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Investor coalition pressures companies on modern slavery

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First Sentier, Aware Super and Fidelity are some of the firms included in a newly formed group of APAC investors that have written to 100 ASX-listed companies, setting expectations for reporting under the Modern Slavery Act.

The coalition, named Investors Against Slavery and Trafficking (IAST) APAC, has been convened by First Sentier Investors, along with Aware Super, AustralianSuper, Fidelity International, Ausbil Investment Management and the Australian Council of Superannuation Investors (ACSI).

Their first statement to ASX companies, signed by 24 investors with a collective $5.8 trillion in assets under management, has aimed to address the harms of modern slavery, after the federal Modern Slavery Act 2018 came into force last year. 

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The bill requires companies running in Australia and generating a revenue greater than $100 million to report on the risks of contributing to slavery in their supply chains and in their operations, as well as their course of action on it.  

Ausbil, which is one of the investors involved in the IAST APAC, consulted with the Australian government on the act as an investor voice.

With around 3,000 entities due to publish their first reports over the next year, Kate Turner, responsible investment specialist at First Sentier said there is a “crucial window of opportunity” to engage with companies on the issue and set expectations.

“As investors, we expect companies to meet their reporting and compliance obligations and in doing so encourage companies to examine the broader risks of labour expectation as a leading indicator of modern slavery,” the statement said.

The group statement sets out best practice principles for modern slavery reporting, as defined by IAST APAC, referring to experience in the UK, where similar reporting is already legislated. 

The investors have pledged to follow the statement with the creation of a framework and co-ordinated engagement program, where the investors are aiming to work with organisations to identify and mitigate slavery risk in supply chains.

“As investors, we see modern slavery, human trafficking and labour exploitation as something that goes beyond ethics,” the statement read.

“Business models and value chains that rely on underpaid workers, weak regulation or illegal activities such as forced labour and other forms of modern slavery drive unsustainable earnings. Companies are exposed to significant compliance and brand risk, which can be costly and time-consuming to address.”

Andrew Gray, director of ESG and stewardship at AustralianSuper commented working with other investors will allow his fund to “influence systemic changes” to help mitigate trafficking investment risks.

Liza McDonald, head of responsible investments at Aware Super echoed Mr Gray, commenting her company will be able to “really shift the dial and have a lasting impact” by teaming up with other investors. 

“Modern slavery or human rights abuses in the companies we invest in, or their supply chains, pose significant financial risks to our portfolio, and to our members’ long-term retirement outcomes,” Ms McDonald said. 

“Ensuring we act on and address modern slavery risks in our portfolio is something that we take very seriously.”

The IAST group is open to asset owners and managers in the Asia-Pacific region. 

Advocacy groups Walk Free and the Liechtenstein Initiative for Finance Against Slavery and Trafficking (FAST) are acting as secretariat.

 

Investor coalition pressures companies on modern slavery
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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