As non-essential visits to production sites have been curbed globally in view of the Covid-19 pandemic, risks of worker exploitation that can lead to modern day slavery is likely growing.
Furthermore, the pandemic has ushered in trade disputes that risks worsening the prospects of assessing human rights violations in factories, and to an extent even the validity of such tasks.
In many countries – due to self-imposed restrictions or government, corporate policies – investors and company officials are finding it impossible to conduct factory visits and assess workers' plights.
Mans Carlsson, the Sydney-based head of ESG research at Ausbil Investment Management, highlighted the risks to workers in absence of proper evaluation of working site, at the Bloomberg Inside Track webinar yesterday.
Australia has gone further than the UK and California with laws requiring companies and investors to have a detailed plan on how they will assess and tackle the risk of modern slavery in their supply chains. With more than 40 million people working in slave-like conditions even before the pandemic, more than any time in human history, it's a complex issue to address, Carlsson says.
The global nature of supply chains can make the issue overwhelming, said fellow panelist Danielle Welsh-Rose, ESG investment director for the Asia Pacific at Aberdeen Standard Investments.
"We're at the beginning of this long journey into really understanding the complexity of supply chains and the interrelation with other issues," she said from Melbourne. The issue can be further complicated by geopolitical tussles, she said, citing the Trump administration banning imports from Chinese companies on human rights concerns. Investors must analyse the alleged rights abuses, but also determine whether such bans are influenced by the wider trade dispute, she said.
Liza McDonald, the Melbourne-based head of responsible investment at First State Super, said she was undertaking a long-term assessment of supply-chain risk and had asked more than 80 fund managers that have mandates with the firm to explain how they address the issue.
Carlsson said other jurisdictions including the UK are looking at Australia's modern slavery laws and more legislation would likely follow elsewhere in the world.
"This is just a start," he said. "There will be much much more legislation coming in this field going forward."