DECODING ESG: What are the Investor Implications of Modern Slavery?

The Decoding ESG series explores key themes in the sustainable investment space – click on this link for the most recent edition: DECODING ESG: What are the Investor Implications of Modern Slavery? 

Sustainable investment globally totals more than a third of assets under management in five of the world’s largest markets. Investors would be wrong to think that this race has been run, however.

Consumer pressure drives ESG-themed retail investments, and the sector is seeing stellar growth. In the US, even with market share doubling over the past five years, ESG funds represent just 1.4% of long-term AUM.

One of the key barriers to entry into this sector is the sheer volume of jargon used in the industry. In this series, ISS ESG works to unpick some of this jargon, with a view to making responsible investment open to all!

Modern Slavery

Modern slavery, one of the top three international crimes, is a violation of the fundamental human rights to freedom, decent work, and dignity. It refers to situations a person cannot refuse or leave due to threats, violence, deception, and/or abuse of power.

More than half of the estimated 40.3 million people in slavery are in forced labour, often in global supply chains, coerced to work through deceptive recruitment, debt-based manipulation, and physical and psychological abuse. 

Action on modern slavery is not only a priority of the United Nations Sustainable Development Goals (Target 8.7) but also increasingly an obligation under modern slavery and supply chain transparency legislation, which is currently in force or proposed in over 10 countries and includes requirements for investor portfolio exposure disclosure.

The COVID-19 pandemic brought to the fore the previously underrepresented ‘S’ in ESG. Research by ISS ESG’s Norm-Based Research (NBR) team identified ‘working conditions’ as the most covered issue in ESG-related news in 2021.

Explore ISS ESG solutions mentioned in this report:

• Identify, evaluate and act on modern slavery risks and their impact on investments with the Modern Slavery Scorecard.
• Assess companies’ adherence to international norms on human rights, labor standards, environmental protection and anti-corruption using ISS ESG Norm-Based Research.