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In recent years, the financial sector has become an increasingly high-profile contributor to efforts to identify and disrupt modern slavery and human trafficking. Specific financial sector-led initiatives, such as Canada’s Project PROTECT, have emerged; and multilateral efforts such as those convened by the UN University or the Bali Process have included a significant emphasis on the role of the financial sector. Furthermore, in advanced markets such as Europe and the US, financial institutions are increasingly making clear and unequivocal commitments to their human rights responsibilities, and are incorporating policies to identify modern slavery and human trafficking into their financial crime compliance operating models, to good effect.
As this paper will explore, a range of mainly external factors have led the financial sector to commit itself to the fight against modern slavery and human trafficking. The commitment shown by the industry should be welcomed, as it supplements the existing work of governments and NGOs.
But can this commitment from the financial sector go further – beyond financial crime compliance and transaction monitoring – by using the provision of finance as a force for good to effect change in the operational and value-chain behaviour of their clients? The UN Guiding Principles on Business and Human Rights (hereafter referred to as the UN Guiding Principles) require that businesses ‘should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved’. A 2013 worldwide survey of financial institutions – conducted two years after the publication of the UN Guiding Principles – revealed that 60% were ‘aware’ of the UN Guiding Principles, but understanding of their use to identify and/or assess human rights issues was mixed. While recognising that there is a range of human rights impacts that are relevant to the banking sector, this paper focuses specifically on modern slavery and human trafficking. It evaluates whether more action and commitment are required – and whether this is possible – from the sector, particularly in the form of using leverage provided by the provision of finance to clients to encourage the raising of standards in the field of human rights, in line with activity on environmental risks. In reviewing whether the financial sector’s activity in some cases furthers – rather than diminishes – the prevalence of modern slavery and human trafficking, the paper evaluates what responsibility should be taken by the sector to mitigate negative impacts throughout their corporate client portfolio (and through their clients’ value chains). It also addresses the practical and economic challenges associated with this prescription of responsibility and the potential to make a significant positive contribution to the realisation of human rights.
Building on RUSI’s previous work on the role financial institutions can play in disrupting human trafficking, this paper seeks to determine the extent to which the financial industry could and should take greater responsibility for addressing modern slavery and human trafficking, moving beyond the current compliance and anti-financial crime-based responses, recognising the tremendous power that finance and financial institutions have to create positive human impacts.
Jo Webb is a consultant specialising in modern slavery, supply-chain sustainability and stakeholder engagement. Prior to this, Jo held positions in Thomson Reuters’ Customer and Third-Party Risk business and SEDEX (a not-for-profit organisation helping companies monitor and manage responsible supply chains). Jo is also a former Non-Executive Director of UN Global Compact UK, and a member of their Supply Chain Sustainability and Modern Slavery Working Groups.
Tom Keatinge is Director of the Centre for Financial Crime and Security Studies at RUSI.
BANNER IMAGE: The Bank of England, 2013. Courtesy of Katie Chan/Wikimedia Commons