ESG and Modern Slavery: How to Monitor and Reduce Risks
Modern slavery falls under the ‘S’ in ESG and presents a huge risk to organisations and their supply chains. The International Labour organisation (ILO) estimates that there are over 40 million people globally experiencing modern slavery, with 75% of these people living in Africa and the Asia-Pacific region. This estimate could be even higher now due to the impacts from the COVID pandemic.
What is modern slavery?
Human rights organisation Anti-Slavery International defines modern slavery as ‘the severe exploitation of other people for personal or commercial gain”. The organisation estimates that of the 40 million people experiencing modern slavery, one in four are children and 71% are women and girls. A previous report by the organisation also revealed that modern slavery is estimated to generate $150billion of profit every year.
Modern slavery can take many forms including: human trafficking, forced labour, debt/bonded labour, descent-based slavery, slavery of children, and forced and early marriage. In most of these cases, people are forced or tricked into slavery through poverty or exclusion.
What’s being done to eradicate modern slavery?
According to the World Economic Forum, modern slavery is more prevalent than you might think, with more than one and a half million people experiencing modern slavery in Europe, North America, Japan and Australia.
Many people are trapped in modern slavery because of political, economic or social systems. More broadly, people can be tricked into modern slavery if they don’t have access to the information they need to help them make decisions. Organisations such as Anti-Slavery International are working hard to change this (and give more people the freedom that everyone deserves as a basic human right) by collaborating with NGOs and other organisations to educate communities, influence decision makers and campaign for the protection of human rights and workers’ conditions.
Governments across the world are also adopting their own policies and laws to help end modern slavery. In the UK, for example, the government has outlined that certain organisations have to publish an annual statement setting out the steps they are taking to prevent modern slavery in their company and supply chain under Section 54 (Transparency in Supply Chains) of the Modern Slavery Act 2015. However, this comes with its own risks as around 40% of businesses have not complied with the act. Similar acts have also been enforced in Australia, New Zealand and Canada.
Modern slavery & ESG
More and more consumers want to know where their products/services come from. Investors want to know who they are investing in for assurances on what their money is funding and whether they are ethically doing the right thing. This pressure from consumers and investors has led to the need for enhanced data gathering and analytics to reduce risk and provide greater visibility.
While your business may not directly be involved with modern slavery, the biggest risk to any business is in the supply chain.
Modern slavery can be in any area of your supply chain – from the picking of raw materials right the way through to the manufacturing or delivery process. With many businesses operating with a large supply chain of producers, manufacturers, distributors and retailers, the risk of modern slavery at any stage of the chain can be high. So, the more data you can collect the more visibility you will have across your business operations and the greater the chance of limiting risk.
Risks to modern slavery involvement can vary greatly depending on the sector you’re in and the product/service your business offers. One of the key steps to understanding your supply chain and gaining greater visibility is to carry out a comprehensive risk assessment.
A robust modern slavery (MS) assessment and detailed report can increase transparency and accountability and mitigate reputational, financial and legal risks. Some examples that highlight the risk in these areas include this report from The Guardian, which revealed some supermarkets vowing to cut ties with meat suppliers due to their exploitation of workers across Europe. In the hospitality sector, this report by the Minderoo Foundation’s Walk Free Initiative found that hotels in the UK are ‘failing to address the risks of modern slavery in their direct operations and supply chain.’
Our team has years of experience managing risk for businesses, working with companies of all shapes and sizes across the world.
With expertise in financial sectors and a broad understanding of the supply chain, our advisory team can work with you to highlight best practise and give you greater visibility using our technology platform.
Turnkey’s flagship products, Sustainion and Risknetic, both allow you to manage ESG across the entire supply chain, enabling you to automatically collect and aggregate data from multiple sources.
Once the data is collected it can be mapped against regulatory reporting requirements and frameworks.
What’s more, our risk analytics and reporting means you’ll have ongoing metrics to help you monitor and track changes to risk as it happens. If you’re overwhelmed by the data, there’s no need to be; our team of advisors can guide you on what it means for you and your business, providing you with actionable insights that are designed to track trends, protect your reputation and give you the peace of mind and security that you’re doing the right thing.
To find out more about our comprehensive approach to risk management, contact our team today.
Environmental, Social & Governance (ESG) Tracking & Metrics – A Better Way Forward