Investing in Freedom: Accelerating the End of Human Trafficking

With an estimated 27.6 million victims of human trafficking worldwide, human trafficking is the second largest and fastest growing global crime, with the percentage of trafficked children increasing from 13 percent in 2004 to 35 percent in 2020. Climate change is multiplying human trafficking risks, and global conflicts increase the number of trafficking victims within and outside crisis areas. 

While the number of human trafficking victims did reduce slightly during the pandemic due to protective measures and travel restrictions, the reduction has been largely attributed to trafficking operations forced to operate in more dangerous and concealed locations, becoming even harder to detect.

Economic crises, global conflicts, and forced displacements continue to drastically affect the daily lives of the global community, leaving many vulnerable to exploitation and forced to endure unimaginable conditions. Although more than 175 nations have ratified or acceded to the UN Protocol to Prevent, Suppress and Punish Trafficking in Persons (the UN TIP Protocol), which defines trafficking in persons and outlines obligations to prevent and combat crime, human trafficking continues to be the most harmful humanitarian and financial crime in modern times, robbing individuals, families, and communities of their humanity, livelihoods, and futures.

Why Investor Engagement is Crucial to the Fight against Human Trafficking

Between the 16th and 19th centuries, between 10 and 12 million people were captured and sold as forced labor in the transatlantic slave trade.Today, more than ever in modern history, an estimated 50 million people live in modern-day slavery. Illicit profits from human trafficking and modern slavery are intricately linked with the financial system, as traffickers utilize informal banking systems, shell companies, and cash-intensive businesses to launder funds into the formal financial sector.

Due to the extensive reach of the financial system in all sectors of the economy, investors can use their leverage as asset allocators to combat the financial crime of human trafficking and influence corporate initiatives and actions to end modern slavery.

Investors are well placed to combine their portfolio-led efforts to combat human trafficking and modern slavery with public sector initiatives already in place, such as the Liechtenstein Initiative for Finance Against Slavery and Trafficking, a public-private partnership launched in September 2018 in response to requests from the G7, the G20, the UN General Assembly, and the UN Security Council for governments to actively partner with the private sector to find actionable solutions to human trafficking.

To support survivors of human trafficking to avoid future exploitation and rebuild their lives, the Liechtenstein Initiative for Finance Against Slavery and Trafficking and their partners enable access to essential banking services for human trafficking survivors, which could provide a helpful blueprint on how the financial sector could offer supportive financial services specifically focused on assisting survivors to regain their financial independence and live productive lives free from exploitation.

The Power of Your Portfolio in Ending Human Trafficking

Transparent markets underpin the security of the global financial system and ensure that the safety and security of victims of human trafficking can break free of the spread of modern-day slavery. Investors are essential in combatting human trafficking through their everyday financial decisions and portfolio allocations and can incorporate the following actionable insights to contribute to the fight against human trafficking:

• Ethical Investment Screening:

Investors can incorporate ethical investment screening into their portfolio management decisions, avoiding companies and industries with known or potential links to human trafficking, such as those involved in forced labor or supply chains with exploitative practices. By applying human trafficking due diligence, investors can send companies a clear and powerful message that unethical practices are unacceptable.

• Engagement and Shareholder Activism:

Investors can actively engage with the companies they invest in to promote transparency and ethical practices. Shareholder resolutions and engagement with corporate boards are powerful tools to encourage companies to take proactive steps against human trafficking, as they enable investors to leverage their influence to push for more robust supply chain due diligence, anti-trafficking policies, and reporting mechanisms.

• Support Anti-Trafficking Initiatives:

Invest in companies and organizations directly involved in anti-human trafficking efforts, which includes supporting businesses that provide employment opportunities and skills training to survivors of trafficking or investing in nonprofits and impact funds focused on combatting human trafficking. Such investments contribute directly to the rehabilitation and empowerment of survivors and prevention efforts.

By aligning investments with anti-human trafficking initiatives and holding companies accountable, investors can significantly impact modern-day slavery prevention and tackle exploitative labor practices.

A Call to Action: A Unified Stand Against Human Trafficking

Human trafficking poses an urgent economic, sustainable development, and national security threat, undermining international security affecting the stability of the global financial system, placing millions of individuals and families in daily peril.

The investor portfolio does more than allocate capital. By leveraging the power of data, technology and innovation, investors can transform their portfolios into one of the most powerful advocacy tools against the rapid spread of human trafficking that has ever existed.

We cannot allow this fundamental abuse of human rights to continue. The time is now to become an investor advocate, leveraging the power of your portfolio in the global fight against the rise and spread of human trafficking.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

ESG Anti-financial Crime