Human trafficking, essentially modern slavery, is a large and growing practice, although most people are unaware of its existence and extent. Pope Francis has called it a plague on humanity. The NGO Human Rights First notes that Human trafficking is the world’s fastest growing criminal enterprise, earning exploiters an estimated $150 billion annually. Elaborating on this, Amy Sobel, Vice President, Anti-Human Trafficking Campaign, says that modern slavery is occurring in the vast supply chains that fuel our global economy, causing human tragedy and damaging some of the world’s most trusted brands. An article, Inside the Scarily Lucrative Business Model of Human Trafficking, in Time shows that it is a very profitable business. An estimated 21 million victims are entrapped by this practice and the number is growing at about 800,000 per year. Human Rights First has a campaign to Bankrupt Slavery: Dismantling the Business of Human Trafficking which is focused on increasing risks and decreasing profits for perpetrators.

This is a terrible problem, undoubtedly, but what does the seamy world of human trafficking have to do with the exalted world of company board rooms? The answer is that a company’s board of directors is responsible for determining the material issues that the company should be reporting on. In a recent survey of 582 institutional investors I undertook with Mirtha Kastrapeli, head of State Street’s Center for Applied Research, we found that an extraordinary 92% of them wanted companies to identify and disclose on what they regard are the material environmental, social, and governance (ESG) issues facing the company. Tellingly, nearly two-thirds (64%) wanted the board to make the determination of what is material, vs. 32% for the CEO and only 14% for the CFO.

Materiality is determined by what a company’s significant audiences deem to be important issues. While investors certainly are a significant audience, they are not the only one and directors must take these other audiences into account as well. The board’s duty is not, as is commonly believed, to put shareholder’s interests first and foremost. In certain industries such as agriculture, food products, and manufacturing, failure to eliminate human trafficking in their supply chain can damage the long-term viability of the company. Consumer reaction to modern slavery abuses can damage the company’s brand (and stock price), have negative effects on the morale of its employees, and make it difficult to attract new ones. 

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