Modern slavery isn’t a distant problem. It is embedded in the supply chains behind everyday goods and services – and that means it is embedded in investment portfolios, including those of pension schemes.
That is why it is so welcome to see IFM Investors publish their paper Addressing Modern Slavery in Investment Portfolios. It’s a practical, detailed, and unflinching look at the risks for investors, and the steps they can take to tackle them. It makes the case that this is not only a moral imperative, but also a material financial, legal, and reputational issue.
For pension schemes, this is an important read. These are long-term investors, holding capital on behalf of millions of members. Their investment decisions can influence global supply chains, for better or worse. If modern slavery is present, there are real implications for returns, reputation, and legitimacy.
IFM’s report shows how hard this is to detect. Weak and inconsistent company disclosures, a lack of worker voice, fragmented tools, and over-reliance on country-level risk scores all make it easy to miss. The regulatory picture is improving but still patchy, with too much emphasis on reporting rather than meaningful due diligence and remediation.
What stands out is the report’s focus on action: integrating modern slavery checks into every stage of the investment cycle, using diverse data sources beyond corporate statements, collaborating with other investors, setting clear expectations for investee companies, and making disclosure less about blame and more about fixing problems.
For those working in responsible investment, the challenge is how to build this into ESG metrics in a way that actually drives change. How can metrics move from counting policies to measuring outcomes? How can they ensure that the voices of workers most at risk are part of the picture?
The IFM report is a strong reminder that modern slavery is a systemic risk that pension schemes cannot ignore. The question now is how to embed this thinking into the frameworks and metrics already in use, so it becomes part of how value and long-term sustainability are measured.
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