The global covid-19 pandemic has caused unprecedented shockwaves throughout the global economy, wreaking havoc on workforces and supply chains, and putting already-vulnerable workers in even more precarious positions.
At the same time, this pandemic has exposed and exacerbated capital market vulnerabilities to social issues. Although the extent and scale of the pandemic’s impact on the market is not yet fully understood and may not be for a long time, the disruption already caused by covid-19 has reinforced the need for investors to account for the impact of system-wide social disruptions.
Over the last several years, there has been growing investor interest in incorporating social factors into investment strategies, including modern slavery. However, a shortage of tools and approaches focusing on “S” in Environmental, Social and Governance (ESG) investing has hindered the market’s ability to effectively take social considerations into account. Now more than ever, those social concerns should take centre stage for investors.
Last year Humanity United, UBS Optimus Foundation and Freedom Fund launched Moving the Market, an initiative to shift investor considerations to include social impacts across asset classes. Through a pooled fund, the initiative aims to “move the market” by supporting projects to support investor demand for socially responsible investing, and advance approaches to account for social impacts in investment decision-making.
Following an open request for proposals, the Moving the Market funding partners are pleased to announce the allocation of grants to support five innovative projects over the next 12 months. Grantee organisations will develop and pilot new strategies to advance investor engagement on modern slavery across a range of asset classes, with the aim of expanding the tools, metrics and approaches available to market actors.
Grants were awarded to the following organizations:
Rights CoLab – Harnessing Big Data for Investor-Led ESG Standards to Combat Modern Slavery
This project will engage with the Sustainability Accounting Standards Board (SASB), an existing sustainability reporting framework, to develop and define a strengthened set of modern slavery disclosure standards that investors can use to push companies to tackle modern slavery in their supply chains. A data science project will identify stronger relationships between modern slavery and financial materiality, while a civil society advisory group will work with SASB to incorporate these findings into revised standards that are most beneficial to rights holders.
NYU Stern Center for Business and Human Rights – Developing a new model for S based on economic inequality
NYU Stern’s project aims to improve social measurement by proposing a significant refocusing of “S” that frames modern slavery as part of a broader social crisis of global economic inequality. The project team will develop and test a new model for S, through which investors can better evaluate and influence corporate action to manage and address the systemic issues that increase economic inequality.
Ergon Associates – Exploring modern slavery risk identification and management with private equity funds supported by Development Finance Institutions
Modern slavery risk indicators are likely to be present in many emerging market companies in which DFI-supported private equity funds invest. However, there is limited research on how fund managers are using existing guidance, and the extent to which fund managers are actively managing risks and exerting investment leverage over investee companies. Ergon Associates will partner with DFIs and work with selected fund managers in order to understand the current landscape and pilot appropriate modern slavery risk identification and management approaches.
International Federation for Human Rights (FIDH) – Scaling the application of a human rights investment methodology as a tool to address modern slavery
FIDH will revise its existing human rights evaluation methodology for investment, applied in the SRI Human Rights Fund (a partnership between FIDH and La Banque Postale Asset Management) by developing a corporate performance tool that can facilitate assessment of modern slavery by fund managers. This methodology will be used to evaluate businesses across LBPAM funds, to inform specific and tailored engagement with companies to strengthen modern slavery responses.
Oxfam India – Influencing Indian ESG investments to address human rights and labour rights issues
This project aims to leverage the growing sustainable and responsible investment market in India to strengthen disclosure on human and labour rights by Indian companies. Using a sectoral approach focused on food and agriculture, the project will carry out research on the gaps within the existing ESG disclosure framework and company practice in India from the perspective of human and labour rights, using these findings to develop guidance and tools that can be used by the investment community within and outside India to drive up modern slavery standards.
In light of the extraordinary social and economic fallout caused by covid-19, Moving the Market is also supporting a parallel project to investigate the implications of the pandemic on investor decision making on social issues. Led by The Investment Integration Project, the project will assess how covid-19 might be impacting the structure of capital markets, and identify ways to promote system-wide consideration of social issues in the financial industry.