Editor’s Note: Fiona Reynolds is chair of the Financial Sector Commission on Modern Slavery & Human Trafficking and CEO of the Principles for Responsible Investment (PRI). The opinions expressed in this article are solely hers.
It’s often said that you need to “follow the money” when it comes to organized crime. Yet, despite the fact that barely a day goes by that modern slavery or human trafficking is not a news headline, few steps have been taken to bring the financial sector to the heart of this fight.
This week, the Financial Sector Commission on Modern Slavery and Human Trafficking was launched during the 73rd Session of the United Nations General Assembly to find ways to harness the full potential of the sector to eradicate this scourge on human rights.
These crimes are estimated to affect 1 in 185 people worldwide, in both developing and developed economies.
Read: 40 million slaves in the world, finds report
Modern slavery and labor trafficking are often embedded in complex value chains, from the transnational supply chains that generate the consumer products we use every day, to complex infrastructure investment deals backed by national pension funds. Modern slavery and human trafficking thrive where big business turns away its gaze. The International Labour Organization estimates annual profits at $150 billion.
Bringing together finance leaders
Because of the magnitude of these crimes, the Government of Liechtenstein together with the Australian Department of Foreign Affairs and Trade, and the Centre for Policy Research at United Nations University, have established the Financial Sector Commission, known as the Liechtenstein Initiative.
More from the CNN Freedom Project
The Commission brings together leaders from the financial sector – including microcredit pioneer and Nobel Laureate Muhammad Yunus, and those from Bridgewater Associates, ABN AMRO, Barclays, the Swedish National Pension Fund AP2, the New Zealand Superannuation Fund, and the UK’s development finance institution – with financial regulators, anti-slavery heads, and survivors of these crimes.
Together, we will explore ways to accelerate financial-sector engagement to tackle these problems, touching on everything from anti-money laundering practices to responsible lending and investment, and from remediation to prevention.
The full spectrum of financial sector institutions – commercial and retail banks, private equity houses and hedge funds, institutional investors, international regulators and FinTech innovators – all have an important role to play.
The global reach of the sector can put it unwittingly at the crossroads of modern slavery and human trafficking: from bankers who may be used to try to launder profits illicitly generated from these crimes into the formal financial sector, to investors who may invest in or lend funds to businesses that are engaged with these forms of exploitation.
Growing awareness
In recent years, we have seen growing awareness around these issues on the international stage. The UN General Assembly, the Security Council, G-20 and G-7 leaders have all drawn attention to the role of the private sector and the importance of fostering public-private partnerships in this fight.
Indeed, 193 countries have already committed to take effective measures to eradicate these crimes by 2030. Towards this goal, governments across the globe are already taking action to pass legislation that puts in place greater supply chain transparency and human rights due diligence regimes.
Read: Teaching children about human trafficking
Yet unharmonized regimes have led to fragmented compliance. Limitations in cross-border and inter-agency information-sharing arrangements continue to limit the financial sector’s understanding of where and when modern slavery and human trafficking risks arise.
Making communities less vulnerable
This is not just about finding solutions to minimize the sector’s risks to its own operations. The sector can also play a crucial role in addressing the drivers of modern slavery and human trafficking.
Micro-credit, financial technology and innovative financing instruments can empower communities and decrease their vulnerabilities to these types of exploitation. Considering the drivers of these practices is essential, as looking only at the symptoms could actually make matters worse. Over-zealous de-risking, for example, could actually be counter-productive, as it could push business into informal and illicit financing arrangements, and foster situations of modern slavery and human trafficking.
This is why tackling modern slavery and human trafficking requires a coordinated and comprehensive approach, which is what we’re looking to achieve with the Financial Sector Commission.
Bringing together the financial sector, regulators, governments, UN agencies and non-governmental actors towards this same goal is a first and significant step. Now, we need to find practical, relevant and actionable ways forward, putting the global financial sector at the heart of efforts to tackle modern slavery and human trafficking.