We recently hosted a live video webinar to discuss ways in which investors can contribute to the narrowing of economic disparities through a dedicated emphasis on investing in underserved minority communities. Our panel, moderated by Randall Strickland, Cornerstone’s Director of Client Relationship Management, featured Pat Miguel Tomaino, Director of Socially Responsible Investing for Zevin Asset Management, and Julianne Zimmerman, Managing Director of Reinventure Capital.




In today’s economy, the goods we consume are often produced far from where they are purchased, successively changing hands along complex and opaque corporate supply chains. The International Labour Organization estimates that across these supply chains, there are approximately 24.9 million victims of forced labor in the world.

Where forced labor risks are not addressed, they can result in serious legal, reputational, and financial repercussions for companies. Investors are uniquely positioned to help companies recognize the importance of managing this risk, and are increasingly using their voice to do so.

KnowTheChain is a resource for companies and investors to understand and address forced labor risks. We believe that companies and investors can be a powerful force for improving the lives of people who labor in their global supply chains.

Through benchmarking current corporate practices and providing practical resources that enable companies to operate more transparently and responsibly, we aim to drive corporate action while also providing considerations for investor action. KnowTheChain recently evaluated  38 of the largest global food and beverage companies on their forced labor policies and practices.

The 2018 Food and Beverage Benchmark Findings Report finds that while many of the companies evaluated may have policies and commitments in place, the majority do not provide evidence that their policies and practices are being effectively implemented. Without evidence of implementation of these policies, companies may be unprepared to respond to an egregious abuse uncovered in their supply chain by an NGO, trade union, or reporter.

Agriculture workers are particularly vulnerable

Human Rights Watch tells the story of Saw Win, a Burmese migrant worker smuggled into Thailand on the promise of a food processing job for US$4.50 a day. He was sold to brokers who were controlling work crews at fishing piers in a Thai port town. Initially, he worked on a trawler with no pay for three months. Upon returning to the port town, he was locked in a room for three days before being sold again to another boat. Eventually, Saw Win escaped by jumping overboard near the Malaysian coast and returned to land for the first time in two years.

Men and women seeking gainful employment in the agriculture industry are particularly vulnerable to exploitation – whether through force, fraud or coercion – and are often made to work for little or no pay, cut off from their homes or families. As the food and beverage sector increasingly pushes agricultural work into more rural areas to accommodate its land-intensive activities, it’s exacerbating the remote nature of the work and putting workers at greater risk.

How are companies scoring?

Unilever, which was the top scoring company in KnowTheChain’s first food and beverage sector benchmark in 2016, remains at the top with a score of 69 out of 100. Kellogg took second place with a score of 66.

Five companies score below 10 out of 100. None of them have a publicly available supplier code of conduct, nor do they take any action on worker voice and recruitment.

Scores by theme

The average score across the benchmark remains low, at just 30 out of 100, indicating that companies need to take further action to address forced labor risks across all tiers of their supply chains.

Overall, companies scored the lowest on indicators of worker voice and recruitment, suggesting that little or no action is being taken to listen to, engage with, or empower laborers across supply chains. These themes have the most direct impact on the lives of workers, and concerned investors can ask companies about their practices.

Improvements are (slowly) being made

Comparing the 2018 benchmark to its 2016 counterpart, we can see that more companies now have policies prohibiting recruitment fees, and in general, companies are providing more substantive examples of how their policies are used in practice. Of the 19 companies benchmarked in both 2016 and 2018, 17 disclosed additional steps taken to address forced labor risks.

It’s encouraging to see some companies making additional commitments since the 2016 benchmark, but progress for workers is not moving fast enough. Companies across the board must do better to make demonstrable improvements for workers.

Investors are taking action

In addition to scoring and ranking companies, this report provides good practice examples and recommendations for companies as well as considerations for investor action.

Investors representing more than $3 trillion in assets have signed the KnowTheChain Investor Statement, which lays out expectations for how companies should address forced labor risks, in-line with international standards and existing human rights due diligence tools.

