The Connection Between Climate Change and Modern Slavery

Climate change is traditionally regarded as an environmental issue. But climate change also threatens human rights, with material implications for investors.

Climate change is one of the most pressing challenges of our time, but it’s often seen as strictly an environmental cause. We believe that needs to change. That’s because climate change is also a human rights issue that threatens everyone’s lives and livelihoods, while putting the most vulnerable people at risk of human trafficking and modern slavery. 

What’s more, neglecting to account for climate-related modern slavery threats may present material financial risks to investors. AllianceBernstein recently partnered with Walk Free, an international human rights group working to accelerate the end of all forms of modern slavery, on a report, Bridging ESG Silos: The Intersection of Climate Change and Modern Slavery, that explores climate-related modern slavery risks in depth.

Making the Climate Connection to Human Rights 

Around 50 million people were living in modern slavery on any given day in 2021. But despite this shocking figure, the connection between climate change and modern slavery isn’t well-understood. The World Bank predicts that by 2050, 216 million people will be forced to migrate within their own countries solely because of climate change. This forced migration will make them more vulnerable to the risk of human trafficking and modern slavery.

We’ve made recommendations and developed tools to help investors assess, disclose and manage climate-related modern slavery risks. The first step is to identify the risks. 

Physical and Transition Risks to Human Rights

Climate change poses two primary sources of risk to human rights:

Physical risks. Acute physical risks relate to “sudden onset” events such as storms and bushfires. Chronic physical risks involve gradual long-term changes, or “slow onset” events, including drought, desertification, rising sea levels and ocean acidification. 

Sudden- and slow-onset events can destroy homes, infrastructure, food and water sources, and livelihoods. People affected by severe weather events can find themselves working in poor job conditions or forced to migrate in search of new work. This increases their susceptibility to human traffickers and can also result in labor exploitation. 

Transition risks. The shift from high-carbon fossil fuels to decarbonized, renewable energy sources creates two types of transition risk:

• Phasing out fossil fuels can affect workers who either lack the skills for the green economy or are not in the right location. This increases their vulnerability to poor working conditions and human trafficking. 
• Phasing in renewable energy can create human rights risks in the project-implementation and supply chain stages, such as land acquisition, resource extraction, material processing and equipment manufacturing. Examples include reported practices of child labor in cobalt mining and forced labor in polysilicon production.

Climate-related modern slavery and human rights risks can also create risks to businesses and investors. These include legal risks (running afoul of modern slavery disclosure law or human rights due diligence), reputational risks (harming a brand by falling short of client, shareholder and customer expectations) and operational risks (destabilizing a company’s operations and supply chains).

These risks can result in legal fees, fines, penalties and declining shareholder value—and could divert resources from a firm’s core business activities (Display).