Podcast: Catching human rights risks early

Question:

Why does modern slavery persist despite Australia's Modern Slavery Act, and what practical steps can investors and fund managers take to drive real change beyond compliance?

Answer:

Modern slavery remains a global issue, with an estimated 50 million people affected. Australia's Modern Slavery Act has increased awareness but hasn't yet reduced incidents. According to Måns Carlsson, OAM, head of ESG at Ausbil Active Sustainable Equity, the key is moving beyond a "compliance mindset" to genuine leadership. This means harmonising laws internationally, adopting human rights due diligence (not just reporting), and using investor influence for practical engagement with companies.

Investors can't guarantee portfolios are free from modern slavery risk, but they can:

• Incentivise suppliers to meet responsible sourcing standards, focusing on deeper supply chain tiers (not just tier one).

• Use tools like worker voice technology for real-time feedback, rather than relying solely on annual audits.

• Collaborate with other investors and advocate for stronger, harmonised laws (e.g., import bans on goods made with forced labour).

• Support companies to improve, rewarding progress rather than demanding perfection.

The real power lies in ongoing, practical engagement and policy advocacy, not just risk assessments or box-ticking.

Why it matters:

Modern slavery is not just a legal or ethical issue-it's a material risk for companies and investors. Reputational damage (as seen with Boohoo in the UK) can hit share prices hard and fast. As global regulation tightens, companies that fail to act may find their goods blocked from key markets. For investors, supporting companies to improve standards helps reduce risk, avoid negative surprises, and contribute to positive change.

Sources:

• Måns Carlsson, head of ESG, Ausbil Active Sustainable Equity

• Michelle Baltazar, executive director of media, FS Sustainability

• RIAA Human Rights Working Group toolkits

Timestamps:

00:00 - Why modern slavery persists; need for global collaboration

02:01 - Investor relevance: reputational risk, earnings sustainability

05:51 - Harmonisation, human rights due diligence, import bans

08:40 - Practical steps: engagement, worker voice tools, supplier incentives

13:19 - Responsible purchasing and unintended consequences

16:40 - Monitoring deeper supply chain tiers

18:32 - Accountability and ongoing engagement

20:54 - ESG, risk management, and performance

We record on Gadigal Land and we pay our respects to the traditional custodians of country and elders past and present.

https://www.fssustainability.com.au/