I know there’s a lot going on for all of us, and the world, at the moment, but I think it’s worth returning to this topic.
Modern slavery remains widespread and deeply embedded in global supply chains. The International Labour Organisation estimates that around 49 million people are affected worldwide, and most experts believe this is under-reported. In the UK, the 2024 review of the Modern Slavery Act concluded that progress has stalled, and that many organisations are still not engaging meaningfully with their responsibilities.
This global endemic scale matters because modern slavery is not confined to marginal activity, it is part of your portfolio, today. Most investors would say they do not want forced labour in their portfolios, but in practice, few examine supply chains closely enough to understand where risks are most likely to arise. Sectors such as agriculture, clothing, and construction are particularly exposed; sectors that pension funds commonly hold through equities, debt, and infrastructure.
The issue is whether current investment practices are capable of detecting risk. Where modern slavery exists, investors may be financing criminal activity without realising it. Weak labour practices often sit alongside poor environmental controls, unsafe working conditions, and a broader culture of cutting corners. Social and environmental risks tend to reinforce one another.
This makes modern slavery a financial risk management issue, not just an ethical one. Exposure can lead to regulatory breaches, supply chain disruption, legal action, and reputational damage, e.g., Boohoo in 2020. These costs are indirect and unpredictable, which makes them easy to ignore, but from a fiduciary perspective that is a mistake.
Identifying these risks requires more than high level disclosure. Effective due diligence requires mapping supply chains, tracing labour sources, and focusing on known high risk points within specific sectors.
However, asset managers are generally rewarded for performance, not for stewardship. When abuses come to light, they are often treated as isolated incidents rather than signals of broader oversight failures. Yet these issues do affect returns, most often through reputational damage, disrupted operations, or legal costs.
Modern slavery is not only an overseas issue. It occurs in the UK, and forced labour is illegal everywhere. The United States, Australia, and the European Union are all restricting imports linked to forced labour, with the EU planning a full ban from around 2027. Investors who do not understand their exposure may face blocked markets or significant penalties.
Some collective action already exists. Initiatives such as CCLA’s Find It, Fix It, Prevent It show what is possible. However, modern slavery still receives far less attention than climate or biodiversity in most stewardship programmes and is often not listed explicitly in consultant frameworks. If it is not named clearly, it is unlikely to influence mandates or engagement.
Progress depends on three conditions:
- Asset owners must state clearly that modern slavery is a priority.
- Consultants must include it explicitly in assessments and advice.
- Investors must work together, as collaboration improves information and increases leverage.
For trustees, this brings the issue back to fiduciary responsibility. Modern slavery is a systemic risk that affects operations, legal liability, reputation, and long-term returns. Ignoring it means accepting exposure without taking reasonable steps to understand or manage it. Once framed clearly, that is a position few trustees would choose.
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