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Investors Have Real Power to End Human Trafficking

Endowments, pension funds and the like have the portfolio power to effect change and end this scourge, which is the world’s fastest-growing crime.

Pope Francis recently deemed human trafficking “a crime against humanity.” The pontiff made an unexpected appearance in early June at the Vatican-organized Judges’ Summit on Human Trafficking and Organized Crime. There, he met with more than 100 judges and prosecutors who had gathered to develop policies to combat forced labor and sexual exploitation.

Attendees discussed police resources, punishments and support for victims. But religious institutions and public policymakers can’t tackle this problem alone. The private sector can — and should — play a critical role through its financial investments.

Valued at more than $150 billion globally, human trafficking is a worldwide epidemic. It ensnares nearly 21 million innocent people, including 6 million children. Despite lawmakers’ efforts, it is now the fastest-growing crime on the planet.

Some businesses, often unknowingly, actually fuel trafficking. To produce goods easily and cheaply, some companies start their supply chains in countries with loose regulations and shockingly low labor costs. It is difficult to ensure full oversight of these operations from afar, of course, so forced labor can permeate these supply chains. Indeed, officials at the U.S. Department of Labor identified at least 136 popular goods from 74 countries that were produced through forced labor in 2014.

“Consumers of goods and services may be connected to human trafficking more closely than they imagine,” says a 2015 State Department report. They’re “connected, however indirectly, to the man in the Amazon compelled to mine for gold and to the woman forced into prostitution in that same mining camp.”

To tackle trafficking at its foundation, companies will need to examine how they produce goods and make changes where necessary. Many are already starting to do so. It’s no easy task — especially since doing so risks making production more expensive and admitting that their suppliers may be tied to child labor.

That’s where investors can come in. By urging executives and board directors to change their practices and more carefully scrutinize their supply chains, investors can use the power of the purse for global good.

Consider the Hershey Co. In response to shareholder influence, the world-famous chocolate maker has now reached the halfway mark in sourcing 100 percent of its cocoa via ethical business practices by 2020. Through continuous dialogue, shareholders monitor Hershey’s progress in strengthening its farmer well-being programs, which aim to prevent the worst forms of child labor.

Or take Archer Daniels Midland Co., one of the world’s largest agricultural processors. After meeting with the Interfaith Center on Corporate Responsibility (ICCR) and the Tri-State Coalition for Responsible Investment, two groups of Catholic-minded asset management firms and institutional investors, the company agreed in 2014 to protect the workers in its agricultural supply chain through a human rights code of conduct. The code calls for the ethical recruitment of workers, especially those at risk of falling into conditions befitting modern slavery.

Investor engagement in trafficking doesn’t have to be confrontational — nor should it be. There are times, however, when investors need to move beyond dialogue and file shareholder resolutions — joining many voices behind one cause.

“There’s a unique role for faith-based investors in pushing the world’s biggest companies to act as responsible and accountable corporate citizens,” says Josh Zinner, ICCR’s recently installed CEO.

After an investigation in Brazil found slavelike labor conditions in the supply chain of Charlotte, North Carolina–based Nucor Corp., the largest steel producer in the U.S., concerned investors filed a shareholder resolution asking for greater supplier transparency. The resolution garnered the support of nearly 3 in 10 shareholders, so the company agreed to adjust its supplier base and only use firms licensed by the Brazilian government and subject to regular inspections. To encourage Nucor to hold firm in its anti–slave labor commitment, our own company, Christian Brothers Investment Services, attended the company’s annual shareholder meeting to address the CEO and board. We’ve also helped encourage global chain Wyndham Hotel Group to sign the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism and train its staff in victim rescue efforts.

Human-trafficking discussions should go beyond government offices and auditoriums at the Vatican. They should permeate investment engagements and shareholder meetings. It’s time for investors to recognize the crime-fighting power of their portfolios — and help rescue human-trafficking victims.

David Skelding, based in Chicago, is the executive vice president, and Julie Tanner, based in New York, is the director of Catholic Responsible Investing; both at Christian Brothers Investment Services, an asset management firm founded by the De La Salle Christian Brothers order that works exclusively with Catholic institutions and their fiduciaries.

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