Investors may wish to integrate KnowTheChain’s findings into their investment decision-making and active ownership practices. Shareholder advocacy organization As You Sow introduced a resolution on behalf of Monster Beverage shareholders, citing its 0/100 score in our 2016 benchmark report and asking the company to address the lack of transparency regarding slavery and human trafficking in its supply chain. (Monster scored 4/100 this year.)

Through responsible purchasing practices, strategic collaborations, and extended standards on issues such as ethical recruitment to lower-tier suppliers, companies can positively impact working conditions across their supply chains.

Investors who hold any of the companies KnowTheChain has benchmarked can use KnowTheChain to engage their portfolio. For each company in the benchmark, KnowTheChain has created a two-page summary identifying what steps the company can take. These company scorecards can provide a clear path for engagement for investors. Investors can further ask how companies are working to ensure migrant workers are not exploited, and how they engage with workers in their supply chains to empower them to exercise their labor rights, while ensuring that an early warning system is in place for when abuses occur.

KnowTheChain will be releasing a similar benchmark report on the apparel and footwear industry in the very near future, and we hope the audience for this research continues to grow.

Executive Summary

Access our full report here.

The US legacy of inequality based on race and ethnicity is rooted in centuries-old policies and practices that were designed to provide greater opportunity and wealth to some people (white people) and less opportunity and wealth to others (people of color). These practices were sometimes promoted at the outset as “race-neutral,” while in actuality they were nothing of the sort. For instance, policies such as the G.I. Bill granted opportunities to build wealth but were implemented to benefit white Americans while suppressing others’ access to those opportunities. Over time, investors have done little to break the economic divide; indeed, in many cases investment practices have only served to reinforce the accumulation of wealth among a small percentage of people.

Investors cannot alter centuries of structural racism that have led to economic inequality on their own, but they can support ways to help build an economy that provides opportunity for everyone. In this report, we look at some ways that investors are attempting to alter the economic paradigm through their investing practices.

People of color in the US earn far less and possess a fraction of the household wealth of white communities. The disparity reflects, in large part, 20th century policies such as the New Deal that set the stage for the emergence of a robust middle class but also embedded discriminatory practices that severely limited the participation of communities of color in that upward mobility. Many decades on, the overhang from these policies persists, and for many households of color were exacerbated by the impact of the 2007-09 recession.

Household wealth underpins financial security, helps families weather difficulties such as health issues or natural disasters, and enables people to maintain their standard of living during periods of unemployment. Family transfers of wealth are key to funding higher education, the formation of businesses, and home ownership for the next generation.

The implications of this wealth disparity go beyond the disadvantages it creates for the people directly affected. People of color will become the majority of the US population as early as 2045, according to a new US census projection. If the current income and wealth gaps between whites and people of color remain static, the overall pool of investment capital for entrepreneurship and home equity will be concentrated in fewer hands and sectors of the economy. This could fuel social instability and create major headwinds for future US economic growth.

Whether motivated by a desire to address racial inequities or concern about the future health of the US economy overall, investors are interested in understanding concrete ways to invest toward a more equitable economic playing field — one that fosters the creation of durable wealth. Investors are increasingly seeking companies, funds, and other assets that address long-term risks resulting from racial inequality and that are positioned for success if society moves to confront the status quo. We have assessed how investors may be able to contribute to solutions to three of the main current components of wealth inequality:

In crafting impact investment strategies, Cornerstone Capital Group evaluates how investments can improve access to resources needed to improve individual, community, and societal outcomes. In considering what investors can do to help break the cycle of racial and ethnic wealth inequality, we look for ways to foster wealth creation by tackling those three challenges.

Fortunately, the scope and number of investment vehicles designed to improve access to housing and capital is broadening along with growing interest in targeting investments for impact.

