Nearly 40 investors, led by UK charity fund manager CCLA, have written to companies with significant operations in the Gulf, asking them to provide details on how they are protecting migrant workers – amid concerns over debt bondage and slave labour in the region, which have been exacerbated by the Covid-19 pandemic.
38 investors – among them Aviva Investors, Schroders, Brunel Pension Partnership, The Church of England Pensions Board, Boston Common Asset Management, and Mercy Investment Services – penned the letter.
More than 50 firms were targeted in the engagement, including well-known multinationals such as Shell, McDonald’s and Exxon Mobil.
The engagement is in response to reports that many migrant workers in the region have been “coerced” into paying large fees to agents and middlemen as part of recruitment for roles at major international firms.
‘Migrant labour recruitment fees are a systemic issue that Covid-19 is turning into a crisis’ – Rosey Hurst, Impactt
Workers often pay for these ‘fees' by taking out loans at high interest rates, leaving them in a position of ‘debt bondage’ and at risk of forced labour and modern-day slavery.
Migrant workers make up around 50% of the population in the Gulf nations and, in some, they comprise up to 90% of the workforce. It is not suggested that all migrant workers are subject to modern slavery conditions.
However, the pandemic resulted in many jobs being revoked or cancelled, leaving some migrant workers with substantial debts that they are unable to repay. The investors warn of the prospect of rising rates of suicide and other social harms as a consequence.
Recognising the “complicated nature of migrant worker recruitment supply chains” and the fact that many end-user companies may be unaware of these abuses, the investors are asking the 54 companies to disclose whether they use any labour outsourcing firms or migrant workers within their operations in the Gulf states.
If they do, companies are being asked for information on how they work with these agencies and for details about policies and processes in place to “identify, reimburse and provide other forms of remedy to migrant workers who have been impacted by recruitment fees and/or passport retention”.
“A quarter of the forced labour victims globally are migrant workers”, said Peter Hugh Smith, CCLA’s CEO. “As investors, we have a moral duty to ensure that we are not profiting from modern slavery in any shape or form, and CCLA will continue to encourage the investment community and leading companies to do more to uncover and prevent modern slavery.”
“Migrant labour recruitment fees are a systemic issue that Covid-19 is turning into a crisis” added Rosey Hurst, Founder of Impactt, who has assisted the engagement.
The engagement on debt bondage comes as, yesterday, the Investor Alliance for Human Rights published investor guidance on the human rights risks associated with the Xinjiang, Uyghur Autonomous region of China, where there has been widespread reports of egregious and systematic abuse of Uyghur and other Muslim minorities – including reports of forced labour.
The Alliance, which is backed by over 160 institutional investors, was launched in 2018 by the Interfaith Center on Corporate Responsibility (ICCR), which also backed the investor letter on debt bondage.
Human Rights Risks in Xinjiang Uyghur Autonomous Region: Practical Guidance seeks to inform “investors of the salient risks to people associated with the business activities of their portfolio companies in or connected with the Uyghur Region”.
Last month, the US State Department cautioned businesses and investors about the reputational, legal, and economic risks of business links to the Uyghur region.
In the same month, over 200 organisations including investors, NGOs and trade unions, also called for apparel brands to stop sourcing from the region due to the near certainty of forced labour.
US Republican Senator Josh Hawley is also currently seeking to introduce legislation that will hold American companies accountable for their supply chains, including requiring CEOs to certify that their firms are free of slave labour.
“Executives build woke, progressive brands for American consumers, but happily outsource labour to Chinese concentration camps, all just to save a few bucks”, he said.
"If corporate America wants to be the face of social change today, they should have to certify they are completely slave-free.”