BRIDGING ESG SILOS:
THE INTERSECTION OF CLIMATECHANGE AND MODERN SLAVERYDISCLAIMERCONTENTS
01

FOREWORDS

2

02 EXECUTIVE SUMMARY

403 INTRODUCTION

504 INVESTOR RISK EXPOSURE

8

Case Study: Sudden-onset event............................ 12
Case Study: Slow-onset event................................ 14
Case Study: Combined sudden
and slow-onset event............................................ 16
Case Study: Fossil fuel industry.............................. 20
Case Study: Renewable energy industry................. 2205 TOOLS FOR ASSESSING CLIMATE-RELATED
MODERN SLAVERY RISKS TO INVESTORS

26

a. Existing approaches tomanaging climate risk..................................... 26
b. Tool 1:
Supplementary recommendations
to assess climate reportingand management............................................ 28
c. Tool 2:
Investor stewardship guidance......................... 33
06 CONCLUSION

34

07 ENDNOTES

35

This briefing for investors on climate, transition and slavery (the Briefing)is made available by Walk Free, an initiative of Minderoo Foundation(Minderoo), and AllianceBernstein, on an “as is” basis. None of Walk Free,
Minderoo nor AllianceBernstein, nor any of their respective directors,
officers, employees, agents or related entities, give any warranties,
guarantees or assurances, and will accept no liability, in connection with
the Briefing or its use, including in relation to its accuracy, completeness,merchantability or fitness for any particular purpose. Walk Free, Minderoo,
and AllianceBernstein are not acting as financial advisers in providing
the Briefing. The Briefing does not constitute legal, financial or similar
professional advice, is not intended to be used as a substitute for suchadvice and should not be relied upon as such advice. Any advice andinformation in the Briefing is general only. The Briefing has been preparedwithout taking into account users’ particular circumstances and needs.
Users should consider seeking independent legal, financial, taxation orother advice to check how the information in the Briefing relates to users’unique circumstances.
The case studies in the Briefing are provided for users’ information andto illustrate scenarios. The results should not be taken as a substitute forprofessional advice. All reasonable care has been taken in preparing anddesigning the case studies; however, none of Walk Free, Minderoo andAllianceBernstein provide any warranties and make no representationthat the information provided by the case studies is appropriate for users’particular circumstances or indicates that users should follow a particular
course of action.
None of Walk Free, Minderoo or AllianceBernstein is liable for any loss
caused, whether due to negligence or otherwise arising from the use of,or reliance on, the information provided directly or indirectly, by use of
the Briefing.
No warranty is given that the use of the Briefing will (a) ensure complianceby companies with their reporting, legal or other regulatory obligations or(b) improve investment outcomes.
Users of the Briefing are granted a non-exclusive, non-transferrable, nonsublicensable licence to use the Briefing for their own internal businesspurposes. Any other use must be approved in writing and in advance by
Minderoo and AllianceBernstein. The Briefing may be updated from time
to time – users should go online to access the current version.

Sydney, Australia
Workers install solar panels on the roof of ahouse in May 2021. Solar panels are crucial
in the switch from fossil fuels to renewableenergy, but their production poses modern
slavery risks. There are allegations thatmany working in the global supply chain
are subjected to forced labour, which is
why it is crucial to protect human rights
and ensure a just transition and decent
work for all. Photo credit: Brendon Thorne/
Bloomberg via Getty Images.

We are grateful to all those involved in drafting and reviewing this paper and would like to acknowledge Matthew Coghlan
and Serena Grant (Walk Free); and Roxanne Low and Saskia Kort-Chick (AllianceBernstein).
1

01

FOREWORDS

Walk Free is proud to partner with AllianceBernstein
to present this briefing, Bridging ESG Silos:
The intersection of climate change and modern slavery,
to the global investor community. We hope that investors
will use the tools we have developed to conduct sharper
ESG analysis and foster meaningful corporate engagement
in relation to the intricate interplay between climate change
and modern slavery risks.  
Walk Free recently launched the Global Slavery
Index (GSI) which estimates there are 50 million
people living in modern slavery globally. It impacts
every country, every supply chain and every
investor portfolio in the world. The confluenceof compounding crises, including the COVID-19
pandemic, conflict and climate change have all
increased vulnerability to modern slavery.

Investors play a pivotal role in managing theintersection of these environmental and social risks.
Knowing that one risk reinforces the other, investors
are uniquely positioned to provide oversight andsupport businesses to be accountable, especiallywhere governments may be falling short, in order
to combat the increasing modern slavery risk in our
global economy.

Climate change intersects with modern slavery
in multiple ways. We have seen the devastationthat sudden and slow-onset climate events canhave, destroying homes and livelihoods. Its effects
push people to migrate and magnify drivers ofdisplacement, such as food insecurity and a lackof access to water and other natural resources.
Migration in these contexts can be volatile andexpose people to higher risks of modern slavery,
underscoring the urgency for transformative action.

Bridging ESG Silos provides robust tools forinvestors to improve disclosure practices andstewardship regarding climate-related modern
slavery risks, fostering a new level of transparency
and responsibility.

Concurrently, those industries most necessary
for our urgent transition to clean energy are alsoreliant on exploitation and forced labour. For
example, risks have been identified throughout thesolar energy value chain, from evidence of forced
and child labour in cobalt artisanal mines in the
Democratic Republic of the Congo to the productionof polysilicon in the Uyghur region of China.

2

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERYGRACE FORREST
Founding Director
Walk Free

July 2023 was recorded as the hottest month in history
and the effects of this heat have been acutely felt acrossthe world. In Canada, raging wildfires sent plumes of smoke
billowing across North America, raising pollution levels andprompting the suspension of outdoor work. An extreme
heatwave in China’s Sichuan province, a key manufacturinglocation for the semiconductor and solar panel industries,
forced factory shutdowns; and soaring temperatures andcatastrophic floods across South and South-East Asia haveclaimed lives and forced evacuations.
From waterlogged farms and overheatedconstruction sites to poorly ventilated factories,
rising temperatures across the globe expose
workers to heat stress and other related social
risks. The International Labour Organization has
estimated that temperature increases caused byclimate change will amount to productivity loss
equivalent to 80 million full-time jobs by 2023.[1]In addition, sudden and slow-onset climate events
can drive those affected to migrate in precarious
conditions in search of new livelihoods, increasing
their vulnerability to forced labour and modern
slavery. The mass movement of people to different
locations can result in a loss of human capital fromthe places they leave, and cause potential strain on
the resources in the places to which they relocate.
Even businesses with assets and operations thatare relatively resilient to climate change can be
impacted by climate migration as they are likely to
be situated in areas attractive to climate migrants.
Against the backdrop of growing regulatory
requirements and expectations for investors toassess and report on social and environmental
risks in investee companies’ value chains, it would
be prudent for investors to consider the social andlabour issues that are likely to cascade from climatechange and how these issues can materialise in
the supply chains of investee companies. Althoughsocial factors are increasingly being considered
in investor assessments of climate change andthe energy transition, their inclusion is often donein an ad hoc manner, resulting in climate-related
human rights risks being inadequately addressed.
Global trends in regulation, litigation and social
expectations can result in material risk for investors
who do not systematically account for climaterelated human rights risks in their portfolios
where these risks are relevant. Systematicallyincorporating social factors into risk assessments ofclimate change and the energy transition is one way
in which investors can seek to mitigate these threats
to long-term stability and value creation.
AllianceBernstein (AB) has collaborated withinternational human rights organisation, Walk
Free, to author this paper setting out the systemic
links between climate change, human rights, andrisks to businesses. The paper offers an analysisof the key dimensions that investors can consider
when making investment decisions and managing
portfolios, and concludes with two tools to guideinvestors with incorporating these considerations
into their existing strategies in an incremental andpractical way.

SASKIA KORT-CHICK
Director of Social Research and Engagement
AllianceBernstein

WALK FREE

302

EXECUTIVE
SUMMARY

INTRODUCTION

The impacts of climate change will adversely affect a wide
range of human rights. There are clear links between climatechange, the energy transition and increased vulnerability tohuman trafficking and modern slavery.

Climate change is one of the most pressing human rights
issues of our time, threatening the lives and livelihoodsof millions of people. It is driving material social risks thatinvestors should consider when assessing capital allocation.

Today, active investors generally integrate material
environmental, social and governance (ESG)
factors into their investment decisions. However,
ESG integration often remains siloed, neglecting
important connections between issues. These
connections are particularly notable between
environmental and social factors, such as climatechange and modern slavery. Climate-related
human rights issues can present financially material
risks and opportunities to investors. Assessing
material financial risk in the investment decisionmaking processes requires the consideration ofboth environmental and social factors. Rethinking
existing frameworks to account for the intersection

The latest Global Estimates of Modern Slavery
estimated there were 49.6 million people living insituations of modern slavery on any given day in
2021 [2]. This increase of almost 10 million people
since 2016 is driven by compounding crises, suchas the COVID-19 pandemic, conflict and, of course,
climate change. The World Bank predicts thatby 2050, there will be 216 million people forced
to migrate within their own countries becauseof climate change, which can increase theirvulnerability to modern slavery [3].

Bagerhat,
Bangladesh

A crowd of climate migrants
cross the Pasur River by boat
to get to work in the Portof Mongla. Many migrants
work hard to build a better
life for themselves and theirfamilies, but they can beat risk of climate-related
modern slavery.
Photo credit: Zakir Hossain
Chowdhury/Anadolu Agency
via Getty Images

4of material climate change and human rights risks
offers an opportunity for deeper analysis andenhanced risk management.
This briefing, authored by AllianceBernstein andWalk Free, seeks to illustrate the links between
climate change, the energy transition, humanrights and, specifically, modern slavery through acase study approach. Drawing carefully on these
real-life examples, it develops two new tools to
help investors identify and respond to the material
climate-related modern slavery risks they seek tomanage on behalf of clients and beneficiaries.

