Investors can be ‘an agent for change’

By Natalie Kenway

How can wealth managers and fund selectors engage with asset managers on labour rights at the companies they invest in?

Wealth managers should directly ask their investment managers a series of questions on how they embed respect for human and labour rights into their investment process, and importantly how they perceive human rights risks. They should ask how managers evaluate human rights risks as part of their investment thesis for different asset classes and whether the firm takes a single- or double-materiality perspective on this risk. What policies are in place? Do they reference the UN Guiding Principles for Business and Human Rights?

They should also assess the firm’s own engagement with the assets it holds – on both business and human rights risks such as labour standards, human rights and modern slavery. Can they give examples of when they’ve engaged with companies on labour rights issues and demonstrate outcomes?

While direct engagement is key, it’s also important investors demonstrate their concern for labour rights and add to the weight of conversation within the community. They should call for more transparency and supply chain due diligence through collective and active participation in alliances and organisations such as the Investor Alliance for Human Rights and CCLA’s own Find it, Fix it, Prevent it initiative on modern slavery.

What would you say are red flags?

Clearly, a lack of openness or willingness to engage is a red flag, and specifically if a firm can’t point to examples of engagement on human and labour rights it suggests it’s not taken seriously as a material risk. Of course, the complete absence of a human rights policy is problematic.

CCLA and ABN Amro have recently written to Nike about outstanding wage payments for garment workers and dismissals in factories in Cambodia and Thailand during the pandemic. How did this come to light?

It’s no secret that suppliers shut down factories and made workers – some of the world’s most vulnerable people – redundant during the pandemic, as the industry cut orders and pulled back production. In this case, some Ramatex Group employees were dismissed and not paid legally owed partial wages during the shutdown, an issue that has been raised by various trade unions since 2020, with civil society organisations amplifying awareness.

Read the full interview in ESG Clarity Intelligence’s October digital magazine.