As the global insurance industry navigates the choppy waters of climate change and environmental degradation, there's an increasing need to shine a light on another interconnected challenge: modern slavery.

Hidden within the supply chains of global commerce, including finance and insurance, modern slavery persists as an insidious violation of human rights.

The financial backbone of human trafficking and modern slavery is complex and often obscured by layers of money laundering on a global scale. A recent report from Thomson Reuters revealed:

• Forced labour generates $150 billion of illicit revenue – the world’s third most lucrative criminal activity
• $43 billion of that comes from the sectors of agriculture and fishing, mining, manufacturing, processing and packaging
• $100 billion comes from sex trafficking.

The insurance industry, integral to the financial ecosystem, has a pivotal role in detecting and disrupting these illegal monetary flows. Effective action extends beyond compliance; it's about delving into supply chain depths to address exploitation's root causes.

In my engagements with industry leaders and through my work at Fair Supply, it has become clear that a multifaceted approach is crucial in combating modern slavery, and collaboration is key.

By forging long-term partnerships with external stakeholders, including industry bodies and public interest groups, companies can significantly enhance their capacity to identify and mitigate risks. The insurance sector has an opportunity to openly share risk insights and best practices, conduct joint audits, and advocate for ethical standards across the industry – collective efforts like these amplify impact and foster a culture of accountability.

An example of such collaboration is the Investors Against Slavery and Trafficking Asia Pacific initiative, where investors across the Asia-Pacific have united to tackle modern slavery. With a combined strength of AU$11.9 trillion in Assets Under Management, they’re driving policy advocacy and company engagement to ensure ethical labour practices.

Insurers can leverage their unique position to influence global supply chains by conducting thorough due diligence, working closely with clients to encourage transparent labour practices and ensuring that their coverage doesn’t inadvertently support or overlook forced labour. They also have the power to foster a culture of accountability by requiring clients to demonstrate adherence to human rights standards as a precondition for coverage.

By integrating these ethical considerations into their risk models, the insurance industry can exert significant pressure for change, driving improvements in corporate behaviour worldwide.

This comprehensive approach to risk assessment, which places modern slavery indicators on equal footing with financial metrics, isn’t just ethical – it’s about prudent business practice in a world where regulated ESG commitments are becoming the benchmark for corporate performance and stakeholder trust.