Investors considering the impacts of climatechange on their business should now explicitly
factor in the related human rights impacts on
workers and their communities because theseissues can have material risks for investments overmultiple time horizons. Climate-related modern
slavery risk can be financially material to investee
companies because these risks can manifest as
legal, reputational and operational damage. Gaining
a better understanding of these climate-related
human rights risks can empower investors to charta more sustainable path to long-term value creation
and align themselves with the UN Guiding Principles
on Business and Human Rights (UNGPs), a set of
guidelines for companies to prevent, address andremedy human rights abuses committed in business
operations [4].
Both the physical and transition impacts of climatechange can impair human rights. Physical risks,
including both sudden-onset events such as
bushfires or slow-onset events such as sea-level
rises, can impinge on the rights to life, housing,work, food, water and sanitation. These events cantrigger rapid displacement or ongoing migration,
which can, in turn, increase vulnerability to humantrafficking and other forms of modern slavery and

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

03

labour exploitation. The transition risks in shiftingfrom high-carbon to decarbonised economies
and societies can result in loss of employment
and livelihoods as fossil fuel production andconsumption decline. Forced labour and childlabour have already been well-documented in
the supply chains of renewable energy industries:
from extracting raw materials to manufacturingcomponents and parts for solar, wind and hydrogenprojects and in building the projects themselves[5]. Aside from risks, climate change and the energy
transition also present significant opportunities toimprove social outcomes, particularly technologicalinnovations to help workers and communities
adapt to climate events and impacts, the creationof clean energy jobs, and expanding stakeholder
engagement on products and projects to strengthensocial license to operate.
In recent years, ESG integration has become
increasingly common. At the time of this publication,for instance, the Principles for Responsible
Investment, the world’s leading initiative on
responsible investment reporting, had 5,3814
signatories with about US$121 trillion in Assets
Under Management (AUM) [6]. Many investors havebegun to recognise the considerable intersectionof material ESG factors in making investments andengaging investee companies. However, the adverse
effects of climate change on human rights, and therole investors can play in supporting a just transition
from an economy driven by fossil fuels to one built
on renewable energy, have not been fully explored.
Specifically, investor assessments of material
climate change risks and opportunities, alongwith related new climate disclosures, now need toincorporate a social dimension.

WALK FREE

50MILLIONPEOPLE
were living in modern
slavery in 2021

216
MILLION
will be forced tomigrate within theirown countries by 2050

30+

COUNTRIES
signed the Just
Transition Declaration
at COP26 in 2021

5

03
INTRODUCTION

Alongside the growth of ESG integration,international legal frameworks are increasingly
providing guidance to strengthen investment
analysis and reporting that reflects climaterelated human rights risks. The Paris Agreement
is a guiding framework for efforts to address
climate change. Negotiated at the 2015 United
Nations Climate Change Conference (COP) (COP21),
the agreement included commitments from its
194 Parties to reduce their emissions and work
together to adapt to the impacts of climate change[7]. The ‘just transition’, which the International
Labour Organization (ILO) defines as “greening
the economy in a way that is as fair and inclusive as
possible to everyone concerned, creating decent work
opportunities, and leaving no one behind” [8], is a
Paris Agreement objective.
Following the Paris Agreement, more than 30
countries attending the 2021 COP26 signed the Just
Transition Declaration, committing to strategies
that consider workers, businesses and communities
during the energy transition [9]. More recently,
the Sharm El-Sheikh Implementation Plan, agreed
to at the 2022 COP27, recognised that the urgent
action needed to address climate change mustalso support a just and inclusive transition to net
zero that minimises negative social or economic
impacts. The plan emphasises that a “just andequitable transition encompasses pathways that
include energy, socio-economic, workforce andother dimensions” [10]. As a signal of the growing
commitment and momentum for this objective,
the 2023 COP28 program includes a Just Energy
Transition Day, which will focus on strategies
to reduce simultaneously carbon emissions in
the energy and industrial sectors and stimulate
economic growth and job creation [11].
The Financial Stability Board, an international
body that monitors and makes recommendations
about the global financial system, created the Task
Force on Climate-Related Financial Disclosures(TCFD) in 2015 to improve and expand reportingof climate-related financial information [12]. The
TCFD began as a voluntary set of recommendations
but is now part of the regulatory framework inmany jurisdictions, including the European Union(EU)[13], Singapore [14], Canada [15], Japan [16]and the United Kingdom [17]. New Zealand issimilarly mandating climate-risk disclosures inline with the TCFD by 2025 [18]. More governments
are shifting from recommending the TCFD as
guidance to enacting laws and policies to embed
the recommendations into mandatory legislation
and regulation. As this process continues to evolve,
it will become increasingly material for companies

6

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

to comply with the disclosure requirements orface regulatory scrutiny or fines, or reputational
damage [19]. The TCFD, however, does not makerecommendations for reporting on human rights.
The UNGPs are the most authoritative global
framework for business to consider in assessing andaddressing human rights issues in their value chains.
They require corporates, including investors, torespect internationally recognised human rights by:1.

Avoiding causing or contributing to adverse
human rights impacts through their own
activities, and addressing such impacts when
they occur, and2.

Seeking to prevent or mitigate adverse humanrights impacts that are directly linked to theiroperations, products or services by theirbusiness relationships, even if they have notcontributed to those impacts [20].

The scope of this responsibility includes the ILO
Declaration on Fundamental Principles and Rights
at Work, which incorporates the ILO conventions
prohibiting two of the most prominent forms ofmodern slavery, which are forced labour and childlabour [21].
New laws for companies to prevent, mitigate or
remediate adverse human rights impacts have been
introduced globally. These new legal frameworks
take different approaches to solving the problem ofbusiness failing to respect human rights. The UK andAustralia have taken a disclosure-based approachfor reporting on modern slavery risk management.
European countries and the EU have gone beyond
that to legislate that companies must conduct
broader human rights due diligence. The US relies
on its forced labour import ban laws to prevent
goods tainted with forced labour from entering the
US market. The list below provides examples ofthese different legislative approaches, but it is not
an exhaustive list.

“[G]reening the economy
in a way that is as fair andinclusive as possible toeveryone concerned, creating
decent work opportunities,
and leaving no one behind”
International Labour Organization (ILO)
definition of ‘Just Transition’

Disclosure approach:• The UK Modern Slavery Act requires in-scopecompanies to prepare and publish a modern
slavery and human trafficking transparency
report every financial year [22].
• Australia’s Modern Slavery Act requires larger
companies in Australia to report publicly on how
they are preventing and addressing risks related
to modern slavery in their operations and supply
chains annually [23].
• The EU’s Corporate Sustainability Reporting
Directive (CSRD) requires in-scope businesses
to report and disclose information on theirsocietal and environmental impact, and externalsustainability factors affecting their business.
The CSRD triggers the need for businesses
to comply with the EU Taxonomy and the EU
Sustainability Reporting Standards [24].

Due diligence laws:• Once adopted, the EU’s Corporate Sustainability
Due Diligence Directive will require large EU andnon-EU companies to set up mandatory due
diligence processes on their own operations andon the activities of their subsidiaries and otherentities in their value chains [25].
• France’s Corporate Duty of Vigilance Law
requires large companies to carry out humanrights and environmental due diligence andpublish a vigilance plan annually [26].
• Germany’s Supply Chain Due Diligence Act
makes it mandatory for larger businesses inGermany to conduct supply chain risk analysis
to better understand environmental and humanrights risks and negative impacts on global
supply chains [27].
• Norway’s Transparency Act requires in-scopecompanies, including both Norwegian andforeign companies operating in Norway, toconduct human rights and decent work due
diligence in their supply chains and business
relationships, and to communicate any findings
externally [28].

AllianceBernstein and Walk Free havecollaborated to develop a practicalbriefing to help investors better
understand and act on the links
between material risks related toclimate change, the energy transition
and modern slavery. The briefing isorganised into two sections:
A. Investor risk exposure examines
exposure to modern slavery risks
from climate change and the energy
transition, sharing relevant casestudies.
B. New tools offer guidance to help
investors manage and disclose
climate-related modern slavery risks.
The section includes supplementary
climate-reporting recommendations
that address modern slavery risks andexpectations for investor engagement.

Import bans:• The US Tariff Act of 1930 prohibits the import ofany product mined, produced or manufactured
wholly or in part by forced labour, including
forced or indentured child labour into the US[29].
• The US Uyghur Forced Labour Prevention Act
requires companies that source material fromthe Xinjiang region of China to prove their supply
chains are not tainted with forced labour if theywant to import goods into the US [30].

WALK FREE7

04

INVESTOR RISKEXPOSURE

Investors should take a systematic approach to identifying where
physical and transition risks might lead to material social risks
such as modern slavery, and then assess the relationship of suchsocial risks to their investment activities.

Climate-related human rights andmodern slavery risks to business and investors
Climate change can have complex, far-reaching
harmful effects on a range of human rights.
Climate-related events and risks can create impacts
and responses that may violate human rights and create
modern slavery vulnerabilities. There are two widely
recognised categories of climate change risk:
1.

