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‘Labor-lens investors’ are disrupting exploitative supply chains

Working to end forced labor and poor conditions in global supply chains in not new. What’s new are the growing number of “labor-lens” investors betting on strategies for ending exploitative working practices.

Disrupting the $51 billion in profits reaped from goods made with forced labor, including about 25 million people in modern slavery conditions and 125 million youth through forced child labor, is an opportunity ripe for impact investment, according to “Labor Lens Investing,” an analysis of investment models that directly address labor exploitation and forced labor.

Just as organic food booms with awareness of food risks, “social investment strategies are growing as investment risks from harmful labor practices become clear,” says Michele Demers of Boundless Impact, the research firm that put out the report.

For investors and global corporations, global supply chains marred by persistently poor and forced labor conditions present real and reputational risks. In January, Humanity United, the Omidyar Group anti-slavery organization (which sponsored the report along with the Freedom Fund), raised $23 million to invest in solutions to corporate demand for greater transparency in their supply chains. The fund has backed Provenance, a blockchain-based startup for product traceability and Ulula, a software firm that allows for worker engagement in their supply chains.

Humanity United launches $23 million fund to combat forced labor, other supply chain problems

Other early models of labor-lens investing include:

  • Stardust Equity, an impact fund launched by a family office in Houston, which worked with Seattle-based Parametric to build a Labor Lens portfolio of public companies that has attracted $635 million from more than 150 investors.
  • The IFC’s Global Trade Supplier Finance working-capital loan product, which provides cheaper capital to borrowers able to demonstrate compliance with international labor standards.
  • Trading platform Motif Investing, which developed a Fair Labor screen that allows individual investors to invest in publicly traded companiesthat promote fair wages, safe working conditions, and job security.

Motif offers refunds if its impact robo-advisors underperform

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