Climate-Related Forced Labor and the Role of Investors
Modern slavery, a term encompassing debt bondage, human trafficking, child and forced labor, is a significant and growing problem within global supply chains. These chains, which involve multiple layers of workers, including contractors, subcontractors, and suppliers, can be incredibly efficient and profitable. However, they are often driven by unseen or overlooked forced labor due to high demand, labor-intensive processes, and limited oversight.
The International Labor Organization (ILO) estimates over 27 million people worldwide are estimated to be in forced labor.
The complexity of global supply chains—especially those that rely on low-cost labor—often makes it difficult for companies to track where and how exploitation occurs or fully understand the scope of forced labor within their operations. Climate-related disruptions, such as extreme weather, environmental degradation, and resource depletion, amplify these existing vulnerabilities, forcing workers into exploitative conditions to survive due to migration (The World Bank highlights that unless urgent climate action is taken soon, then by 2050, more than 200 million people will have moved within their country's borders as a result of climate change.) and the impact of intensifying climate emergencies. Industries like agriculture, technology, and mining are particularly susceptible, as climate disruptions increase demand for cheap (or underpaid) labor while decreasing oversight. This exacerbated risk makes it crucial for companies and investors to address climate and labor issues as interconnected challenges.
Addressing forced labor and mitigating physical and transitional risks is not only an ethical imperative—it's also a business necessity in an era where questions about how and to what degree consumers and investors can hold companies accountable for their impact on human rights are at the forefront of many bipartisan discussions.
Climate change tends to disproportionately affect the vulnerable, who are inherently at risk for abusive labor practices. People whose livelihoods are threatened by severe droughts or floods caused by climate change are highly susceptible to exploitation.
The Role of Investors in Addressing Forced Labor
For instance, Apple has implemented a comprehensive supply chain transparency program, and Nestle has a robust system for monitoring and eliminating forced labor in its operations. These companies demonstrate how companies can take proactive steps to combat modern slavery.
The recognition of forced labor within major companies' supply chains presents an opportunity for these companies to take action and for investors to play a pivotal role in driving change. Investors have significant power to influence corporate behavior by prioritizing environmental, social, and governance (ESG) factors in investment decisions, pushing companies to do more than just report on forced labor.
When investors demand that companies audit their supply chains, engage in meaningful mitigation efforts, and adopt ethical sourcing practices, they incentivize businesses to take action. Investors can use their leverage to push companies toward greater accountability, requiring them to develop and implement comprehensive transparency measures. Investors can also look to companies with strong records on labor rights and human trafficking as part of their portfolios, rewarding those with rigorous supply chain monitoring and proactive measures to eliminate forced labor. In doing so, they can help create a market shift that values corporate responsibility. This accountability factor is especially important in the shift toward clean tech where many of the raw materials are mined and could give rise to exploitive labor practices to meet the demand of the emerging market.
The problem of forced labor in supply chains is not going away. However, by recognizing the opportunity to address forced labor as a critical part of corporate responsibility, companies and investors can pave the way for a more ethical and sustainable future. Labor rights protections are not just good for people—they're good for business, too.
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Resources/Helpful Reading:
Bridging Esg Silos: The Intersection Of Climate Change And Modern Slavery
Governance gaps in eradicating forced labor: From global to domestic supply chains.
Climate Change Could Force 216 Million People to Migrate Within Their Own Countries by 2050
Climate Change, Modern Slavery and Clean Energy: The Surprising Links | American Century
