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Modern Slavery considerations in outsource provider relationships

The purpose of this article is to ensure investors are equally cognisant of the implications of modern slavery in the supply chains of their largest relationships – outsource providers.

24th September 2021 / 5 mins read
Michael Gillespie
Senior Analyst, Operational Consulting
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Modern Slavery disclosures allow investors an alternate lens with which to comprehend a company’s values, as well as the company’s own understanding of their operations and its place in the world. JANA’s clients are well versed in the need to assess Modern Slavery implications in their investments. The purpose of this article is to ensure investors are equally cognisant of the implications of modern slavery in the supply chains of their largest relationships – outsource providers.  

Custodians, administrators and insurers are routinely the largest expense lines for institutional investors, intricately tying investors and their reputation to the complex supply chains of their outsource providers in multi-year engagements. The presence of these providers has spread across the world largely through the requirement for large amounts of quality talent to support clients’ operations around the clock. The providers, as well as their suppliers, are also often precariously positioned between the constant pressure on costs and complex tasks that still require human capital to facilitate in some part. The balancing act just described presents a common scenario whereby modern slavery risks could be amplified in supply chains. 

Diving deeper by way of looking at the operations of a sample set of outsource providers and moving our thinking beyond the largest labour markets of China and India provides some interesting insights. The map below shows countries with the highest estimated instances of modern slavery for which we were also able to identify supplier operations for the outsource providers included in our analysis1. The map breaks the illusion that the financial service sector is not a participant in higher risk modern slavery countries, while also highlighting countries where readers could enquire as to their own outsource providers presence. 

1. Modern Slavery

Figure 1: Countries with high instances of modern slavery1 and suppliers to outsource providers. 

Given the expectation that the financial services sector remunerates at the high end in any country, it would be a misconception that this high degree of remuneration would extend across the supply chain of a financial services firms thus lowering the risk of modern slavery. Unfortunately, this is not the case as any corporate supply chain (no matter the sector) extends across multiple industries as shown in the graphic below.

2. Modern Slavery

Figure 2: Related industries within immediate supply chains of outsource providers.  
Higher risk industries identified using ILO Global Estimates of Modern Slavery2.

Financial institutions will require facility management services and will use other goods and services sourced from the local or even cross border communities. We as investors, as well as the financial outsource service providers, need to recognise the need to develop a deeper understanding of countries with higher risks of modern slavery, their cultural considerations and the sub-regional supply chain links. 

The JANA Operational Consulting approach

JANA’s Operational Consulting team has been supporting clients’ with outsource providers for many years and have often been called upon by these providers as an independent sounding board for issues facing the industry. Going a step further, JANA’s own research program includes onsite due diligence at the international divisions of all the major custodians and is complemented further by our interactions with the broader asset management industry through operational due diligence. 

The below summarises a few insights in regard to modern slavery from JANA’s engagements with outsource providers over time:

3. Modern Slavery

It is clear that most outsource providers have recognised the importance of tackling Modern Slavery, though some have differentiated themselves by showing a deeper level of understanding and focus. As ESG becomes even further integrated into every commercial decision in the coming years, JANA looks forward to seeing the positive impact that the many sophisticated outsource service providers of the financial sector can make on modern slavery.

 1Top 50 countries with the highest estimated instances of modern slavery per 1,000 people as per the Global Slavey Index 2018 report –

2International Labour Organisation – Global Estimates of Modern Slavery: Forced Labour and Forced Marriage Report, Geneva, 2017 –

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