This is a financial issue as well as an ethical one: companies which find modern slavery in their supply chains can face significant legal, regulatory, operational and reputational impacts as a result. But it can be difficult to uncover, particularly along global supply chains. Adding to its complexity, every company will take a different approach to managing its modern slavery risks, depending on the nature of its operations, locations and supply chains. Modern slavery regulation also varies around the world, and company policies and reporting on the issue are still evolving.
For a boutique listed equities team within Macquarie Asset Management, the challenges of inconsistent reporting of modern slavery risks present an opportunity to engage directly with investee companies to encourage greater transparency around their management and reporting.
As a shareholder in over 1,000 stocks globally, the team relies on company and market data to guide its investment decision-making.
To address the gaps in modern slavery reporting, MSI undertook 40 direct engagements with investee companies in the year to March 2023 to improve the quality and comparability of information going into its investment model. During these discussions, the team asked investee company management teams a series of questions, including how they are assessing modern slavery risks in their business and supply chains, how their modern slavery policies and practices are supporting people at risk, and which practices are most effective at mitigating, identifying, and rectifying modern slavery issues.
In addition to information gathering, MSI also used these collaborative forums to encourage greater transparency around the companies’ modern slavery disclosures.
Modern slavery is a significant human rights issue which is difficult to measure. By directly engaging with companies, we’re able to improve the quality of our investment data, as well as encourage improved transparency and disclosures.”
Co-Head of Macquarie Systematic Investments
Macquarie Asset Management