Physical risks can be acute or chronic.
Acute physical risks relate to the potential
impact of typically sudden-onset events
such as storms and bushfires. Chronic
physical risks are gradual long-termchanges, or slow-onset events, including
drought, desertification, sea-level increases
and ocean acidification.

2.

Transition risks are associated with the waythat society, governments and businesses
respond to a changing climate — mainly
through the shift from a greenhouse gasemitting economy based on fossil fuels to a
decarbonised, renewable energy economy in
the global energy transition [31].

The climate-related modern slavery risk management cycle

PHYSICAL RISKTRANSITION RISK

Jobs and migration

WORKERS

8

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

1. Both sudden and slow-onset events may
damage or destroy homes and livelihoods.
This toll can increase vulnerability to humantraffickers and prompt risk-taking in bothjob hunting and labour migration. New
employment in areas affected by severe
weather events might have worse working
conditions in the wake of these events; people
might also choose or be forced to migrate
in search of new work that subjects them tolabour exploitation.
2. Phasing out fossil fuel industries canleave workers and communities stranded,
potentially facing similar issues to people
impacted by climate disasters — labour
migration, human trafficking and labour
exploitation.
3. Phasing in renewable energy generationand supply creates new extraction andmanufacturing activities that currently facea high prevalence of forced labour and childlabour. The energy transition can also resultin local communities including Indigenous
peoples losing their traditional land andlivelihoods to project sites. This can increase
their vulnerability to exploitation.

Climate events can directly impact basic humanrights including the rights to life, health, work,
housing, food, water and sanitation. Climatechange has been termed a “stress multiplier”
because it aggravates existing vulnerabilities,
particularly for women, children, the rural
poor and fossil fuel industry workers [32]. This
increased precariousness heightens the needfor affected individuals and communities toadopt riskier coping strategies, such as unsafe,
disorderly or irregular migration, which makes
exploitation through human trafficking andmodern slavery more likely.
While migration can help people to deal with theinitial dangers and consequences of climateinduced natural disasters, it can also lead toother harmful social outcomes, such as working
excessive overtime, receiving less pay than nonmigrants and exposure to hazardous working
conditions [33].
Companies operating in climate disasterzones and employing affected local workers,
or located outside these areas and receiving
labour migrants from them, need to recognise
the increased precariousness these workers
or migrants might be experiencing. The rightrecruitment policies and procedures and worker
grievance mechanisms must be in place toprevent abusing new vulnerabilities.

Investor risk

COMPANIES

MODERN SLAVERYFINANCIAL IMPACT

Climate-related risks canmanifest as modern slavery
risks in several ways:

INVESTORSESG INTEGRATIONAND COMPANY ENGAGEMENTWALK FREE9

04
INVESTOR RISKEXPOSURE

Climate-related modern
slavery risks can manifest as
business or investor risk andbe financially material in thefollowing ways:• Legal risk: As governments worldwide
rapidly shift their human rights andclimate policies, regulatory risk has
become a significant concern for investors.
Governments are committing to achieving
net zero emissions and implementing laws
to safeguard climate-related impacts causedby companies. Regulatory expectations
for companies to measure, monitor andmitigate their climate-related financial risks
are growing rapidly globally. At the sametime, companies are increasingly required to
identify and mitigate human rights risks intheir operations and supply chains throughlegislative measures. Regardless of where acompany is headquartered, the global reachof these regulatory trends makes it crucial
for companies to respond proactively to thehighest regulatory requirements concerning
both human rights and environmental due
diligence. While these current and prospective
laws on supply chains or environmental
impact do not specifically address climaterelated human rights risks, when taken
together with the physical impacts ofclimate change on communities and thecommercial demands of the energy transition,
the consideration of such risks is importantfor investors.

• Reputational risk: Stakeholders, including
civil society, consumers and beneficiaries, areincreasingly becoming more informed aboutclimate and human rights risks. Campaigns thaturge companies and investors to adopt stronger
climate and human rights policies, commit toemission targets and increase transparency insupply chains can gain significant momentum[34]. Customer-facing companies are increasingly
obligated to ensure their value chain partners
effectively manage and mitigate the risk ofclimate-related impacts on human rights. Fundmanagers are faced with similar expectations.
One study conducted on about 96,000 global
funds using Morningstar data found thatsustainable funds experienced net positive fundflows in 2022 of US$115 billion (around 3 per centof 2021 year-end Assets Under Management),
while traditional funds experienced outflows
of US$565 billion, signalling strong demand
for sustainable products and strategies [35].
In addition, shareholder activism, where
shareholder advocacy organisations engage withcompanies on climate action via shareholder
motions filed at Annual General Meetings, isincreasingly gaining traction. There was about a
36 per cent increase in the number of shareholder
activist campaigns in the US in 2022, compared to2021[36]. Increasing societal expectations mean
investors who fail to manage material climaterelated human rights risks in their portfolios
adequately may face substantial risks themselves.

• Operational risk: The physical effects ofclimate change can lead to large-scale migrationof workers and communities, resulting in theloss of labour in places of origin and potential
strain on resources in new locations. Climateinduced migration can create instability in acompany’s supply chains and operations, while
also presenting challenges to human rights
responsibility. Climate-related migration can leadto supply chain disruptions. As people move fromclimate-affected regions, production facilities
and transportation networks may become
understaffed. These disruptions can impact the
timely delivery of goods and services, leading to
supply chain inefficiencies and potential delays or
shortages.
Climate migration can also result in the loss ofskilled and experienced workers and companies
may face challenges finding suitable replacements,
particularly in industries reliant on specificexpertise or labour-intensive sectors. This can lead
to workforce shortages and, in turn, operational
disruptions. Even businesses with assets andoperations that are relatively resilient to climatechange could be impacted by climate migration
as they are likely to be situated in areas attractive
to climate migrants. Many climate migrants canintensify resource pressures, which can, in turn,have a negative impact on supply chain stability
and overall operations of a business.
In addition, climate-induced migration can becorrelated to an increase in incidences of forced
labour and modern slavery in supply chains[37]. Companies that rely on global supply
chains exposed to this risk may face disruptions

from regulatory or legal action that can cause
production delays. Firms may ultimately need tofind new suppliers or redesign portions of their
supply chains to address instances of forced
labour, which can impact operations. There is also
the risk of supply chain disruption if a supplier issuddenly unable to deliver because of legal action
or a boycott.
These legal, reputational and operational risks
can result in direct financial implications for
a company. Legal fees, fines, penalties andsettlements can have a direct impact on acompany’s financial resources and lengthy legal
disputes can divert management’s attention andresources, away from core business activities,
potentially impacting profitability and growth. A
damaged reputation can lead to reduced sales,
loss of market share and decreased customer
trust and loyalty, all of which can have negative
impacts on a company’s bottom line. Finally,
operational disruptions can lead to production
delays, inventory loss, or increased procurement
expenses, all of which can have financial
implications for investee companies.
Given the high stakes of these issues, investors
should take a systematic approach to identifying
where physical and transition risks might lead tomaterial social risks such as modern slavery, andthen assess the relationship of such social risks
to their investment activities. We have outlined
several case studies in the following pages toillustrate the actual or potential links between
climate change, modern slavery and business risk.

Tarawa,Kiribati
A fisherman puts out his nets
in North Tarawa. In someparts of the world, the fishingindustry employs vulnerable
workers who are susceptible tohuman trafficking when theirlivelihoods are threatenedby flooding, sea-level rises
and other climate disasters.
Forced to find work elsewherein the aftermath of suddenonset events, they may findthemselves driven into forced
labour. Photo credit: Jonas
Gratzer/LightRocket via
Getty Images

10

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERYWALK FREE

11

Tacloban,
Philippines

04
INVESTOR RISKEXPOSURE

Case Study:

Sudden-onset eventand modern slavery
Intensifying typhoons in
the Philippines heighten
trafficking vulnerability
Super Typhoon Haiyan killed 6,300 people anddisplaced 4.4 million people when it struck thePhilippines in November 2013 [38]. The hardest
hit region, the Eastern Visayas, was already one ofthe poorest regions in the country and its people
among the most susceptible to human trafficking[39]. Destroying rice fields, coconut plantations andfishing boats, the typhoon devastated the agriculture
and fishing industries, which already employedvulnerable workers [40]. Seventy-two per cent of
the 44 million coconut trees in the Eastern Visayas
were damaged by the typhoon, resulting in material
reductions in the annual income of smallholder
coconut farmers [41] The Philippines Bureau ofFisheries and Aquatic Resources estimates that
21 of the country’s 72 fishing provinces and morethan 145,000 fishermen were impacted by Typhoon
Haiyan, with up to 95 per cent of boats and fishingequipment being lost in hard-hit areas [42].
The immense destruction of homes and livelihoods
made many local people more susceptible to humantrafficking and labour exploitation [43]. Tens of
thousands were forced to leave affected areas, manyheading to the capital city of Manila. Reports andprosecution of human trafficking surged, as humantraffickers preyed on displaced men, women andchildren [44]. Based on the findings of a Philippine
National Statistics Office and ILO survey, 54 per centof 112 surveyed villages reported children involved
in harsh and dangerous labour, with 39 per centsaying that the number of such children rose
following the disaster [45].
The Philippines is one of the world’s major
agricultural producers. Its key agricultural
products include rice, coconuts, corn, sugarcane,bananas, pineapples and mangoes [46].
The country hosts factories, manufacturing
plants, sales offices and distribution centres ofmany multinational corporations, including foodand beverage companies, pharmaceutical andconsumer goods companies, and automobile
companies nationwide [47].

