How the Modern Slavery Act affects investors

Head of ESG research at Ausbil Investment Management, Mans Carlsson-Sweeny, has published a paper on how the Federal Modern Slavery Act (2018) will affect investors, and what investors can do to contribute to positive change. The paper highlights the growing importance of the ‘s’ in ESG, with sustainability increasingly becoming a large part of company value.  

The Ausbil paper highlights that a business model reliant on an underpaid workforce and slavery, or one lacking strong regulation on social issues, is likely to be unsustainable and therefore a poor investment. Brand damage is another key factor in why investors are increasingly seeking business models with strong modern slavery and human rights policy. Ausbil emphasise that improper conduct in this space can have serious impact on a brands reputation, causing large dips in stock and upset among investors. Brand damage can lead to a loss of sales, impact on staff engagement and prove incredibly costly and time consuming to repair. 

Carlsson-Sweeny encourages investors to be a part of the solution and assess risk of modern slavery by “focusing on high risk sectors and identifying other risk flags”, such as sub-contracting and use of recruitment agencies, short lead times, and long, complex supply chains. Investors should also encourage companies to adopt or exceed industry best practice for addressing modern slavery in operations and supply chains. 

For more information see the full paper.

Sonja DuncanComment