Following the investigations into modern slavery awareness in the financial sector, and the report led by the Independent Anti-Slavery Commissioner and Themis and published in January 2021, there has been increased interest in how the financial sector both contributes to and can combat modern slavery and human trafficking within global supply chains.
Back in 2020, brokers and insurers from Aon, Fidelis and Marsh developed a marine cargo clause against forced labour. The clause makes it a condition of marine cargo policies to have the insured comply with applicable legal and regulatory obligations in respect of forced and child labour.
A recent podcast organised by Themis and hosted by Carel van Randwyck, Chief Growth Officer at Themis, featuring Jasmine O’Connor, the CEO of Anti-Slavery International, and Charles Mathias, the Group Chief Risk Officer at Fidelis Insurance, explores the work done to integrate modern slavery considerations into insurance contracts.
The podcast episode titled ‘Modern Slavery and the Insurance Industry’ focuses on the above-mentioned marine cargo clause against forced labour. As 90% of all world trade is undertaken via the shipping industry, the podcast explains that all trade needs to be insured, otherwise it is unlikely to be financed. Hence, the importance of marine insurance in trade. The goal of the marine cargo clause against forced labour was twofold; firstly, to raise the conciseness of the issues of modern slavery amongst insurers, and secondly, having raised that consciousness, to try and prevent insurance from supporting and facilitating slave labour.
As the clause puts on record requirement for people buying the coverage to abide by applicable local laws and regulations about forced and slave labour, it underlined the importance businesses engaging social corporate responsibility and undertaking the due diligence with reference to modern slavery as required by local and international labour laws. It is revealed that 89% of marine cargo policies entered into by Fidelis included the clause since its creation last year.
The importance of insurance is not limited to trade only. Insurance gets involved in every area of industry and commerce across the globe. At the close of the podcast, Charles Mathias of Fidelis confirms that the marine cargo clause is a starting point that they want to use as a good practice example. It is expected that the clause or its variants will expand into other industries, such as agriculture, garments or construction.
The insurance industry cannot just focus on its own supply chains but can be a driver for change and enforcement of social corporate responsibility across the globe. The UK’s Independent Anti-Slavery Commissioner has stated that the insurance market has the potential to become a ‘significant influencer’ in combatting modern slavery when speaking to Insurance Insider in November 2021. The Commissioner further highlights the ESG agenda but underlines the concern that modern slavery is being overlooked, in comparison to environmental issues.
A point to consider for all businesses, also discussed in the podcast, is the reputational risk from being on the wrong side with regards to environmental and social issues. Laws and regulations covering supply chain due diligence are constantly developing, with consumers demanding transparency now more than ever. The same applies to investors, who can increasingly use the businesses approach to corporate social responsibility as a factor for investment, considering the impact on their own reputation and image.
Southwell & Partners can advise businesses in navigating the complex national and international legal and regulatory obligations on modern slavery, supply chain due diligence and transparency.