members of the coalition include IFM Investors, Schroders, Aberdeen Standard Investments, ACSI, Perennial Value Management, Maple-Brown Abbott, Platypus Asset Management, American Century Investments, Grantham, Mayo, Van Otterloo & Co (GMO),
Ausbil Investment Management Limited, Fidelity International, Christian Super, MFS Investment Management, Ethical Partners Funds Management, VFMC, AllianceBernstein, Colonial First State Investments Limited, and Alphinity Investment Management.