Modern Slavery and Forced Labour Under ESG Framework

 

Curated by:  CK Saikumar
Date: 28- Dec-2024

Let us try and understand modern slavery and forced labour within the ESG Framework. In recent years, environmental, social, and governance (ESG) criteria have emerged as essential components of responsible investing and corporate strategy. Many organizations focus primarily on environmental sustainability, however both social and governance are also equally indispensable, particularly when it comes to addressing modern slavery and forced labour. There is an urgent need for the corporate world to address modern slavery and forced labour within the ESG Framework. 

 

 

Remember this is time critical.

That said, what are this modern slavery and forced labour? This is a relatively new term and don’t start something anew. Enough socio-economic crises are doing the rounds in the world today. NOT ONE MORE.

Sadly. Modern slavery has existed for many recent decades. So does force labour. But they don’t get our optics.

Modern slavery is a broad term that encompasses various forms of exploitation, including human trafficking, forced labour, debt bondage, and child labour. The affected endure this exploitation silently and the aggressors go unscathed as they don’t come under any legal radar. It affects millions worldwide and exists in industries ranging from agriculture and construction to textiles and manufacturing. According to the International Labour Organization (ILO), an estimated 40.3 million people are victims of modern slavery, with approximately 25% of these individuals being, can you believe, children?

 

Why Modern Slavery Must Be a Priority for businesses

From businesses perspective firstly its reputation is in the line of fire. Then it is an unethical practice to deal with its supply chain partners who practice modern slavery. Therefore, it is imperative to integrate ESG framework for risk management, reputation, and stakeholder engagement. This framework is well explained in the CIMA online classes as part of its curriculum offered to students who will eventually become a well trained ESG professional.

 

Here’s why businesses should take definitive action on this anti-social issue:

 

 

1. Enhance Risk Mitigation:

Companies can face severe reputational backlash, legal ramifications, and financial loss if found complicit in modern slavery practices within their supply chains. By proactively addressing these risks, organizations can safeguard their operations and maintain investor confidence.

2. Regulatory Compliance:

Governments around the world are enacting laws aimed at combatting modern slavery. For instance, legislation like the UK Modern Slavery Act, and the California Transparency in Supply Chains Act require businesses to disclose their efforts to identify and mitigate risks related to slavery and human trafficking. Failing to comply can lead to significant penalties. Trust me, non-compliance to these laws will attract severe penalties and loss of license.

3. Stakeholder Expectations:

Today’s consumers are discerning and prioritize ethical sourcing and labour standards. They are more informed and closely watch the company’s labour practices.Companies demonstrating a commitment to addressing modern slavery will resonate more positively with customers, investors, and employees. Transparency in these efforts can enhance brand loyalty and social license to operate.

4. Investment Opportunities:

Investors increasingly seek companies that adhere to robust ESG standards/frameworks. Organizations that champion their stance against modern slavery may see enhanced access to capital and better investment opportunities, as responsible investors align themselves with socially conscious companies. As responsible investors, they prefer such ethical companies in their portfolios.

Strategies for Organizations:

 

To effectively address modern slavery and forced labour, organizations can adopt several strategies within their ESG framework:

1. Supply Chain Audits:

Conduct regular audits of supply chains to identify and assess risks related to modern slavery. This involves working closely with suppliers and requiring them to adhere to ethical labour practices.

2. Training and Awareness Programs:

Engage employees and stakeholders especially suppliers and supply chain partners through training programs that raise awareness of modern slavery issues. Educating them about the signs of exploitation can help in recognizing and addressing these issues promptly.

3. Clear Policies and Commitments:

Develop a clear anti-slavery policy that outlines the company’s stance on the issue. This policy should detail expectations for employees and suppliers and include a commitment to continuously assess and improve practices.

4. Collaboration and Partnerships:

Work collaboratively with NGOs, industry groups, and governmental organizations to share best practices and resources. Collective efforts can amplify the impact of anti-slavery initiatives and foster greater accountability within industries.

 

5. Reporting and Transparency: 

Ensure regular reporting on efforts to combat modern slavery. Transparency in reporting challenges and successes helps build trust with stakeholders and demonstrates a genuine commitment to addressing the issue.

 

Conclusion

As we navigate an increasingly interconnected world, the fight against modern slavery and forced labour is everyone's responsibility. By integrating these issues into their ESG frameworks, organizations can not only mitigate risks but also contribute to a more equitable and just society. The time to take action is now—embrace ethical practices, advocate for transparency, and stand firmly against modern slavery in all its forms. Through these efforts, businesses can play a crucial role in championing human rights and creating a sustainable future for all.

 

Environment, Social and Governance (ESG) is dealt extensively as part of both Management level and Strategic level in AICPA-CIMA, UK which AKONTZ offers as part of its Certified Management Accountant Online Classes.

 

Visit www.akontz.com to access many such career and profession-related blog posts and stay relevant in your professional environment.