With investigative journalism and legislation on forced labor and human trafficking on the rise, forced labor risks can translate into concrete negative impacts for investors, both reputational and financial. [....] Are investors addressing these risks?

Here is what companies think: In 2016, the Ethical Trading Initiative (ETI) surveyed over 70 of its corporate members and found that investor interest has significantly increased [...]

Labor rights are high on the agenda of mainstream investors: In 2016, over 1,000 PRI signatory investors reported publicly on their responsible investment efforts.(6) When asked to provide examples of engagements with investee companies, labor rights [...] were the most commonly cited topic for engagement, ahead of other ESG issues including climate change. [...]

Are investors also looking at forced labor risks more specifically? Out of those PRI signatories whom voluntarily report information on engagement examples (57% of those investors that are invested in listed equity), 12.5% reported engaging on forced labor or modern slavery. This included investors from all over the world, including Australia, Europe, Latin America, and North America. Notably, over 30% of investors engaging on the topic are from the UK, the only country which has a national disclosure legislation specific to modern slavery. [...]

Investors should strengthen and disclose their efforts to safeguard their investments and ensure forced labor related concerns are heard by companies: [...] Given over 60% of companies in the MSCI ACWI Index (an index which covers approximately 85% of the global investable equity universe) will be subject to the UK Modern Slavery Act, the California Transparency in Supply Chains Act, or the proposed US Business Supply Chain Transparency on Trafficking and Slavery Act,(8) forced labor should be high on the investor agenda.