12

A giant ship lies alongsidehomes in Anibong, a suburb
in Tacloban City, after it was
cast adrift during Super
Typhoon Haiyan, which
struck the Philippines on 8
November 2013. The disaster,
one of the most powerful
typhoons to ever hit land,
left thousands dead anddisplaced more than four
million people. The immense
destruction of homes andlivelihoods made many
people more susceptible
to human trafficking andlabour exploitation.
Photo credit: Mark Fredesjed
R. Cristino/Pacific Press/
LightRocket via Getty Images

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

Implications for investors
Sudden-onset climate-related events can increasematerial modern slavery risk in a company’s
operations and/or supply chains in affected
geographies. These events can lead to largescale migration, resulting in labour shortages inaffected areas which can have a negative impact on
operations and supply chains. Embedding climate
resilience throughout a company’s value chain
involves accounting for such climate-related humanrights risks.
In addition, local people can be increasingly
vulnerable to traffickers in the aftermath of suddenonset events and be driven into forced labour orchild labour. These risks can increase if business
operations and supply chains are in areas attracting
a large number of climate migrants. Sudden-onset
events are essentially risk multipliers, making those
who are more vulnerable even more likely to beaffected by modern slavery and, in turn, heightening
the prevalence of forced labour and modern slavery
in supply chains.
Investors can incorporate this heightened risk intorisk assessments following climate-related natural
disasters.

Investor takeaways:
1.

Understand how an investee company identifies
and monitors whether any labour-intensive
parts of its operations and/or supply chains arelocated in an area susceptible to sudden-onset
climate-related events.

2.

Identify whether an investee company locatedin these high-risk geographies accounts forlabour considerations, such as the risk oflarge-scale migration following sudden-onset
climate-related events, in their climate resiliencestrategies.

3.

Understand how an investee company identifies
and monitors whether any labour-intensive
parts of its operations and/or supply chains arelocated in an area susceptible to generating or
receiving a large number of climate migrants.

4.

Understand how an investee company locatedin these high-risk geographies and that operate
within industries that have a high demand forlow skill and low paid labour conduct humanrights due diligence to identify modern slavery
risks and work to mitigate them, remedy adverse
impacts, track and measure progress, and reportany findings.

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Kanadal Province,
Cambodia
Cambodian students walkthrough the rain at a flooded
village in Kandal Province,
which surrounds the capital
Phnom Penh and extends
into the southeast. Such
events can result in crop
failures, forcing farmers andtheir families to search forwork elsewhere — many end
up working in brick kilns as
indentured labour to supply
materials for the capital’s
ongoing construction boom.
Photo credit: Tang Chhin
Sothy/AFP via Getty Images

Case Study:04

Slow-onset eventand modern slavery
Cambodian farmers facedebt bondage in brick kilns
to supply construction boom
Cambodia’s capital, Phnom Penh, is in the middle ofa construction boom, having built a wave of officebuildings, condominiums, shopping malls, hotels,
schools and hospitals in the past decade. Foreign
investment has helped to fuel the boom. Significant
foreign investors in Cambodia’s construction andreal estate industry are from China, South Korea andJapan [48]. The industry is projected to grow 9.4 percent between 2023 and 2026 based on investments
in infrastructure, commercial and residential, andstrong demand for real estate [49].
Local kilns that supply the enormous quantity ofbricks often depend on a coerced workforce ofindebted farmers and their families [50]. Recent
temperature increases and erratic precipitation
have caused crop failures, compelling farmers tospend their savings and take out loans to cope withthe loss of sustenance and income. When some
farmers struggle to repay debt, kiln owners canstep in and offer to buy the outstanding debt. They
then require the farmers and their families to work
off that debt in brick kilns. Working conditions are
dirty, dangerous and demanding, with rural forced
labourers excavating clay and feeding the kilns withcombustible materials that emit toxic fumes.
Once farmers move to the city to live and work, they
typically face a growing challenge in repaying theirdebts, particularly when heavy unseasonal rain stops
production, reduces their piecemeal rate-based
earnings and increases their basic living costs [51].

INVESTOR RISKEXPOSURE

Industries with low-tier suppliers located in
geographies affected by slow-onset climate events
and with lower regulation can be more susceptible
to prevalence of modern slavery in the form of debt
bondage. These low-tier suppliers support listedcompany activities such as construction and realestate companies. For example, debt-bonded labour
is similarly prevalent in India’s agriculture sector,
such as in sugar cane farming. Farmers who face
increasing crop failure because of climate change
become trapped in the cycle of debt bondage as they
enter into informal agreements for cash advancesin return for working in sugar cane fields [54]. As theworld’s largest producer of sugar, the increase inprevalence of debt bondage in the industry can havefar-reaching implications.

Investor takeaways:
1.

Understand how an investee company identifies
and monitors whether any labour-intensive
parts of its operations and/or supply chains arelocated in an area susceptible to slow-onset
climate change.

2.

Understand how an investee company locatedin these high-risk geographies and that operates
within an industry that has a high demand forlow skill and low paid labour implements humanrights due diligence with specific consideration
for migrant workers.

3.

Understand how an investee company locatedin these high-risk geographies with lower
regulation and within an industry that has ahigh demand for low skill and low paid labour
accounts for the increased risk of debt bondage
in its supplier code of conduct; for example,
does it have an ‘employer pays’ or ‘zero
recruitment fees’ policy?

4.

Understand how such an investee company
maintains visibility and transparency andconducts due diligence on the employment
practices of its suppliers and subcontractors.

5.

Understand how such an investee company
addresses violations of its supplier code of
conduct, and how it works with its suppliers
to improve their management systems andremediate affected workers.

Implications for investors
Slow-onset climate events, including risingtemperatures or changing rainfall patterns, canindicate an increased risk of forced labour or debt
bondage within an investee company’s operations
and/or supply chains in affected geographies. Areas
with slow-onset climate events often do not receive
the same level of support or relief aid as areas prone
to rapid-onset climate events. Governments andstates are often left to use their own budgets forrelief operations linked to slow-onset climate events[52]. With such relief operations often coming in late,communities can be forced into distress migration andsituations of forced or debt bonded labour to survive.
Research has found that the percentage of trafficked
migrant households in slow-onset event areas is muchhigher than in sudden-onset event areas [53].

14

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERYWALK FREE

15

Ghoramara,
India

04
INVESTOR RISKEXPOSURE

Case Study:

Combined sudden and slow-onset
event and modern slavery
Climate-induced forced
migration in Bangladesh’s
Sundarbans Delta
The Sundarbans, the world’s largest mangrove
forest, sit on a mega delta created by the confluenceof the Ganges, Brahmaputra and Meghna rivers in
Bangladesh and the eastern India state of Bengal.
The region faces frequent, ferocious cyclones andtidal surges, as well as ongoing, catastrophic floods
and sea-level increases. Locals in the Sundarbans
suffer widespread displacement from their homes
and lost jobs because of extreme events, and many
people living there can no longer work for much of
the year. Agriculture and fishing are the main sourcesof livelihood, but droughts and floods ruin crops andfields, damage houses and pollute water, and trigger
water and vector-borne disease outbreaks.
The Sundarbans is a well-known hotspot for climate
migrants to become victims of human trafficking
and modern slavery [55]. Most households in the
Bangladesh delta have seen at least one family
member migrate. Migrant workers, primarily men,
usually relocate to the urban slums of Dhaka or
Kolkata. Dhaka, for instance, is now home to 10
million climate migrants, and an estimated 2,000
people still move there every day [56].
Many migrants find work in the garment and textile
industry [57]. Bangladesh is the world’s second
largest manufacturer after China; the garment
and textile industry accounts for 80 per cent of its
exports. Global apparel brands produce a significant
share of products in Bangladeshi factories. In 2022,
a study was conducted by the Global Fund to End
Modern Slavery on exploitative labour practices
in the informal-apparel sector in the garmentproduction hubs of Narayanganj and Keraniganj in
the Dhaka area. It found that more than 86 per centof workers met the ILO’s criteria for forced labour[58].
Global apparel brands have been linked toallegations of forced labour taking place at
workplaces that are incorporated into their supply
chains through unauthorised subcontracting
arrangements [59]. A recent study conducted by
the University of Aberdeen and Transform Tradefound that, based on a survey of 1,000 Bangladeshi
factories and suppliers producing apparel for global
fashion brands and retailers, one in five factories
reported that they do not pay the Bangladeshi legal
minimum wage [60].

16

A villager points at thepart of the river whichsubmerged her family’s
farmland ten years ago on
Ghoramara Island in the
Sundarbans, some 100km
south of Kolkata in the Bayof Bengal. This region faces
frequent extreme climate
events, such as cyclones,
tidal surges and floods,
as well as slow-onset
sea-level rises causedby climate change. Such
events displace people
from their homes, leading
to increased climateinduced migration. Photo
credit: DESHA-KALYANCHOWDHURY/AFP via
Getty Images

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

Implications for investors
The combined effects of sudden and slow-onset
climate events can increase the number of migrant
workers in the operations and/or supply chains ofinvestee companies. Migrant workers, particularly
in labour-intensive sectors with low skill and low
paid positions, may be vulnerable to exploitative
recruitment and employment practices. The
risk of exploitation is amplified when there are
intricate subcontracting chains and various
outsourcing or recruitment arrangements are
involved, especially for part-time, project-specificor seasonal workers [61].
Investors can incorporate these considerations into
their risk assessments of firms located in destination
areas for climate migrants and companies that
operate in industries relying on low-skilled labour
with high demand for workers. Investors should
investigate these issues beyond the first tier of their
supply chains.

Investor takeaways:
1.

