The Principles for Responsible Investment has called on Australia’s biggest asset owners to sign a statement in support of the establishment of a Modern Slavery Act in Australia.

IFM Investors, HESTA and Cbus Super are the first three institutions to put their name to the investor statement in support of a Modern Slavery Act in Australia.

It comes as the Joint Standing Committee on Foreign Affairs, Defence and Trade of the Parliament of Australia consults on a draft of the proposed Act.

The International Labour Organization (ILO) estimates that almost 21 million people globally are victims of modern slavery.

But the obligations of investors to ensure they are not profiting from slavery goes well beyond avoiding direct investments in developing nations where slavery is most prevalent.

Fiona Reynolds who is the chief executive the Principles for Responsible Investment, a United Nations backed advocacy group, said that it was important for local super funds to consider the potential exposures to slave labour in both their domestic and international portfolios.

In Australia, migrant workers are found in forced labour across a number of sectors including agriculture, construction, and hospitality, Reynolds said. Meanwhile many ASX-listed companies, that local super funds are major investors in, do not do enough to ensure that no slaves are exploited in their international supply chains.

“Human rights issues can present potential financial impacts through reputational damage and operational risks to portfolio companies. A Modern Slavery Act would improve transparency on how companies operating in Australia are managing modern slavery risks in their operations and supply chains. It would also help investors make informed investment decisions and engage with companies to mitigate these risks,” Reynolds said.

She announced the launch of the investor statement in support of a Modern Slavery Act in Australia at the Conference of Major Superannuation Funds on the Gold Coast, March 22-24.

The goal of the UNPRI in asking the country’s biggest investors to sign the statement is to both encourage the government to adopt the Act, and the hold institutional money managers to public account with a pledge to take action to eliminate slavery from their investment universe.

IFM Investors for executive manager environmental and social governance Chris Newton said the establishment of a Modern Slavery Act would provide long term benefits for companies, investors and workers.

“The global challenge of modern slavery is just as much an investment issue as it is a human rights issue. If investors are not active in their stewardship there will be negative financial implications, whether it’s from increasing regulatory oversight, fines and legal proceedings or staff turnover,” Newton said.

Reynolds said there were plenty of international examples of human rights legislation “making a difference” to reduce the risk of people being subjected to slavery. She pointed specifically to the: California Transparency in Supply Chains Act; the UK Modern Slavery Act; the EU Non-Financial Reporting Directive; and the French Corporate Duty of Vigilance law and international law; the UN Guiding Principles for Business and Human Rights; the ILO core labour standards; and the OECD Guidelines for Multinational Enterprises.

“Early evidence shows that legislation in both California and the UK is improving the availability of information for investors, while increasing senior level corporate engagement, transparency and action on modern slavery. An Australian Act would complement these efforts,” she said.

“I urge all investors to get behind it and acknowledge IFM, HESTA, and Cbus for their leadership in agreeing to sign-up to kick it off.”

IFM Investors is a funds management firm, owned by a collective of industry super funds, with $75 billion in assets under management. HESTA is an industry fund for workers in the health and aged care sectors with $36 billion under management. Construction industry fund Cbus Super has $37 billion under management.

To read all our coverage from Day Two of CMSF 2017, click here.

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