“We know that great things can be accomplished when people are drawn together by a common vision”
The Mekong Club, Research and Communications Group (RCG) and Ashbury Communications have written a new, groundbreaking strategic paper that challenges the private sector to eliminate forced labour from its supply chains by 2030 — and sets out a viable roadmap for realizing this goal without a negative effect on companies’ profitability.
“We know that great things can be accomplished when people are drawn together by a common vision,” said Matt Friedman, CEO of the Mekong Club. “Like the U.S. space programme before it set the goal of putting a man on the moon, our response to modern slavery today is fragmented and often inefficient. A large number of highly committed people are working without a common vision and there is limited evidence of effective progress. We believe that establishing a highly ambitious — yet achievable — goal for ending modern slavery within manufacturing supply chains will bring together these disparate efforts and free millions of people from exploitative labour practices, while not forcing business to choose between what is right, what is sustainable and what is profitable.”
A way forward
As well as establishing the 2030 goal, the paper sets out the first roadmap for the private sector to use in eliminating an estimated 3.7 million modern slaves from its supplier networks. This approach is based on five core components, each of which has clearly defined targets.
- Build a clear and common understanding of modern slavery and why business must respond;
- Equip counter-slavery actors with the information they need to act effectively, efficiently and decisively against modern slavery;
- Establish multi-stakeholder monitoring, feedback and remedy systems to identify, address and prevent further labour violations;
- Enhance the value of social audit processes through improvement and integration; and
- Support ethical migrant worker recruitment solutions.
The Mekong Club will facilitate these processes. Based on feedback from the private sector, a group of likeminded organizations will also work with businesses to collectively develop a set of Principles that support the 2030 goal.
Forced Labour is an ESG factor
The strategy, COVID, ESG and Going to the Moon: How Business Can Unite to Eliminate Forced Labour, highlights how companies’ efforts to eliminate modern slavery from their supply chains will be seen as increasingly important by the growing number of institutions investing in accordance with Environmental, Social and Governance (ESG) principles. The paper argues that the way that a company addresses ESG issues — including the risk of forced labour among its suppliers — has already become a key factor in determining its access to capital, customers and talent.
“Every ESG investor should be taking forced labour into account,” said Adam Harper, Managing Director of Ashbury. “As ESG becomes the dominant investment theme of our times, shareholders will expect companies to rapidly improve disclosure and action on the full spectrum of environmental and social issues. For climate change, there’s the Paris Agreement, national net-zero targets and a number of frameworks to help corporates and investors achieve them. For the first time, we are proposing an equivalent goal for ending forced labour — and a practical methodology to help move towards that goal.”
Photo by Pedro Lastra on Unsplash
Towards more standardised reporting
Sustainable investing has built up astonishing momentum over the last decade. According to research firm Opimas, the value of global assets applying ESG data to drive investment decisions has almost doubled over four years, and more than tripled over eight years, reaching US$40.5 trillion in 2020. In 2020, ESG funds attracted a record US$347bn of inflows, with 700 new funds being launched.
However, the Social component of ESG is widely considered to be the most challenging of the three components to measure. There are at present no standardised criteria or quantitative indicators for measuring social factors relating to modern slavery. The Mekong Club, RCG and Ashbury hope this initiative will enable companies to provide their investors and other stakeholders with more useful and consistent data about how they are addressing the risk of forced labour in their supply chains.
While sustainable investing has thrived during the pandemic, Covid-19 has also highlighted the vulnerability of the world’s poorest people as it caused the worst recession since the Great Depression. With global GDP expected to contract by 4.4% in 2020, the United Nations has warned that more than 200 million people could be pushed into extreme poverty by 2030.
This economic situation clearly puts more people at risk of modern slavery, yet efforts to help the estimated 40 million already trapped in forced labour have proved to be inadequate: it appears that only around 0.2% are receiving assistance. Phil Marshall, Director of Private Sector Engagement at the Research and Communications Group explained that: “The frustrating thing for me is that we actually know why many of these victims are not being identified. But it’s also an opportunity because we have some great examples of how we could help a lot more people, if we all committed to making this a priority.”
Author – Matthew Friedman