Understand how an investee company identifies
and monitors whether any labour-intensive
parts of its operations and/or supply chains arelocated in an area susceptible to receiving alarge number of climate migrants.

2.

Understand how an investee company locatedin these high-risk geographies and that operates
within an industry that has a high demand forlow skill and low paid labour implements humanrights due diligence with specific consideration
for migrant workers.

3.

Understand how such an investee company
accounts for the increased risk of modern
slavery in its supply chain in its supplier codeof conduct.

4.

Understand how such an investee company
maintains visibility and transparency andconducts due diligence of the employment
practices of its suppliers and subcontractors.

5.

Understand how such an investee company
addresses violations of its supplier code of
conduct, and how it works with its suppliers
to improve their management systems andremediate affected workers.

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04
INVESTOR RISKEXPOSURE

Energy transition-related modern slavery risks
to business and investors
Until recently, the assessment of business risks inthe energy transition has focused mainly on the policy
and legal risks arising from climate change adaptation
requirements.
These risks include failure to meet carbonemissions targets and climate-related litigation.
Additionally, technology and operational risks
related to carbon capture and the introductionof renewable energy into assets and operations
have been prominent. However, the energy
transition represents a system-wide humanrights challenge that could result in serious
human rights violations such as modern
slavery. These violations should be consideredmaterial financial risks as they may lead to both
reputational damage and civil and criminal
actions against a company.
We can view the risks in terms of two sides of theenergy transition — phasing out and phasing in:

18

1.

The phasing out of fossil fuel industries canleave workers vulnerable to poor working
conditions in stranded assets. Workers
may also be stranded by unemployment,with limited skills development and job
opportunities in the green economy.

2.

The phasing in of renewable energy
can also create modern slavery cases atmultiple stages:a.

Extracting and processing raw
materials needed to produce renewableenergy inputs and infrastructure,including cobalt for batteries andpolysilicon for solar panels, have a
track record of using forced labour andchild labour.

b.

Acquiring land for hydro, solar andwind power can result in people being
forcibly evicted and losing their land,
homes, livelihoods and communities.
This can leave them more vulnerable
to human trafficking and forced labour,
as is the case with labour migration
following climate events.

c.

The location of many renewable energy
projects are often far from population
centres, so workers on construction
and operations sites could face thetypical modern slavery risks of similar
remotely located industries such as
agriculture, forestry and extractives.

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

A stranded workforce is a major concern in thecontext of the energy transition, particularly inregions where workers rely heavily on jobs in thefossil fuel industry. In some cases, workers in theindustry may not have the skills or qualifications
required to transition to jobs in the renewableenergy sector, leaving them at risk of being
stranded without new work and potentially
fuelling migration to cities and other regions insearch of employment. In addition, while there
may be a level of natural rebalancing between
fossil fuel and renewable energy employment, job
losses and creation will not necessarily occur inthe same geographic locations.
The World Bank’s report on managing the labourtransition out of coal estimates that there areabout 4.7 million coal mining jobs globally in
an industry that generates significant indirect
jobs across multiple economic sectors [62]. The
report concludes that closing coal mines will havesignificant implications for labour markets thatreach well beyond mine workers. Pass-througheffects on workforces along the coal value chain,and on local economies that rely on mine worker
earnings, could impact employment rates andcommunity well-being. In some communities,
the report finds, mine closures can create apersistent, destabilising demand shock asworkers struggle to transition to new jobs.

Transition-related modern
slavery risks for businesses
and investors could be similar
to the climate-related risks
to business and investor
discussed above, but they
could also manifest in new
and different financiallymaterial ways:• Legal risk: Companies may face legal
consequences such as fines, penalties,
lawsuits or import bans for involvement inmodern slavery either directly or indirectly
through their renewable energy supply chains.
These legal risks could lead to operational
disruptions, with firms possibly forced tohalt production, end supplier relationships
or invest in remediation efforts. These
disturbances can also increase costs anddelays while reducing competitiveness.
• Reputational risk:• The shift in demand and spending toward lowcarbon technologies can reduce jobs in thefossil fuel industry and other carbon-intensive
sectors. Companies seen as contributing
to lost jobs or economic activity in affected
regions may lose their social license tooperate, particularly if they are seen to be
failing to take adequate steps to address theissue of a stranded workforce.
• Companies linked to forced labour andmodern slavery in their renewable energy
supply chains can suffer reputational
damage, leading to negative publicity,
consumer boycotts and loss of brandvalue. Allegations can intensify scrutiny
and pressure on companies to address theissue. Firms may lose valuable business
opportunities, as clients, partners andinvestors shy away from associatingwith organisations involved in unethicalpractices. This can result in reduced
financing access, lost contracts, or exclusionfrom public-procurement processes.
• Operational risk: Companies relying on
global supply chains that are exposed tomodern slavery risks linked to transition
minerals may face disruptions from regulatoryor legal action, leading to operational
disruptions. Firms may ultimately need to find
new suppliers or redesign parts of their supply
chains to address instances of forced labouror child labour, which can impact operations.
Disruption may also happen if a supplier issuddenly unable to deliver due to legal action
or import bans. These issues can result in ashortage of renewable power, which could
create further operational risks for companies
relying on renewables.

These energy transition-related legal,
reputational and operational risks can resultin direct financial implications for a company.
A company’s failure to uphold fundamental
labour rights by complying with labour laws
and international standards, including theprohibition of forced labour and child labour,
can be financially material.
A growing number of countries and regions
are considering regulations preventing goods
produced with forced labour from entering
their markets. Firms with higher risks of forced
labour in their renewables supply chains may
find themselves shut out from these markets,
potentially hurting sales and revenues. In
addition, the transition minerals needed forrenewable energy inputs often come froma limited number of deposit or extraction
locations. The Democratic Republic of Congo(DRC) and China, for instance, currently produce
most of the world’s cobalt and rare earth
elements, respectively [63]. Highly concentrated
mineral sources like these increase the potential
financial risks from trade restrictions due tohuman rights and modern slavery issues in the
renewables supply chain.

92%

OF GLOBAL GDP
Has made Net Zero
Commitments

35k

CHILDREN
Working in the cobalt
mining indutry in the DRC

4.7

MILLION

Jobs globally in the coalmining industry

Several case studies that follow illustrate actualor potential links between the energy transition,
modern slavery and business or investor risk.

Energy transition-related
legal, reputational andoperational risks canresult in direct financial
implications for a company.
A company’s failure to upholdfundamental labour rights bycomplying with labour laws
and international standards,
including the prohibitionof forced labour and childlabour, can be financiallymaterial

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19

04
INVESTOR RISKEXPOSURE

Case Study:

People burn raw coal at an
open-cast coal mine in Jharia,
on the outskirts of Dhanbad
in India’s Jharkhand state,on 6 July 2023. Jharkhandholds the largest known coalreserves in the country anddirectly employs 300,000
people, but there arethousands more working in
the industry’s supply chain
and service sectors. The
planned switch to renewableenergy will need to becarefully handled to ensure
a just transition.
Photo credit: Money Sharma/
SFP via Getty Images

Fossil fuel industry
and modern slavery
Potential community
consequences from thephase down of coal in India
Coal is critical to India’s energy security, particularly
as the country experiences rapid population growthand increasing energy demand. According to theInternational Energy Agency, India is expected toaccount for the largest share of growth in global
energy demand over the next two decades, withcoal-based generation currently making up around69 per cent of the country’s total power generation[64]. To meet its coal phase down plans, India willneed to initiate projects to boost its renewableenergy capacity. Its short-term 2030 goals intend tolead India to an eventual carbon emission reduction
and coal phase down over the next 40 years [65].
In the eastern Indian state of Jharkhand, which holds
the largest known coal reserves in India, coal is an
important employer. The industry provides morethan 300,000 direct jobs, with nearly one million
people working in its supply chains and service
sectors [66]. Jharkhand depends on its coal industry
for jobs, pensions, state and local government
revenues, social spending, industrial fuel, household
fuel, mixed-use infrastructure and sometimes forfree electricity and water.
Without effective planning for a just transition, thedecline of the coal industry in Jharkhand could havesignificant consequences. Most renewable capacity
is planned for western, southern and northern Indianstates which are better for wind and solar power
generation [67]. The decline of the coal industry
could result in job losses, falling government
revenues and the destruction of livelihoods inlocal municipalities and in the broader region.
The unplanned closure of coal mines could lead tovillages and towns surrounding mine sites being
abandoned. It could also increase vulnerability tomodern slavery and human trafficking risks in local
communities as workers are pushed to seek new
employment and livelihoods [68].

Implications for investors
Businesses that neglect to incorporate the justtransition into their strategic decision-making may
face substantial risks. Failure to address the social
aspects of the transition may result in adverse
human rights and wider social impacts, leading
to potential risks to business such as damage to
reputation and compromised decarbonisation plans.

20

Dhanbad,India

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

A company’s relationship with its stakeholders
is vital to understanding and assessing the longterm outlook of its operating model, reputation,social license to operate and therefore profitability.
Companies viewed as contributing to job loss or
economic activity in affected regions may lose theirsocial license to operate, particularly if they areseen to be failing to address the issue of a stranded
workforce adequately. Social media and global
connectivity have strengthened the reach of civilsociety movements related to climate change andthe rights of workers and communities. This has
magnified the reputational risks for companies
perceived as failing to act in accordance withaccepted standards. Without a social license tooperate, firms will face challenges in attracting andretaining the talent required to fill new, specialised
and technology-centric roles, and in attracting
investors that value portfolio companies withempowered employees [69].
The demand for green talent and skills is increasing
rapidly, surpassing available supply [70]. This
demand extends beyond traditional industries,
such as energy, and encompasses diverse sectors
such as finance, fashion and technology [71]. This
scarcity poses risks to the climate transition but
also presents an opportunity for businesses togain competitive advantage through retraining andreskilling workers as a form of workforce planning,
mitigating expected skills shortages.

