Introduction

This toolkit outlines how investors can constructively engage with companies to manage and mitigate human rights risks in global value chains. It highlights the increased prevalence of modern slavery—rising from 40 million in 2018 to 50 million in 2021—driven by systemic factors such as the COVID-19 pandemic, debt bondage, and poor supply chain visibility. Regulatory changes, such as the EU Corporate Sustainability Due Diligence Directive and the Australian Modern Slavery Act, have elevated expectations for human rights due diligence.

Human rights risks are financially material. These include reputational damage, legal exposure, supply chain disruption, and challenges to earnings sustainability. Exploitative labour practices, if left unaddressed, can impact company valuations and long-term investment returns. Investors face risks from both direct company failures and broader systemic human rights abuses. The toolkit encourages investors to assess value chains holistically—not just tier 1 suppliers—and to use their influence to promote accountability and remediation.

Section 1: Identifying the issues

Effective identification starts with sanctions lists, such as the US Uyghur Forced Labor Prevention Act list and the Australian Consolidated List. These provide early warnings about high-risk goods, geographies, and suppliers. Sovereign risk analysis using data from sources like the Walk Free Global Slavery Index is recommended.

Traditional social audits, while still common, have limitations—especially when audits are announced or limited in scope. Unauthorised subcontracting, auditor bribery, and lack of worker trust are persistent challenges. Investors are encouraged to support a suite of complementary tools, including worker voice platforms, grievance mechanisms, and focus groups, to capture real-time insights.

Effective grievance mechanisms must be trusted, multilingual, and confidential. Case studies such as Amader Kotha in Bangladesh and Chorus Limited in New Zealand highlight successful models where workers actively use hotlines and surveys to report concerns. Traceability technology (e.g., blockchain, forensic origin testing) and credible certification schemes are also highlighted as tools to improve visibility and mitigate risks below tier 1.

Section 2: Preventative actions

A risk assessment alone is insufficient; follow-up actions are necessary to address identified vulnerabilities. Good practice includes prioritised audits, corrective action plans, and supplier engagement. Companies such as Woolworths and BlueScope Steel demonstrate tangible follow-through on risk assessments.

Investors should examine how buying behaviours—like short lead times or delayed payments—can negatively impact suppliers, increasing pressure that may result in labour rights violations. Tools such as the Better Buying Institute provide insight into these dynamics.

Human rights due diligence (HRDD), whether required by law or adopted voluntarily, is encouraged. Leading firms such as BHP and Rio Tinto integrate HRDD across departments. Investors can support policy advocacy efforts that aim to improve labour protections, such as recruitment fee bans or living wage regulations. Consolidating supplier networks and building supplier capacity are also effective strategies to increase transparency and improve ethical standards.

Section 3: Remediating the issues

Remediation must be proactive and grounded in stakeholder engagement. Case studies from Woolworths, Coles, and BlueScope Steel illustrate responses including repayment of withheld wages and long-term preventative reforms. Partnering with expert organisations and implementing grievance response frameworks are identified as good practice. Companies should maintain structured procedures for child labour, forced labour, and wage remediation.

Section 4: Interconnected issues

Human rights risks intersect with broader issues including living wages, gender inequality, freedom of association, armed conflict, climate change, and the circular economy. These factors can amplify exploitation risks or create new vulnerabilities. Investors are advised to integrate these concerns into due diligence and engagement strategies. For instance, NAB and Westpac assess customer-related modern slavery risks, while Telstra and Commonwealth Bank have taken steps to address cyber scam centres linked to trafficking.