Strengthening modern slavery risk management through collaborative efforts

As a responsible asset manager, we are committed to understanding, identifying and mitigating the risk of modern slavery in our business operations, supply chain and investments. Beyond ethical and moral imperatives, we recognise that failing to protect the labour and human rights of working people poses investment risks through unsustainable business models, reputation impacts and regulatory costs.

Our approach is built around three key principles: prioritising where the greatest modern slavery risks lie in our operational and investment supply chains; influencing through our global platform and expansive sector reach to promote better understanding and management of modern slavery risks; and collaborating with like-minded stakeholders to continually learn and accelerate progress towards reducing the risk and occurrence of modern slavery.

Understanding where risks lie and building capability to manage them

In FY20 we conducted an independent assessment of modern slavery risks in our business supply chain, as well as the supply chains of investments in our portfolio where are have significant influence as owners. This work provided a foundation for our understanding of material risk areas and the activities we need to undertake to mature our management of these risks.

Our focus on educating our people about modern slavery risks and increasing the capabilities of team members involves a number of activities, including tailored training programs and guidance notes for investment team members who play an active role in driving outcomes in our portfolio companies and their supply chains. Educational sessions for employees company-wide aim to lift awareness of the issue more broadly.

Integrating modern slavery risk identification and mitigation strategies into our supply chain and investment processes and practices is an ongoing process. We continue to focus on using levers such as our board directorship positions and company engagement to advance our approach.

Engaging collaboratively to improve modern slavery risk transparency and management

We work closely with the Australian Council of Superannuation Investors and other investors to monitor both compliance and quality in relation to modern slavery reporting across ASX200 companies required to report under the Modern Slavery Act 2018 (Cth).

As a signatory to Investors Against Slavery and Trafficking Asia-Pacific (IAST APAC), an investor-led initiative, we work with industry peers to promote effective action among companies to ‘find, fix and prevent’ modern slavery, labour exploitation and human trafficking in their value chains.

Through this initiative, we have led engagement with various large retailers, and we acknowledge their high level of understanding, governance and expertise in this area. We recognise much work underway across the sector to improve understanding of worker rights and identify incidents of modern slavery, as well as to increase the capability and deployment of independent auditors, whose role helps to boost accountability. However, we have also identified a need to address factors limiting businesses with shared supply chains to collaborate on this issue, in light of anti-competitive practice regulation.

We regularly publish our progress across our corporate and investment activities on our website in accordance with the Modern Slavery Act (UK) 2015 and Modern Slavery Act (Australia) 2018 via annual Anti-slavery and Human Trafficking Statements.

Protecting labour and human rights in workplaces is central to building durable portfolios and delivering on our company purpose to protect and grow the long-term retirement savings of working people.

Case study: Collaboration on supply chain to help mitigate modern slavery risk in infrastructure debt

In response to media reporting that highlighted forced labour and human rights abuses in the global polysilicon supply chain, the Solar Energy Industries Association (SEIA) issued a Forced Labour Prevention Pledge, which was signed by many large solar companies.

During FY21, our Infrastructure Debt team reviewed a potential investment in a company that owns and operates photovoltaic (PV) solar projects in Chile. IFM requested that the company amend its supplier list to only include SEIA pledge signatories, or alternatively, agree to a “best efforts” approach in ensuring it used suppliers that are free of forced labour.

The company confirmed its intent to source PV panels only from suppliers on the SEIA list to the extent that it is commercially feasible. This included future solar panels purchased from the loan proceeds. It also committed to providing regular updates on new PV-panel supply contracts it enters.