Investor takeaways:
1.

Understand how an investee company has
identified potential risks and opportunities tointernal and external stakeholders with regards
to its decarbonisation plans.

2.

Understand how an investee company has
engaged and collaborated with its employees,
suppliers, customers and community to assess
and address the impact of its decarbonisationplans.

3.

Identify whether an investee company has
assessed how failure to successfully implementa just transition strategy could negatively
impact its business; and, if so, whether it has
embedded just transition consideration into its
corporate strategy.

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21

Kolwezi,
Democratic Republicof Congo (DRC)
Miners at the Shabara
artisanal mine, which employssome 20,000 people in shifts of
5,000 at a time, on the hunt forcobalt, a critical component
in rechargeable batteries
that power mobile phones
and electric vehicles. The
DRC produces more than 70
percent of the global supply
of cobalt, mainly through its
industrial mines, but it also
has hundreds of thousands ofinformal diggers who toil inhazardous conditions. Photo
credit: JUNIOR KANNAH/AFP
via Getty Images.

Case Study:

04

Renewable energy industry
and modern slavery
Cobalt extraction for
lithium-ion batteries inelectric vehicles andother uses
Cobalt is a key mineral component in lithium-ion
batteries used in electric vehicles (EVs) and otherelectronic devices such as laptops and mobile
phones, jet engines and renewable-energy storage.
According to the Cobalt Institute, the cobalt market
grew by 22 per cent in 2021 and is expected tocontinue expanding by 13 per cent every year for the
next five years [72]. In 2021, EVs became the largest
end-use for cobalt and might account for half ofcobalt use by 2026.
A significant portion of the world’s land-based cobalt
reserves are found in the DRC [73]. Seventy percent of cobalt from the DRC is pulled from largescale mines (LSM) but up to 30 per cent also comesfrom artisanal and small-scale mining (ASM), which
employs up to 250,000 workers [74].
Serious human rights allegations have been tied
to cobalt mining in both ASM and LSM operations[75]. The prevalence of child labour in ASM is wellknown and estimates show at least 35,000 children
working in the industry [76]. Labour practices andconditions for ASM workers are poor and hazardous,
with health and safety standards usually ignored.
Mines frequently operate illegally, with tunnels often
exceeding the legal depth limit and miners exposed
to toxic dust, which leads to hard-metal lungdisease. LSM risks include the exposure of miners
and communities to high levels of toxic metals,
poor health and safety practices on mine sites,
forced evictions around sites and abuses linked tosecurity personnel.

INVESTOR RISKEXPOSURE

Firms linked to child labour in their renewable energy
supply chains can suffer severe reputational harm,leading to negative publicity, consumer boycotts
and loss of brand value. In 2016, an Amnesty
International report implicated major technology
and automotive companies in sourcing cobalt
linked to child labour in the DRC [78]. These types ofallegations can intensify scrutiny and pressure oncompanies to address the issue.
Businesses associated with child labour in their
supply chains may also lose valuable business
opportunities because clients, partners andinvestors may be unwilling to engage withorganisations involved in unethical practices. This
reluctance can also reduce access to financing, resultin lost contracts, or lead to a firm being excluded
from public procurement processes.

Investor takeaways:
1.

Identify whether an investee company has a
responsible sourcing policy or equivalent forcobalt that is aligned with relevant aspectsof the OECD’s Due Diligence Guidance for
Responsible Supply Chains of Minerals from
Conflict Affected and High-Risk Areas, and how
this policy is implemented [79].

2.

Understand how an investee company assesses
what proportion of DRC-origin cobalt in its
supply chain has a connection to ASM.

3.

Identify whether an investee company has asupplier code of conduct that reflects relevantinternational standards such as the ILO’s
Declaration on Fundamental Principles andRights at Work, which covers child labour, andhow compliance of suppliers is assessed.

Implications for investors
Companies involved in modern slavery either directly
or indirectly through their renewable energy supply
chains may face legal consequences, including fines,
penalties or lawsuits. In 2019, a US class-action
lawsuit was filed against five major technology
companies, alleging they knowingly benefited fromthe use of child labour in their cobalt supply chains[77]. Beyond litigation risks, increased regulatory
scrutiny can bring more stringent supply chain
reporting requirements, audits and inspections.
Failure to comply may result in financial penalties,
loss of operating permits or other legal actions.

22

BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERYWALK FREE

23

04
INVESTOR RISKEXPOSURE

Case Studies:

Renewable energy industry
and modern slavery
Allegations of forced
labour in solar energy
supply chains
Global solar photovoltaic (PV) capacity is projected toalmost triple from 2022 to 2027, surpassing coal as thelargest source of global power by 2050 [80]. Since 2017,91 per cent of new polysilicon production capacity
worldwide has been developed in China, with around
40 to 45 per cent of the polysilicon used in solar panels
now coming from the Xinjiang region [81].
In recent years, media and non-governmentalorganisations have published allegations of forced
labour within the global solar supply chain — someof them linked to Xinjiang. Reports allege that about
2.6 million ethnic minorities — the Uyghur people, inparticular — are subjected to ‘surplus labour’ programs
and face significant coercion, re-education programs
and internment [82]. The reports also allege that many
workers in these programs are unable to refuse suchwork or ultimately unable to leave these jobs.
On 21 June 2022, the Uyghur Forced Labor Prevention
Act (UFLPA) came into effect in the US, creating a
rebuttable presumption that all goods manufactured
wholly or in part in Xinjiang are produced withforced labour, and therefore banned from entering
the US unless the importer can present clear andconvincing evidence to the contrary [83]. In addition
to prohibiting imports manufactured in Xinjiang, the
UFLPA’s rebuttable presumption also extends to a listof entities identified as companies that participate in‘poverty alleviation’ and ‘pairing assistance’ programsin the region, or as entities that work with the regional
government to recruit, transport or receive alleged
forced labour from Xinjiang. In its Enforcement
Strategy, the US indicated that the high-priority
sectors for enforcement will include silica-based
products including polysilicon [84].

Implications for investors
Companies using forced labour in their renewableenergy supply chains may face legal action, including
import bans, fines, lawsuits and regulatory penalties,
which can harm their operational and financial
performance. In November 2022, Reuters reported
that more than 1,000 shipments of solar components
had been blocked at US ports under enforcementof the UFLPA [85]. In August 2022, ROTH CapitalPartners reported that as many as 3 gigawatts (GW)of solar panels have been held up since the UFLPA
was enacted; it estimated as many as 12 GW would be
prevented from entering the US market by the close of2022 [86].

24Oaxaca,MexicoBRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

A wind farm in
La Ventosa, Oaxaca State,
Mexico in 2017. Jobs createdby wind farm projects can be
temporary, low-paying andmale-dominated.
Photo credit:
Patricia Castellanos/AFP
via Getty Images

Companies facing legal action or import bans may
also suffer reputational damage, making it harder toattract investment and hold on to market share. The
US is prioritising the addition of more companies to
its sanctions list this year for using forced labour in
Xinjiang [87]. The EU has similarly proposed draft rules
barring products made with forced labour from its
market. The proposal covers all products, specificallythose made in the EU for domestic consumption andexport as well as imported goods, without targeting
specific companies or industries [88].
The US has also set a priority of working to persuadelike-minded countries in Europe, as well as Japan,
Australia, India and others, to pursue US-like forced
labour import bans [89]. While import bans targeting
specific regions may be perceived by some to bepolitically motivated, they do create regulatory riskthat can impact investee companies [90].

Investor takeaways:
1.

Understand how an investee company identifies
and manages risks associated with legal andpolicy developments related to solar energy
supply chains.

2.

Understand an investee company’s exposure
to risks of potential disruptions in the supply
chain arising from the use of polysilicon from the
Xinjiang region, and how the company manages
such risks.

3.

Understand how an investee company monitorsand mitigates material negative environmental
and social externalities that translate to businessrisks associated with its polysilicon supply chain.

Poor working conditions for
local labourers on Mexican
wind power project
Since 2015, Electricite de France (EDF), the biggest
transnational French energy company and a leading
global electricity producer, has sought to build the Gunaa
Sicaru wind farm on the land of an indigenous Zapotec
community in Oaxaca, Mexico [91]. Multiple lawsuits
have been filed against EDF for failing to consult thecommunity effectively about the project. Gunaa Sicaru
would have been EDF’s fourth wind farm in the area, andthe community was assured by the firm that the project
would bring new jobs and investment. Instead, theproject has divided the community [92].
A complaint to the UN Special Procedures consistingof independent human rights experts appointed andmandated by the UN Human Rights Council raised

several labour dimensions [93]. In response, the UN
Special Procedures report warned that jobs created bywind farm projects are often temporary, low-paying
and may not last beyond the initial construction
phase, despite renewable energy developers typicallyinsisting that local renewable projects will bolster
local job creation. Moreover, when the jobs created
are not secure enough or long-term, local workers
may be prevented from registering for social security
and other labour benefits. Hiring local women is
exceedingly rare and often gender-stigmatizing —cleaning jobs, for example. After construction iscompleted, there is a risk that most high-quality job
opportunities will be reserved for foreign workers,
including through in-company transfers [94].
In June 2022, Mexico’s state power utility, Comisión
Federal de Electricidad, cancelled the power-supply
contract for the wind project as a result of multiple
complaints related to stakeholder rights. Gunaa Sicaru
was worth €310 million [95].

