Challenge
Modern-day slavery is an unfortunate reality that many in the investment community and wider public are only beginning to learn about. Even in socially responsible investment products, human trafficking is not as widely considered and incorporated as other social justice concerns. Therefore, investors seeking to address this issue typically find themselves with few, if any, investment options.
The United Nations Office on Drugs and Crime defines human trafficking as recruitment by threat, use of force, or other forms of coercion and deception for the purpose of exploitation. Human trafficking affects every country of the world either as the origin, transit, or destination point. Although it can take many forms, forced labor is one of the most common—and the one most relevant to investors’ portfolio holdings.
Although no publicly traded companies intentionally support human trafficking, they can become complicit by inadequately overseeing their supply chains. To combat this, companies must remain vigilant with regard to their suppliers’ hiring policies and practices to avoid and discourage these conditions in the workplace. However, continually assessing supply chains for thousands of global companies is no small task.
Parametric solution
Parametric turned to one of our data suppliers with existing labor and human rights controversies research. This supplier helped us create a unique data set that identifies recent instances of child and forced labor in direct operations as well as in corporate supply chains.
The research is performed by a 24-member multilingual team that monitors more than 9,300 companies daily, looking for corporate controversies and evaluating the severity and pervasiveness of each case, which is then flagged appropriately. Investors can apply these findings to any benchmark in the coverage universe, and the information is continually updated.
