Asian investors have been urged to require more of companies on labour practices to avoid human rights abuses and reduce reputational risk.
A report by the Asia Securities Industry and Financial Markets Association said investors in Asia have been hesitant to discuss labour practices, with companies fearful of being named and shamed.
However, the investment trade association explained addressing labour practices will strengthen supply chain resilience as well as reduce the potential reputational risk and business impacts.
It set out a number of recommendations for investors:
- Identify the risk of labour practices and minimise the impact of such risks;
- Understand the approach taken by companies and how it is integrated into corporate structures and processes;
- Assess each company’s ability to anticipate, monitor, respond and remediate potential issues;
- Ensure each company discloses labour practices in detail, in more depth than just a high-level discussion of policies;
- Apply a TCFD-inspired approach to labour risk management.
It said recommendations should be used not just in industries with traditional labour issues such as construction or manufacturing. Emerging sectors also need to address labour issues, particularly technology companies where products can be reliant on mineral mining.