‘Modern slavery’ ESG tool allows investors to monitor portfolio human-rights risks

Investors now have a way to track down ‘modern slavery’ impacts in their portfolios with the launch of Modern Slavery solution, a tool from ISS ESG that helps monitor exposure, disclosure and management risks, as well as controversies, in the human rights arena.

Modern slavery is an umbrella term for some of the most severe human rights abuses, including forced labor, the worst forms of child labor, human trafficking and debt bondage. According to the International Labour Organization, modern slavery refers to situations that a person cannot refuse or leave because of threats, violence, coercion, deception and/or abuse of vulnerability.

Anti-Slavery International estimates that 50 million people worldwide are trapped in modern slavery.

Till Jung, head of ISS ESG said the product launch “is timely in light of improving corporate modern-slavery and supply-chain related disclosure in markets such as Australia, the United Kingdom, Canada,  France, the Netherlands, Germany and Norway, driven by significant regulatory developments in recent years.”

The new platform includes a scorecard and portfolio report powered by a comprehensive set of data sourced from three ISS ESG solutions — the ESG Corporate Rating, Norm-Based Research and the ESG Country Rating — along with data from external sources such as the U.S. Department of Labor.

Its methodology assesses 25 quantitative and qualitative factors developed by ISS ESG’s modern slavery and human rights experts. As of June 2024, the Modern Slavery solution covers approximately 60,000 issuers globally in its risk assessment section and 8,000 issuers are covered by all sections of the report.

Jung in a release announcing the launch said the new reporting functionality allows clients to upload their portfolio and download a report which details their risk exposure and also demonstrates how their holdings are managing modern slavery risks. It also allows investors to benchmark portfolio companies against their industry peers.

ISS ESG is the sustainable investing arm of ISS STOXX, which provides research and technology solutions that help capital-market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements.

ISS ESG also provides climate data, analytics and advisory services to help financial market participants understand, measure and act on climate-related risks across all asset classes. In addition, ESG solutions cover corporate and country ESG research and ratings enabling its clients to identify material social and environmental risks and opportunities.

Read more: Morningstar strengthens its ESG ratings tools for investors