Slavery continues to exist in the 21st century – a fact that also affects the financial sector. However, profits generated through modern slavery are very difficult to detect, Ursula Finsterwald writes on finews.first.

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The United Nations (UN) estimates that over 40 million people today live either in captivity, are exploited through forced labor or suffer from another form of servitude. With the UN 2030 Agenda, the key component of which are the 17 sustainable development goals (SDGs), the international community has committed to combat modern-day slavery and human trafficking.

The SDGs address this matter in sub-goal 8.7: immediate and effective measures are to be taken to eradicate forced labor, and end modern slavery and human trafficking. In addition to this, the ban on the worst forms of child labor, including forced recruitment and the use of child soldiers, is to be enforced, and by 2025, all forms of child labor are to be eliminated.

«Slavery has taken on new forms and, since it is forbidden by law, happens largely in secret»

These efforts are not a recent phenomenon. In 1926, the member states of the League of Nations already committed in a convention to «prevent and suppress the slave trade». In 1948, the UN introduced this as an article in the Universal Declaration of Human Rights and in 1956, added a supplementary convention on the abolition of slavery, the slave trade and institutions and practices similar to slavery.

Despite these steps, slavery has still not disappeared. Instead, it has taken on new forms and, since it is forbidden by law, happens largely in secret. The Walk Free Foundation defines modern slavery as exploitation by people from whom those affected cannot escape without fearing violence, threats or abuse of power.

«Not only private individuals are involved in such practices, but also state institutions»

According to this definition, more than 40 million people were victims of slavery in 2016. Some 25 million people perform forced labor, 16 million thereof in the private sector. This means that they must work under threat of punishment and against their free will, for example as domestic workers, on construction sites, in obscure factories, in agriculture and fishing, or as prostitutes.

Not only private individuals or organizations are involved in such practices, but also state institutions. The goods produced often end up in normal sales channels, for example as textiles or food. The UN's International Labor Organization estimates that annually, slave labor and human trafficking account for global proceeds of around 150 billion dollars.

«Huge sums of money generated by crimes flow through the banking system»

Contrary to frequent assumptions, modern slavery does not only exist in Asia or Africa. Although 58 percent of the people who perform slave labor live in India, China, Pakistan, Bangladesh and Uzbekistan, around one million people in Europe also live in conditions similar to slavery. Migration and flight exacerbate the problem because refugees are increasingly being subjected to human smuggling and forced prostitution.

The most important prerequisite for combating modern slavery is political will. Governments need to better coordinate their efforts internationally, exchange information, and cooperate more with international and regional organizations in the enforcement of labor and criminal law as well as in the area of migration.

In addition to countries, the private sector can also make a contribution against slave labor and human trafficking. The financial sector in particular has the means to do so. Huge sums of money generated by crimes against humanity, or invested in goods and services in whose supply chains modern slavery or human trafficking occurs, flow through the banking system internationally.

«These measures are to make the finance industry part of the solution»

The government of the Principality of Liechtenstein has recognized this problem. In 2018, it therefore decided to launch the «Financial Sector Commission on modern slavery and human trafficking», which consists of international members. The so-called Liechtenstein Initiative is a private-public partnership between the Liechtenstein government, the Liechtenstein Bankers Association (LBA), the Hilti Family Foundation, LGT and a number of other foundations. The Australian government also supports the initiative and the UN University serves as its secretariat.

The objective of the Liechtenstein Initiative is to show financial institutions how they can best protect themselves from investments and business activities in the area of modern slavery and human trafficking with the help of a list of measures and best practices. These are to make the finance industry part of the solution instead of part of the problem.

The measures were discussed by the Financial Sector Commission at its second meeting in Liechtenstein in January 2019. The results are to be presented to the international community in September 2019 at the UN General Assembly.

Ursula Finsterwald is Head Group Sustainability Management at Liechtenstein's LGT. She is writing about all kinds of issues regarding sustainability. She likes to be in the nature where she finds the inspiration for her articles. LGT put in place comprehensive sustainability management years ago, which incorporates the non-financial criteria in asset management and private banking.

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