IFM Investors calls for joint action throughout the investment chain in order to promote greater transparency, consistency of data and collaborative solutions.
While modern slavery remains one of the most neglected human rights problems today, IFM Investors, a global investor in private markets, calls for joint action throughout the investment chain in order to promote greater transparency, consistency of data and collaborative solutions.
His latest report, entitled “Addressing Modern Slavery in Investment Portfolios” (Fighting modern slavery in investment portfolios), underlines that modern slavery remains deeply rooted in the global economy and, by extension, in the portfolios of institutional investors around the world.
The document suggests that, if the asset holders on the main markets are increasingly granting priority to modern slavery considerations in their investment processes, the risks linked to modern slavery remain among the most difficult to detect in the context of reasonable investment diligence. Unlike environmental concerns, which are often assessed using technical measures and indirect indicators, modern slavery is often hidden in opaque supply chains, informal working structures and complex subcontracting networks.
IFM stresses that, if the regulatory environment evolves rapidly (more than 70% of companies in the main markets are now subject to rules in terms of modern slavery or human rights), gaps remain, many laws emphasizing disclosure rather than action and lacking means of implementation.
The document maintains that the fight against risks linked to modern slavery requires coordinated action of the entire investment ecosystem: asset owners, managers, companies, regulators, governments, civil society and communities concerned. IFM believes that investors must integrate considerations relating to modern slavery throughout the investment cycle, go beyond the information disclosed by companies and use their influence in matters of governance through the vote and responsible management.
As part of a strategic organizational response to modern slavery, the document presents the internal risk assessment model of the IFM supply chain, which maps potential exposure to risks throughout the supply chains at the level of sub-sectors, covering upstream, operational and downstream activities.
In addition, the document provides a consolidated list of recommendations for investors, political decision -makers, data suppliers and other sector players, calling for a more systematic approach to identify and, ultimately, eradicate modern slavery of investment portfolios, in order to also arouse positive changes in the real economy.
Quotes awarded to Maria Nazarova-Doyle, global responsible for sustainable investment at IFM Investors: “Modern slavery is not only a social problem, it is a risk of material investment which can erode value, harm trust and expose portfolios to increasing legal responsibilities. If institutional investors pay increased attention to this problem, they remain faced with major obstacles to remedy it. The detection is difficult, the tools are fragmented, the disclosure is inconsistent and the problem is often hidden in the depths of supply chains, where surveillance is the lowest. Any significant advance will require collaboration between asset owners, asset managers, businesses, regulators, civil society, governments and, possibly, workers and communities concerned in order to promote greater transparency, consistency of data and the implementation of collaborative solutions. ”
Quote attributed to Antonia Parkes, Senior Director ESG & Stewardship, Australiansuper: “Modern slavery practices constitute a systemic risk. A company cannot eliminate this risk alone. In addition to our commitment to some of the companies in which we invest directly through our ESG and responsible management program, we also participate in collaborative forums, because it is important to work with other investors in order to identify opportunities to combat risks linked to modern slavery. ”
Quote allocated to Liza McDonald, responsible for responsible investment at Aware Super: “Investors can make a significant contribution by raising awareness among companies to report cases of modern slavery and by eliminating the stigma associated with these disclosure. This effort would help the market to reach a level of transparency comparable to that of the reports on quasi-accidents in security protocols. ”
Quotation attributable to Tom Sanders, ESG Senior analyst, Nest: “Respect for human rights and the eradication of modern slavery in companies are closely linked to the resilience of the value chain and the stability of the commercial environment. As investors, we recognize the operational, financial, legal and reputation risks to which companies are exposed when they fail to manage the risks linked to modern slavery and human rights. “