FA Magazine, Feb 12: Sexual Harassment Now An Investment Issue, Cornerstone Capital Says


CFO Magazine, Feb 12: Sexual misconduct poses financial risks for companies

“Time’s Up”… #MeToo … allegations of abusive behavior by corporate chiefs … the groundswell of public attention to sexual and gender-based violence (SGBV) is revealing how pervasive it is at all levels of society, in all industries. From an investor’s perspective, the burgeoning movement to root out abuse raises the question of whether capital markets participants might be complicit in its persistence.

It also raises the possibility that issues related to SGBV might evolve into a material financial risk for companies that don’t take appropriate action.

Traditionally, impact and gender lens investing has focused on discrimination, pay equity, and workplace conditions more so than the human rights violations embodied by SGBV. Investors lack access to data regarding the extent of the problem and do not possess the means to gauge the consequences for stakeholders or investment performance. We believe it is incumbent upon investors to demand greater transparency on issues of SGBV related to business activity; to hold companies accountable for reducing SGBV; and to incentivize companies to minimize SGBV.

With this report we launch an inquiry into how investors might better understand SGBV and contribute to a solution, as well as examine what kinds of data would generate useful insights. Key findings include:

Download our full report here.

Emma Currier is a Research Associate at Cornerstone Capital Group. Emma graduated with a Bachelors of Arts degree in Economics from Brown University in May 2016. While at school, she worked with the Socially Responsible Investing Fund and as a teaching assistant for the Public Health and Economics departments. She spent her sophomore summer researching differences between American and Indian educational styles in Arunachal Pradesh, India, and completed a summer investment bank analyst position with Citi in the Media & Telecom group in 2015.

Sebastian Vanderzeil is Director, Global Thematic Research Analyst with Cornerstone Capital Group. He holds an MBA from New York University’s Stern School of Business. Previously, Sebastian was an economic consultant with global technical services group AECOM, where he advised on the development and finance of major infrastructure across Asia and Australia. Sebastian also worked with the Queensland State Government on water and climate issues prior to establishing Australia’s first government-owned carbon broker, Ecofund Queensland.

Slavery is outlawed throughout the world, yet an estimated 25 million children and adults are still victimized as forced laborers. Modern slavery particularly affects the supply chains of the Apparel & Footwear, Information & Communications Technology, and Food & Beverage industries, but no industry is immune. Sustainable and impact investors, who have long called on companies to respect human rights throughout their supply chains, now have a growing number of investment options available to mitigate the tragedy of forced labor.

We recently hosted a webinar featuring leading experts to discuss the implications of human trafficking and forced labor for global investors. The panel covered:

Our panel, moderated by John Wilson, Head of Research and Corporate Governance for Cornerstone Capital Group, featured:

Kilian Moote, an expert in supply chain transparency and legal disclosure. He is the Project Director for KnowTheChain, a Humanity United project dedicated to helping businesses and investors understand and address labor abuses in their supply chains. In addition to joining our discussion, Kilian notes, “We have quite a few helpful resources on KTC that might be useful to your audience. For example, we have a section on our site now that is dedicated to resources for investors. We also have specific guides, such as KTC Investor Engagement Guide and a guide by ShareAction that details how forced labor can be an investment risk.”

Julie Tanner, Director of Socially Responsible Investing at Christian Brothers Investment Services. Julie  develops robust and substantive agreements with corporate boards and senior managements to improve environment, human rights and governance performance.

Craig Metrick, Managing Director. Institutional Consulting & Research at Cornerstone Capital Group, where he oversees the firm’s manager and fund outreach and review process and provides investment advisory services for institutional clients.



