International group IFM Investors has called for united action across the investment chain to tackle modern slavery, warning that it is still deeply embedded in the global economy and, by extension, in institutional investment portfolios such as pensions.
Modern slavery may be buried deep in global supply chains, but it is not invisible to regulators, consumers, or investors, the group said. For workplace pension schemes this poses legal liabilities, especially as regulations tighten globally, reputational damage, and potential financial penalties.
The UK government defines modern slavery as a serious crime in which people are exploited for someone else’s gain. It can take many forms including human trafficking, forced labour, domestic servitude, and debt bondage.
“Modern slavery is not just a social issue, it’s a material investment risk that can erode value, damage trust, and expose portfolios to mounting legal liabilities,” said Maria Nazarova-Doyle, global head of sustainable investment at IFM Investors. “While institutional investors are paying closer attention to the problem, they still face major hurdles in addressing it. Detection is difficult, tools are fragmented, disclosure is inconsistent, and the issue often hides deep in supply chains where oversight is weakest.”
In its paper, titled ‘Addressing Modern Slavery in Investment Portfolios’, IFM highlights the urgent need for greater transparency, consistent data, and collaborative solutions to tackle one of the most under-addressed human rights issues of our time.
The investor notes that while regulatory frameworks are evolving, with more than 70 percent of companies in major markets subject to modern slavery or human rights regulations, many laws still prioritise disclosure over action and lack meaningful enforcement. This leaves a persistent gap in how effectively modern slavery risks are identified and mitigated.
Unlike environmental issues, which can be assessed using technical metrics and proxy indicators, modern slavery risks are often hidden within opaque supply chains, informal labour structures, and layers of subcontracting. As a result, investors continue to face major hurdles in detecting and addressing them through traditional due diligence.
In response to this challenge, IFM’s paper outlines an internal supply chain risk assessment model designed to help identify exposure. It also provides a set of recommendations for investors, policymakers, data providers, and industry bodies to adopt a more systemic, proactive approach to eliminating modern slavery from global investment portfolios.
Nazarova-Doyle said: “Any meaningful progress will require collaboration between asset owners, asset managers, companies, regulators, civil society, governments, and potentially affected workers and communities to drive greater transparency, consistent data, and collaborative solutions.”
Tom Sanders, senior ESG analyst at Nest, which owns 10 percent of IFM, underlined the growing awareness of the financial and operational consequences of inaction.
“Respect for human rights and eradicating modern slavery in business are strongly associated with value chain resilience and a stable business operating environment. As investors, we recognise the operational, financial, legal and reputational risks companies face when they fail to manage modern slavery and human rights risks,” he said.
Antonia Parkes, senior director in ESG and stewardship at AustralianSuper, (which manages A$340 billion of retirement savings and is headquartered in Melbourne), called modern slavery practices “a systemic risk”.
She said: “One company cannot fix that risk on its own. As well as engaging with some of the assets we invest in directly through our ESG and stewardship program, we also engage in collaborative forums because it’s important we work with other investors to look at opportunities to address modern slavery risks.”
Liza McDonald, head of responsible investment at Aware Super, another Australian superannuation fund headquartered in Sydney, said: “Investors can significantly contribute by educating companies on the importance of reporting instances of modern slavery and removing the stigma associated with such disclosures. This effort would help the market strive for a transparency level comparable to the reporting of near misses in safety protocols.”
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