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Charlotte O'Meara

Slavery: How to combat a modern problem

By Charlotte O'Meara
1 minute read

It is a commonly held view that the signing of the Emancipation Proclamation in the 19th century ended slavery, not only in the US, but globally. Sadly, it has only evolved. Today there are more people enslaved across the world than at any other time in recorded history.

What is modern slavery?

When a power imbalance between an employer and an individual results in the loss of basic freedoms in their employment – it is known as modern slavery. In many cases, this comes from employers exploiting workers to the point where they cannot refuse or leave their employment because of threats, violence, coercion, abuse of power or deception. Forms of modern slavery include debt bondage, where a person is forced to work for free to pay off a debt, child slavery, forced marriage, domestic servitude, and forced labour. 

There are an estimated 40.3 million people living in modern slavery globally. Fifty-eight per cent of people living in modern slavery live in one of five countries; India, China, Pakistan, Bangladesh and Uzbekistan. However, it is important to note that instances of modern slavery are everywhere. Modern slavery is a widespread global issue with an estimated 403,000 modern slaves in the US, 136,000 in the UK and 15,000 in Australia. 


Modern slavery in the Australian market 

Modern slavery is a growing focus for regulators and investors. The Australian Modern Slavery Act came into effect in January 2019 and establishes a national modern slavery reporting requirement.  This mandates companies with a consolidated revenue of at least $100 million to publish a modern slavery statement, detailing modern slavery risks in their supply chains and operations, and sharing actions taken to mitigate those risks. This includes an assessment of the modern slavery exposures within their investments. The concept of “risk” in this context is quite different to other investment risks. When referring to modern slavery risk, this refers to the risk to people, rather than risk to the reporting or related entities themselves.  

While some fund managers may not meet the revenue threshold of the act, their investments may form part of another entity’s supply chain and operations, for example those of an Australian superannuation fund. In this case, fund managers are required to report to that entity on the modern slavery risks across their investment portfolios. 

Consequently, most Australian fund managers have undertaken an assessment of modern slavery risk exposure across their investment portfolios. Some smaller fund managers, along with charities and not for profits, have also decided to voluntarily report, as the assessment of modern slavery risks across investment portfolios has become a minimum standard required by institutional investors and platforms. 

The impact of modern slavery on financial advisers and their clients

Financial advisers are increasingly concerned about responsible investing and taking action on modern slavery. Although most financial advice practices fall below the consolidated revenue threshold for the act, Australian consumers are seeking greater transparency of their investments than ever before. 

Fifty-one per cent of Australians identify human rights as one of the top issues they want to avoid as part of their investments. The introduction of the Australian Modern Slavery Act has increased the awareness and knowledge of Australian consumers on this issue. 

The findings reflect the importance consumers place on ethical and responsible investing and the crucial role of advisers in ensuring that their clients’ values are considered when making investment decisions. 

Modern slavery considerations for key asset classes 

Many financial advice clients are already starting to ask about instances of modern slavery or child labour within their investments, and advisers need to be equipped to respond. It is important to understand the actions your fund managers are taking to address modern slavery risks across their portfolios. 

Most fund managers across the market have been factoring human rights and child labour considerations into their ESG integration process for some time. While this has been a key aspect of the social component of ESG integration, the Modern Slavery Act provides a recognised framework for fund managers to formalise the investigation into human rights issues that they are already undertaking. 

When an adviser is assessing a fund manager’s exposure to modern slavery risk, it is important to factor in the unique characteristics of different asset classes. This will help gain a greater understanding of how fund managers assess the unique modern slavery risks for each asset class. 

Australian equities

- Companies should have a modern slavery statement that fund managers can use to assess modern slavery risks. 
- Fund managers can influence companies through voting rights and engagement.

Global equities

- Only the UK and Australia have a legislated modern slavery reporting requirement. Companies outside of those jurisdictions don’t have a reporting framework to assess and report on modern slavery risks, requiring the fund manager to undertake additional due diligence.

Fixed income

- Corporate issuers: in Australia and the UK, modern slavery statements should be available. For other jurisdictions, additional due diligence will be required. 

- Sovereign issuers: fund managers should evaluate factors that may limit government’s ability to enforce key protections e.g. corruption, war, famine, democratically elected officials.  

- Credit: the available data is limited, so additional due diligence and meetings between the fund manager and borrower will be required. 


- Managers should review service providers within the supply chains of the property with a focus on high-risk suppliers e.g. cleaners. 

- The Property Council of Australia database and guidance on suppliers should be used where possible.  


- Fund managers should ensure that the local labour rights of all workers associated with an infrastructure project have been considered and protected during the planning phase. The protection of workers and labour rights, and modern slavery requirements, should form part of the project impact assessment. 


If more investment professionals build a greater knowledge of the topic of modern slavery, there is a hope this in time will influence companies around the world to allocate capital not only in the most efficient way, but also in a way that protects the human rights of those most vulnerable.    

By undertaking due diligence of fund managers, financial advisers can form a view of the level of modern slavery risks across an investment portfolio. This in turn can influence the allocators of capital. If we work together as an industry to assess the modern slavery risks across investment portfolios, and engage with issuers on this topic, we can go a long way to contributing to the fight against the modern and significant problem of slavery. 

Charlotte O'Meara, ESG specialist, Fidante Partners

Slavery: How to combat a modern problem

It is a commonly held view that the signing of the Emancipation Proclamation in the 19th century ended slavery, not only in the US, but globally. Sadly, it has only evolved. Today there are more people enslaved across the world than at any other time in recorded history.

Charlotte O'Meara
Charlotte O'Meara
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