Vannak Anan Prum thought he’d be away from his family for two months. Two months became five years before he saw his family again. Seeking work to pay for his wife’s hospital bill, Vannak left his Cambodian village for Thailand where he met a man promising he could earn good money in the fishing industry. Held hostage on a fishing vessel, Vannack lost his freedom while working around the clock and living in unimaginable violence. After a brave escape Vannak told his story of modern slavery.
Unfortunately, an estimated 200,000 migrant workers like Vannak are exploited by the $6.5 billion Thai fishing industry. It is an industry that implicates companies around the world in worker exploitation, including Australian supermarkets. However, modern slavery stretches far beyond the fishing industry. The UN’s International Labour Organization (ILO) estimates that 40.3 million people (including 10 million children) are victims of modern slavery. Modern slavery includes a range of exploitative practices that impede a person’s freedom including human trafficking, forced marriage, bonded labour and forced labour. Instances of modern slavery can be hidden within investment portfolios through complex webs of global supply chains.
As an ethical concern and as a financial risk, shareholders should consider their exposure to instances of modern slavery in their investment portfolio. Exploitative labour distorts global markets, undercuts responsible business practices, and if left unaddressed poses substantial reputational and legal risks that may damage commercial relationships.
Australia’s Modern Slavery Act 2018 requires commercial and not-for-profit entities with annual consolidated revenue of at least AU$100 million to report on the risks of modern slavery in their operations and supply chains. The reporting obligation includes investors, trusts and superannuation funds. High risk industries include agriculture and fishing, apparel, construction and building materials, mining and electronics, however, modern slavery can occur in every industry and sector.
In 2019, Australasian Centre for Corporate Responsibility (ACCR) filed the world’s first modern slavery shareholder resolution urging Coles to protect farmworkers from labour exploitation in their supply chains. At the time, there was an estimated 15,000 people considered to be working under illegal working conditions with allegations of modern slavery including severe underpayment, withholding wages, excessive overtime and threats of physical and sexual violence.
The commercial cleaning sector has been identified as high risk for exploitative labour practices due to a largely migrant workforce, aggressive price competition and complex sub-contracting arrangements. ACCR reviewed listed companies in the property sector’s reporting under the Modern Slavery Act including Charter Hall (CHC), Dexus (DXS), GPT (GPT), Mirvac (MGR), Scentre Group (SCG), Stockland (SGP), Vicinity Centres (VCX). Finding that while all companies have made commitments to eradicate modern slavery these commitments risk becoming little more than baseless box ticking without companies implementing effective steps to identify, assess, implement changes and rectify harms across business operations and supply chains.
Companies that fail to ensure labour rights and implement policies and meaningful actions to address modern slavery across their supply chains face increased risks that can impact investment returns over time. Poor labour practices and poor health and safety practices in supply chains are recognised as material risks to long-term investment portfolio performance. Reports of modern slavery can see share prices plunge which was demonstrated last year by the fashion retailer Boohoo which was severely underpaying wages.
However, companies within the fashion industry that source sustainably have been shown to enjoy improved employee and customer loyalty. As stakeholder pressure continues to mount, companies with business models that are founded upon poor supply chain labour practices are likely to face increasing unanticipated costs through the risk of industrial action and increased regulation. Companies that ensure labour standards across their supply chain create long term value.
Ending the exploitation of people like Vannack will take a sustained effort by business, investors, governments and consumers. While companies ultimately have the largest responsibility to ensure their operations and supply chains respect human rights, shareholders can reduce exposure to modern slavery in their portfolios by keeping an eye out for shareholder resolutions on labour exploitation and asking questions about companies’ supply chains, for guidance see Investor toolkit: Human rights with focus on supply chains.
To know more about the leaders and laggards when it comes to supply chain transparency and human rights see ACSI’s comparison of ASX200 modern slavery reporting and the Corporate Human Rights Benchmark assessment of the world’s largest companies’ human rights impacts. Holding companies accountable and investing in companies that respect human rights will help build a future where everyone has access to safe and decent work.
Author: Mariana Wheatley is interested in labour rights and how they intersect with social and environmental issues. Mariana is Altiorem’s head of operations and marketing.
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