Implications for investors

right granted to Indigenous peoples recognised in
the UN Declaration on the Rights of Indigenous
Peoples, which aligns with their universal right toself-determination. Failure to obtain FPIC can
result in fines, project delays or even suspended
or cancelled projects.
Failure to obtain proper consent for land use anddeliver on promises to create local jobs can lead toprotests, blockades or other forms of opposition from
affected communities. For businesses, this could mean
operational disruptions, delays or higher costs — aswell as a hostile environment for project development
and strained relationships with local stakeholders.
A firm that loses its social license to operate could
struggle to secure future projects or partnerships,
access financing, or continue or expand operationsin affected regions. These risks and impacts can hurt
their brand, investor relations — and, ultimately,
financial performance.

Investor takeaways:
1.

Identify whether an investee company has acommunity engagement policy that commits
to FPIC for both Indigenous peoples and otherproject-affected communities and that provides
for ongoing meaningful consultation across thefull lifecycle of the project and understand how
this is implemented.

2.

Understand how an investee company identifies
specific rights and rightsholders that it may be
adversely affected by renewable energy projects,
and whether this process is systematicallyincorporated into all project-related decisionmaking such as when commencing a new projector entering a new country or region.

3.

Identify whether an investee company has
established and implemented effective
grievance mechanisms in which project-affectedrightsholders can voice their concerns, andwhether commitment to responding to concerns
is demonstrated.

Renewable energy projects are essential for
addressing climate change and transitioning to asustainable energy future, but many related jobs areshort-term, insecure and poorly paid. Companies
should pay more attention to this aspect of theirsocial license.
Moreover, renewable energy projects can negatively
impact local communities, particularly if ‘at risk’communities are left out of decisions that affect their
future. The development of large-scale renewableenergy projects often requires significant tractsof land, which Indigenous peoples as well as local
communities may rely on for their traditional or
current livelihoods. Specifically, companies that fail toobtain free, prior and informed consent (FPIC) before
starting renewable energy projects on Indigenous
land may face legal challenges or regulatory penalties,
because they may be violating national laws orinternational human rights standards. FPIC is a specific

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05

TOOLS FOR INVESTORS TOASSESS CLIMATE-RELATED
MODERN SLAVERY RISKS

A. Existing approaches tomanaging climate riskThis briefing has utilised case studies toshowcase and analyse the pathways linking
climate change and the energy transition
to modern slavery. This has shown theclose connections between these forms ofenvironmental and social risk, and highlighted
the need to start assessing these risks
jointly. This briefing then connected theseintersectional environmental and social
risks to traditional business or investor risks,
illustrating that they can have a financiallymaterial impact on investee companies andinvestment portfolios, representing not just arisk to people but also a risk to business.
Despite this potential or actual causal chain
between climate change, the energy transition,
modern slavery and investors, existing
frameworks and tools for managing climate
risk do not currently comprehensively require
firms to assess and disclose climate-relatedsocial factors. Instead, they generally focus
on climate reporting or integrating the justtransition.

Climate risk reporting frameworks include
the International Sustainability Standards
Board’s inaugural standards – IFRS S2 [96],
the Task Force on Climate-Related Financial
Disclosures (TCFD), Global Reporting
Initiative [97], Carbon Disclosure Project[98] and World Benchmarking Alliance’s Just
Transition Assessment [99]. Available tools
include the Grantham Research Instituteon Climate Change and the Environment’s
Climate change and the just transition: A
guide for investor action (Grantham guide)[100] and ILO’s Just Transition Finance Toolfor banking and investing activities (ILO tool)[101]. The Grantham guide suggests fiveareas for investor action: investment strategy,
corporate engagement, capital allocation,
policy advocacy and partnerships, andlearning and review. The ILO tool adopts
four steps to embed the just transition in
investing activities: foundations, governance,
implementation and engagement.
We have identified several reporting or
management gaps not yet addressed by the
Grantham guide and ILO tool and designed
two new tools to supplement them. These newtools are intended to assist investors assess
and address material climate-related modern
slavery risk more fully, strengthening theiroverall ESG risk management approach.

Riyadh,Saudi Arabia
Foreign labourers work at a construction
site amid scorching heat in the Saudi
capital. In this part of the world, the highsummer temperatures are unbearable
even in the shade. Across the globe, risingtemperatures are putting more and moreworkers at risk of harm via heat stress.
For employers with their eyes on thebottom line, heat stress usually means
lower labour productivity. Photo credit:
FAYEZ NURELDINE/AFP via Getty Images

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TOOLS FORINVESTORS

B. Tool 1: Supplementary
recommendations toassess climate reportingand management
We have drafted a set of recommendations
for companies seeking to disclose how
they identify, assess and manage material
climate-related modern slavery risks. These
recommendations were developed tosupplement the TCFD framework in particular,
and they are intended to guide companies
to expand current reporting to include therisks identified where they may be financiallymaterial.
Company disclosures should focus on making
progress toward these recommendations, anddisclosure should consider the relevance andfinancial materiality of the recommendationsin the context of each company. We recognisecompanies may not meet all of theserecommendations immediately. Nonetheless,investors can use this tool as a means ofstarting to engage with companies on theseissues where relevant. In time, these extra
disclosures might also provide the basis forinvestors updating investment strategies andconducting policy advocacy with combined
environmental and social considerations.

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BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

Governance
Disclose the organisation’s governance aroundclimate-related modern slavery risks and opportunities
Describe the Board’s oversight of climate-related modern
slavery risks

The Board’s oversight should consider taking the following actions:• Board approval of modern slavery or human rights policy in alignment with the UN Guiding Principles on Business and Human Rights, ILO Fundamental
Principles and Rights at Work, International Bill of Human Rights and OECD Guidelines for Multinational Enterprises• Board training on climate change, the energy transition and modern slavery• Board committee with specific risk management/legal compliance function for modern slavery• Board review of/recommendations for enterprise risk management and due diligence systems• Board review of/recommendations for all climate-related modern slavery metrics and targets

Describe senior management’s
role in assessing climate-related modern slavery risks

Senior management should consider:• Management implementation of modern slavery or human rights policy through policies and procedures• Management/staff training on climate change, the energy transition and modern slavery• Management implementation of enterprise-risk-management and due-diligence systems• Management setting and delivering the climate-related modern slavery metrics and targets• Management establishing a modern slavery working group and assigning lead staff risk management roles

Strategy
Disclose the actual and potential impacts ofclimate-related modern slavery risks and opportunities
on the organisation’s businesses, strategy andfinancial planning, where such information is material
Describe the climate-related modern slavery risks theorganisation has identified over the short, medium
and long-term

The organisation’s strategy should be revised following risk assessment and identification of risk management.
This revision should include describing the high-risk climate-related modern slavery issues, such as operations or supply chainsin geographies subject to likely physical risk and forced migration

Describe the impact of the climate-related modern
slavery risks on the organisation’s businesses, strategy
and financial planning

The strategy should incorporate risks to business that might be caused by the risks to people from climate change and energy transition:
Acute and chronic risks• Reduced revenue from decreased production capacity (e.g., heat stress resulting in lower labour productivity;
displacement and migration causing supply chain disruptions)• Reduced revenue and higher costs from negative impacts on workforce (e.g., health, safety, absenteeism)• Increased compliance costs• Increased operating costs/disruption to operations (e.g., implementing more frequent breaks/shifting work hours
to cooler parts of the day to protect employees from heat stress)• Reduced revenue from lower output
Policy and Legal• Increased operating costs (e.g., increased reporting and compliance cost as a result of mandatory human rights due diligence reporting obligations,increased regulation of existing products such as enhanced conflict minerals regulations globally)• Increased costs and/or reduced demand for products resulting from regulatory fines and judgments• Reduced revenue as a result of trade restrictions from growing forced labour import bans globally• Operational disruptions from legal proceedings/sanctions• Reduced demand for goods linked to human rights issues
Technology• Costs of retraining and reskilling workforce as a result of transitions to lower-emissions technology• Costs of workforce restructuring (including severance costs, recruitment expenses and training costs for new hires)• Capital investments in workers with specialised skills
Market• Revenue loss from reduced market access stemming from stronger forced labour import bans/conflict minerals regulations• Increased operating costs from supply chain disruptions• Unexpected shifts in costs of critical minerals as a result of enhanced corporate social regulations• Reduced demand for goods and services due to consumer demand for better labour standards• Increased operating costs as a result of upskilling/retraining workforce
Reputation• Reduced revenue from decreased demand for goods/services due to shifts in consumer preferences/stigmatization of sector• Reduced revenue from decreased production capacity (e.g., delayed planning approvals, supply chain interruptions)• Reduced revenue from negative impacts on workforce management and planning (e.g., employee attraction and retention)• Reduction in capital availability

Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C-or-lower scenario

This should include how the organisation is seeking to understand social risks including modern slavery and other salient human rights of climate change
and the energy transition under different climate scenarios

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TOOLS FORINVESTORS

Tool 1: Supplementary recommendations toassess climate reporting and management (cont.)

