In an era of complex global supply chains spanning many countries, investors must be alert to the potential use of child labour and modern forms of slavery. This requires constant vigilance and advocacy directed at regimes that do not adequately protect human rights. At the same time, the governments of investors’ home countries have a critical role to play by obliging companies operating in their jurisdictions to be accountable for potential labour abuses wherever they do business around the globe.
UTAM has joined 128 institutional investors that invest in the Canadian market – collectively representing $2.3 trillion in assets under management – in urging the Government of Canada to enact legislation that will help investors and Canadian companies better identify and address the incidence of slavery and child labour globally. The proposed law would require all companies operating in Canada to develop and report annually on their efforts to prevent and mitigate risk in this regard.
The statement, issued in June 2018, recognizes a number of steps undertaken to date – notably Canada’s participation in last year’s joint declaration by G20 leaders stressing the responsibility of businesses within their countries to “take immediate and effective measures to eliminate child labour by 2025, [as well as] forced labour, human trafficking and all forms of modern slavery.” The federal government has since announced that it will appoint an Ombudsperson for Responsible Enterprise to investigate and make recommendations in instances where Canadian companies have been implicated in human rights violations internationally.
Although the statement welcomes these initial steps, it stresses that they are not enough. The signatories ask the Government of Canada to pass legislation during its current mandate aimed at preventing and remedying the most egregious human rights abuses in supply chains and individual businesses before complaints arise. This legislation would oblige disclosure of all relevant information on how Canadian companies are monitoring and mitigating human rights issues, so investors can make decisions accordingly.
For UTAM, this consideration of risks related to human rights is just one dimension of a broader commitment to responsible investing that systematically weighs environmental, social and governance (ESG) factors across our investment analysis and decision-making processes. To fulfill this commitment, as the joint statement explains, “we require up-to-date, clear and comparable information from companies about their due diligence on priority issues like modern slavery and child labour in their supply chains.”
UTAM’s Responsible Investing Policy sets out the guidelines for our ESG-related decision-making, from the management of internal processes and systems to our conduct of proxy voting and engagements with company boards and management. For details of how we put this policy into action, please see our 2017 Responsible Investing Report.