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September 25, 2015

Investors Support Human Trafficking Legislation
    by Robert Kropp

More than 100 institutional investors call for passage in Congress of The Business Supply Chain Transparency on Trafficking and Slavery Act of 2015. -- Human trafficking is surely one of the most vile activities undertaken for mere profit in the world today, and ridding corporate supply chains of the practice remains one of the most significant benchmarks of corporate human rights performance. In 2013, the Int erfaith Center on Corporate Responsibility (ICCR), Calvert Investments, and the Institute for Human Rights and Business (IHRB) published Investing the Rights Way: A Guide for Investors on Business and Human Rights; the report was intended to “help investors assess and address human rights risks in their portfolios and more effectively benchmark and engage the companies they hold,” its authors stated.

At the time of the report's publication, Bennett Freeman of Calvert stated, “Virtually every company in every industry faces some degree of human rights-related risk, and investors have a responsibility to evaluate that risk across portfolios and asset classes.” The report itself states, “Human rights are intrinsically worthy of respect and not simply on the condition that this respect brings a financial benefit.”

While improved corporate performance can and often does occur as a result of shareowner engagement with companies, the fact remains that laws requiring corporate transparency on issues such as human rights can effect more widespread compliance with the stroke of a lawmaker's pen. And, on human trafficking, advances have been made. The California Transparency in Supply Chain Act requires that companies with revenues of more than $100 million doing business in the state publish on their websites their policies addressing slavery and human trafficking in their supply chains. In the UK, the Modern Slavery Act of 2015 requires companies with more than $55 million in revenues to publish an annual slavery and human trafficking statement. And in March, the Obama administration began requiring all federal contractors to “certify their due diligence in confronting and remediating human trafficking in their extended supply chains,” ICCR stated.

In the US, The Business Supply Chain Transparency on Trafficking and Slavery Act of 2015 has been introduced in both the House and the Senate. Along with
Christian Brothers Investment Services—whose laudable work engaging with the hospitality industries on the issue of child sex trafficking at major sports events has been covered many times at—ICCR and Calvert have organized a coalition of more than 100 institutional investors, with assets under management in excess of $1 trillion, that has issued a statement urging passage of the Act in both houses of Congress.

Coalition members “express strong support for legislation that requires companies to disclose their policies and practices to address human rights-related risks within their global supply chains,” according to the statement. “Investors believe these risks are material and that corporations worldwide have a responsibility to disclose their efforts to mitigate them.”

“An estimated 20.9 million people globally are affected by human trafficking,” the statement continues. “This intractable abuse requires comprehensive legislation to level the playing field and move companies beyond voluntary disclosures.”

The statement further argues that since leading companies have been addressing human rights in their supply chains, extending the commitment to require all companies to do so should not be burdensome.

“In our dialogues with companies on human rights, we have learned the limitations of voluntary reporting measures that all too often underestimate the breadth and depth of these risks, particularly at the commodity level of supply chains. We need a mechanism that levels the playing field to give us a more accurate assessment of a company’s exposure on these concerns that will benefit all stakeholders,” Michael Lombardo of Calvert stated. “Compulsory reporting through the SEC, which is being called for in this proposed legislation, does that.”

“All companies have some level of exposure to these human rights violations and, for this reason, global investors are united in their calls for stronger laws to help eradicate them,” David Schilling of ICCR said. “We urge Congress to pass this legislation which we believe will be an important tool for all stakeholders to uncover and eradicate human trafficking.”

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