Your clients may have a reputational and ethical vulnerability they’ve never considered. If they don’t get ahead of the emerging issue of modern slavery that can lurk deep in their supply chains, it can mean legal problems and a hit not only to their finances but also to their self-image.
Jennifer Sireklove from the investment advisory firm Parametric, hopes all your clients will develop an awareness of the problem. In her case, “Five years ago, I had no idea that we have humans living as slaves. I knew about sex work, but I didn’t know that companies have in their supply chains people who are living in slave-like conditions.”
A client brought the situation to her attention, so she began delving into the issue. With growing shock, Sireklove learned that many of the products we buy and use every day were made by people in slavery.
She discovered that modern day slavery can occur during the production of raw materials, for example cocoa, cotton or fishing, or to the manufacturing of every-day goods such as mobile phones or clothes.
What Exactly Is Slavery?
An individual is enslaved if he’s owned or controlled by an “employer,” involuntarily and without compensation, and kept in this situation through mental or physical abuse or the threat of abuse. Individuals in this situation are frequently treated with no more consideration than if they were cattle.
Slavery is a crime against humanity. As Sireklove learned more, she became determined to do something about it.
Her conclusion today is that there are three key points of influence for wealth managers who want to avoid the ethical and reputational aspects of participating in modern day slavery.
Point 1: Monitor Supply Chains
First, businesses have leverage to prevent slavery in their supply chains. Most businesses that we come into contact with don’t engage in slavery themselves, but, as Sireklove points out, “The slavery exists deep into the supply chain, possibly several layers down, so it’s the supplier of the supplier or maybe even the supplier of the supplier of the supplier.”
Businesses need to inspect every part of their supply chain. “They need to do it as carefully as they’d inspect their supply chain for tainted food,” says Sireklove.
Point 2: Own to Influence
In a company with publicly traded shares, shareholders can raise questions, and they can work to influence other shareholders.
“The odds are you won’t need to be heavy-handed about it,” Sireklove points out. “Rather, bringing it to the attention of management may be all that’s needed. Once the issue is brought to their attention, management is likely to want to do something about it, partly for humanitarian reasons, but also for legal and reputational interests.”
Point 3: Influence the Influencers
If you provide investment advice, bring this issue to the people you advise. As Sireklove explains, “The reason this got on my radar is because people we work with brought it to our attention.”
For more information on the issue, Sireklove recommends going to the KnowTheChain.org website. It has general information about this issue as well as assessments of 119 companies in high-risk sectors.
She also recommends ICCR.org, which engages with corporations on issues such as human rights and has several initiatives aimed at eradicating human trafficking and slavery.
Even though human trafficking and slavery can seem like an intractable problem, companies can and are improving. For example, KnowTheChain found improvements in 14 out of 19 apparel and footwear companies that were assessed between 2016 and 2018. Improvements among companies in other high-risk sectors were less widespread but still encouraging.
Your Comfort Level
Sireklove ends with a personal observation. “I find that as an investment professional working with other investment professionals, that this is outside my realm of expertise. It’s like learning another language. It’s not in my comfort zone.”
She continues, “The fact that you’re outside your comfort zone in dealing with this emerging issue can be a subtle but real hurdle. Have patience with yourself and forge ahead anyway. The work is important, and don’t let anything hold you back.”
To contact Sireklove, email her at Parametric where she leads the Investment Strategy team. The address is: [email protected].
Mitzi Perdue is a business owner, speaker. and author of the books, HOW TO MAKE YOUR FAMILY BUSINESS LAST, and 52 TIPS FOR PREVENTING HUMAN TRAFFICKING. Contact her at Mitzi@MitziPerdue.com or call her at (410) 860-4444.