Ausbil Investment Management Head of ESG Research, Måns Carlsson-Sweeny, talks about his work with companies combating slavery in investment supply chains and his input into the Commonwealth’s Modern Slavery Act (2018).
Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Ausbil Investment Management is head of ESG research, Mans Carlsson-Sweeny. Mans, welcome back to the Network.
Måns Carlsson-Sweeny: Thank you, Rachael.
Rachael Jones: Now first off, I'd like to congratulate you on your award for your work with modern slavery in supply chains. What did this involve?
Måns Carlsson-Sweeny: Yeah, thank you. So it was a Certificate of High Commendation by the Anti-Slavery Australia Freedom Awards, and we think it's really great that investors are being acknowledged for their work too, because we think investors have a big role to play.
So in 2016, we issued an investor statement on slavery. We wanted to flag how this is a bigger issue than ever before in human history. And there is an investor angle too, because it's more than just an ethical issue to us, it comes straight back to earning sustainability. So if you invest in a company where the business model relies on the supply chain, where there's a lots of illegal activities like slavery, those earnings are not going to be sustainable. So it was partly about raising awareness among other investors.
We also wanted to flag what we think companies can do to mitigate this risk, and this often practical points we've learned from visiting garment factories in China, Bangladesh, in Cambodia in the past and just learning what leaders are doing.
Also, we have been heavily engaged with the Australian government prior to the passing of the Australian Modern Slavery Act in 2018. And in the last 12 months, we've also assisted the government in doing the guidance for the Modern Slavery Act.
So the act itself has kicked in and the first reporting period has also kicked in. It's a transparency act, which means companies with more than a $100 million in revenue and operations in Australia need to report on, A, what are the risks of slavery in operations and supply chains? B, what have they done about it? And C, how do they measure the effectiveness of that?
Rachael Jones: And what impact do you expect the act to have and how quickly?
Måns Carlsson-Sweeny: I think it will be a lengthy process. Let's not forget that slavery is illegal, and therefore is often hidden deep down in supply chains. The first reporting period has kicked off, meaning that reporting entities that have a financial year end of the 30th of June, 2020, need to submit the transparency report by December, 2020. Now, we've already seen the UK Modern Slavery Act a few years ago, so the Australian Modern Slavery Act builds on that, but we think it's more powerful for a number of reasons. So first it applies to the Australian government. So the government will set the tone and I think that's going to have some trickle down effects. Second thing is in the UK all companies needed to upload their statements on their websites, which meant it could be quite hard to find. Now in Australia, the government will run a centre of depository, so all the Modern Slavery Act statements will be uploaded there. It'll be easier to compare and contrast, and we think there'll be much more scrutiny on companies here. The third thing, which I think is really important, is the requirements here are mandatory. So there are seven mandatory requirements companies need to report against. And the fourth thing, which I think makes a big difference too, is what I can come back to,... Coming back to said before about investors playing a big role. The Australian Modern Slavery act also applies to investors and our investment portfolios. So we think companies will be facing a lot of questions from investors like ourselves going forward.
Rachael Jones: And Mans, could you tell me about your recent trip to Cambodia? What's the situation like over there?
Måns Carlsson-Sweeny: Yeah. Cambodia is an interesting country. It's a big garment exporter. So a lot of garments we buy in Australia actually come from Cambodia, and there's a bit of a trend with the manufacturing slipping out of China to places like Cambodia.
Now, it's a big industry, lots of female workers. And I went to an event, which focused on sexual harassment. But let me just take it back one step and say, when we talk about modern slavery and human rights issues, they're often very interlinked. So we think poor labour practice is often a precursor to modern slavery. Modern slavery just doesn't happen in isolation. So it is closely linked to these various human rights issues like underpaid workers, sexual harassment, physical abuse, etc.
Now this event focused only on sexual harassment, and it's got a significant, obviously physical and emotional cost to the workers themselves, but it also has a big financial cost. So it's been estimated that sexual harassment in the Cambodian garment industry alone costs $90 million in lost productivity. So the event was really bringing together investors like myself. So I spoke about it from an investor perspective. But also brand companies, because we think they have a big role to play as well as regulators and NGOs. It's a very complex issue, very multifaceted, but we think a multi-stakeholder approach to that can be the solution.
Rachael Jones: Måns Carlsson-Sweeny, congratulations once again on your award and thanks so much for the update.
Måns Carlsson-Sweeny: Thank you.