Risk management
Disclose how the organisation identifies, assesses and manages climate-related modern slavery risks
Organisational processes

Risks to people

Recommendations for action and disclosure

Describe the organisation’s processes
for identifying and assessing climaterelated modern slavery risks

GeneralThe identification processes should consider various matters:

Loss of housing, livelihoods and work, and impacted accessto food, water and sanitation

Risk mapping – geography:

Forced displacement and forced migration
Increased vulnerability to human trafficking in disaster zone
or destination location
Increased risk of forced labour in disaster zone or destination
location
Forced labour/child labour in renewables supply chain

Case studies
Philippines typhoon
Sudden-onset climate events can cause an increase in childlabourCambodian brick kilns
Slow-onset climate events can cause an increase in bonded
labourDescribe the organisation’s processes
for managing climate-related modern
slavery risks

Risk mapping – industry/sector:• Is the company part of an emissions and labour-intensive sector?
• How has the company identified potential risks to its internal and external stakeholders when it comes to its climate strategy/decarbonisation plans?

Risk mapping – products/services:• Has the company identified which of its suppliers carry the highest climate-related modern slavery risks?
• How does the company assess potential climate-related modern slavery risks across its supply/value chains and operations?
• Has the company identified:– Which products and services carry the greatest climate-related modern slavery risks?
– The key modern slavery risks associated with these products/services? (e.g., cobalt from the DRC is associated with allegations of child labour,and polysilicon from China is associated with allegations of forced labour)

Bangladesh apparel
Climate displacement and forced migration can increase
forced labour

Risk mapping – legal/regulatory:

India coal
Net zero strategies need to account for jobs lost both in coalsector and jobs that support the sector

The management processes should consider a range of issues:

China solar
Forced labour in renewables supply chain can slow theenergy transition
DRC cobalt
Child labour in renewables supply chain can slow the energy
transition
Mexico wind
Renewable energy projects need to create decent work
opportunities

Describe how processes for
identifying, assessing and managing
climate-related risks are integrated
into the organisation’s overallrisk management• What percentage of the company’s operations and supply/value chains are in countries or regions that are highly susceptible to sudden
or slow-onset climate events?
• How many people does the company employ in these countries or regions? Does the company employ migrant workers from these countries or regions?
• In the company’s view, what are the greatest climate-related modern slavery risks associated with operating and procurement in these regions?

• Has the company identified and assessed regulatory risks for its own operations and supply/value chains? (e.g., labour laws,
mandatory human rights due diligence, risk of import bans, risk of litigation)

Policies and procedures:• What policies does the company have in place to mitigate climate-related modern slavery considerations? (e.g., zero recruitment fee, migrant worker
policy, worker health and safety policies due to changing work conditions, ban from sourcing from high-risk areas, worker retraining, promotion ofcollective bargaining and freedom of association)• What policies does the company have in place to ensure a just transition for its employees who will be most impacted by its climate strategy/
decarbonisation plans? (e.g., reskilling/training existing employees to move toward less carbon-intensive business practices)• What policies does the company have in place to ensure that current or future renewable energy projects are being carried out with defined human rights
standards and in compliance with regulations?
• What policies does the company have in place to ensure that people employed in its direct operations and supply/value chains are paid a living wage?

Risk monitoring:• How does the company monitor the extent to which its operations and supply/value chains are susceptible to climate events/changing climate-related
work conditions? How frequently does the company review this information?
• How does the company monitor the human rights performance of its supply/value chain (e.g., self-assessments, audits, third-party data input)?
How frequently does the company review this information? Does the company regularly perform site visits/audits? Are these site visits scheduled orunscheduled? Are these audits independent? Do audits include off-site worker interviews, broader worker consultation and assessment of worker debt/
contract terms?
• How does the company monitor the extent to which its employees will be impacted by its climate strategy/decarbonisation plans?
• How does the company monitor the extent to which communities and regions that depend on its emissions-intensive business lines, or in areas heavily
impacted by physical climate risks, will be impacted by its climate strategy/decarbonisation plans?
• How does the company monitor exposure of its business operations and supply/value chains to regulatory and litigation risks in relation to labour andhuman rights laws?
• Does the company have a grievance mechanism and remediation framework? How is it designed to receive and fix climate-related modern slavery
complaints?

The integration of processes should consider the following:• Are climate-related modern slavery risks integrated into the company’s enterprise-risk-management system?
• Are climate-related modern slavery risks integrated into the company’s net zero strategy?

Due diligence: has the company started to put in place a comprehensive due-diligence system in line with the UNGPs:
a. Identifying and assessing actual or potential adverse human rights impacts
b. Integrating findings from impact assessments across relevant company processesc. Tracking the effectiveness of measures and processes
d. Communicating on how impacts are being addressed?

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TOOLS FORINVESTORS

Tool 1: Supplementary recommendations toassess climate reporting and management (cont.)

Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related modern slavery
risks and opportunities where such information is material
Disclose the metrics usedby the organisation toassess climate-related
modern slavery risks inline with its strategy andrisk management process

Describe the targets
used by the organisation
to manage climaterelated modern slavery
risks and performanceagainst targets

Key metrics to assess climate-related modern slavery risks might include:• Percentage of operations and supply chains in high-risk climate event geographies/
fossil fuel industry• Number of migrant workers employed from climate event geographies• Percentage of operations and supply chains in fossil fuel industry• Number of workers employed in fossil fuel industry• Percentage of renewables projects requiring community resettlement• Number of community members employed in renewables projects• Percentage of products with high modern slavery risk
• Relevant human rights disclosure, due diligence, import ban or related law• Relevant policies and procedures• Percentage of migrant workers from climate event geographies that have paid
recruitment fee or have employment-related debt; have lawful employment contract
and received training on labour rights and working conditions• Percentage of workers in fossil fuel industry that have been redeployed or received
skills training for new employment• Percentage of community members that have received livelihoods training forresettlement• Number of audits/visits conducted• Number of compliance reports/statements submitted/published• Number of complaints received, or cases found, and type of remedy and if it was
satisfactory

Key targets to manage climate change-related modern risks might include:
•
•
•
•
•
•

100 per cent operations and supply chain risk assessment
Zero recruitment fees or employment-related debt
Zero high-risk supplier products
100 per cent contracts and/or training
100 per cent reports/statements submitted/published
Zero complaints or cases, or 100 per cent satisfactory
remedy if made or found

C. Tool 2: Investor
stewardship guidanceThis set of recommendations is designed toprovide general assistance to investors looking
to incorporate material climate-related modern
slavery risks into their corporate engagements.
To ensure meaningful assessment anddialogue, the relevant recommendations
should be extracted and adapted to thecurrent circumstances of the specific investee
company under review. Stewardship should
focus on continued progress toward theserecommendations and should consider the
relevance and financial materiality of theserecommendations in the context of eachspecific investee company.

Governance1. Companies should have public policies
and/or commitments addressing themanagement and mitigation of material
climate-related modern slavery risks acrosstheir operations and supply chain.
2. The Board should have ultimate
responsibility and oversight of thesepolicies, and sufficient resources should
be dedicated to ensuring compliancethroughout the company.
3. Companies should establish regular
reporting and communication channels
to inform investors and stakeholders
about what steps the Board and senior
management are taking through policies
and procedures to align the business withthe goal of reducing material climaterelated modern slavery risks.

Risk identification and management
4. Material climate-related modern slavery
risks vary by geography and sector, andcompanies should be able to articulate thatthey understand the challenge of identifying
these risks and their nuances in accordancewith their business operations.
5. Companies should also be able to explain
the frameworks, techniques and processes
that they use to identify these risks,
ranging from the loss of livelihoods, forced
displacement, forced migration, forced
labour, child labour, human trafficking, debt
bondage, changing work conditions and astranded workforce.

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BRIDGING ESG SILOS: CLIMATE CHANGE AND MODERN SLAVERY

6. Companies should disclose how risk
identification is conducted, whether
through desktop research or on the groundaudits.
7. Companies should develop and maintaina risk register to track identified risks,
implement mitigation measures, andregularly review and update their risk
assessments.
8. Companies should adopt a proactive
approach to managing material climaterelated modern slavery risks, such as byconducting scenario analysis and stresstesting to assess potential risks undervarious climate and socio-economic
conditions.

Strategy
9. Companies should articulate realistic
solutions to mitigate and prevent material
climate-related modern slavery risks acrossits operations and supply chains. This may
include integrating material climate-related
modern slavery risks into the company’s
net zero strategies or the company’s
enterprise risk management system.
Leading companies tailor their plans basedon sector specific risks, addressing thesocio-economic challenges that increase
climate-related modern slavery risks, rather
than relying on a one-size fits all model.

Targets
10. Companies should set clear, measurable
and time-bound targets to reduce material
climate-related modern slavery risks in theiroperations and supply chains.
11. Companies should be able to articulate
to what extent a company’s actions have
reduced material climate-related modern
slavery risks, and how the Board and senior
management are measuring the progress
being made. They should describe what
procedures are in place to ensure follow-up
actions are implemented and monitored.
For many companies, reducing material
climate-related modern slavery risks will bea continuous process. The best companies
will be able to evaluate progress at eachstep and make changes to continually
improve their performance against each of
its identified criteria.

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06

CONCLUSIONREFERENCES
1

2

As the case studies illustrate, to respond successfully to therisks to people and business inherent in climate change andthe energy transition, investors can  consider the impact of acompany’s climate strategies on all stakeholders.
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Cover image:K’elafo, Ethiopia,
January 2023.
Ethiopia, along with Somalia
and Kenya, has sustained its
worst drought in the last four
decades due to failed rainyseasons. The UN estimates thatdrought has led to 12 million
Ethiopians experiencing acutefood insecurity. Coupledwith an ongoing conflict in
the north, in Tigray, risks of
exploitation have risen. Photo
credit: Eduardo Soteras/AFP
via Getty Images.

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