Forced labor is a risk that can affect shareholders drastically, in light of increasing regulation, litigation, media and consumer attention.  Take the case of Signal International, a US marine-services company, which went bankrupt following compensation payments to victims of forced labor –leading to a US$70 million loss for two Alabama public pension funds that held shares in the company.[1]

Reputational risks of forced labor are particularly high in the supply chains of consumer-facing companies.  In Malaysia, for example, nearly a quarter of workers employed in the production of electronic goods are working under conditions of forced labor[2].  Non consumer-facing companies may still come under scrutiny as business partners of consumer-facing companies.  In May this year, US Customs and Border Protection seized imports from PureCircle, a Malaysia-based supplier of sweeteners to companies such as Coca-Cola, under a new law banning imports of products produced with forced labor.  News of the seizure reduced PureCircle’s market value by almost US$100 million, and forced Coca-Cola to respond to the issue.[3]

The US Customs legislation is just the latest in a growing number of regulations on this issue.  As many as 62% of companies in the MSCI ACWI Index will be subject to the UK Modern Slavery Act, the California Transparency in Supply Chains Act, or the proposed Business Supply Chain Transparency on Trafficking and Slavery Act in the US.[4]

In order to make informed investment and active ownership decisions, investors need access to information on how well companies are addressing forced labor risks.  However, the information provided by many companies is patchy at best.  This is worrying considering the size of corporate supply chains.  Global corporations impact millions of workers through their supply chains – for example, Apple alone reported that since 2008 its suppliers have trained over nine million workers.[5]

Benchmarking companies can help fill this gap. KnowTheChain, an initiative of Humanity United, in partnership with Business & Human Rights Resource Centre, Sustainalytics and Verité, has ranked the policies and practices of 20 global information and communications technology (ICT) companies to address forced labor and human trafficking in their supply chains.  This will be followed by sector benchmarks in the food and beverage, and apparel and footwear sectors later in 2016.

KnowTheChain has already led to increased corporate disclosure, supporting investors’ decision-making.  By engaging companies ahead of the ICT benchmark analysis, many companies increased their disclosure, and others are using the benchmark to evaluate gaps in their policies and practices.  By creating a race to the top, KnowTheChain hopes to drive increased corporate transparency and action on forced labor over time.  This allows companies to understand how they are doing in comparison to peers, and provides investors information on, say, how IBM and Microsoft compare to each other (with 57/100 in the ICT index, Microsoft is scoring 12 points higher than IBM).

Benchmarking can influence companies in all regions.  While Asian ICT companies on average scored lower than their Western peers, many responded during the engagement process and disclosed additional information.  Benchmarking is also used in countries such as China to encourage cities to improve air and water quality.[6]

More specifically, investors can use the KnowTheChain benchmarks to:

Investors themselves can also help accelerate change, and fill the information gap they are currently facing by engaging investee companies on their efforts to address forced labor in the supply chain.

With an average company score of 39/100 in the ICT benchmark, much improvement is still needed across the sector.  Even among 20 of the largest global ICT companies, six either did not have a public supplier code of conduct in place, or the code did not require suppliers to adhere to international standards prohibiting forced labor.

That said, some companies are taking notable action.  For example, Apple has ensured that more than US$25 million in recruitment fees were paid back to supply chain workers.  HP reduces high-risk purchasing practices by establishing multi-year agreements with its major suppliers.  Its Foreign Migrant Worker Standard requires that supply chain workers are employed by the factories rather than agencies, reducing the risk of exploitation.

KnowTheChain’s ICT benchmark demonstrated that across the sector, awareness of forced labor is already high. The benchmark can be a tool for investors to leverage this awareness, encourage companies to take action and improve disclosure and practices, and to make better decisions and safeguard the value of their investments by reducing the risk of exposure to forced labor.

Felicitas Weber is KnowTheChain Project Lead, Business & Human Rights Resource Centre.  Prior to joining KnowTheChain in May 2016, she worked for the ESG Engagements team at the UN supported Principles for Responsible Investment (PRI). In her role, Felicitas was responsible for managing the PRI’s investor-company engagements on social issues.

[1] ShareAction 2016 –Investor briefing June 2016: Forced labour: What investors need to know

[2] Verite 2014 – Forced Labor in the Production of Electronic Goods in Malaysia: A Comprehensive Study of Scope and Characteristics

[3] ShareAction 2016.

[4] MSCI (2015) – “Slaving away in hiding”.

[5] Apple – Supplier responsibility. Accessed 12 July 2016.

[6] The New York Times: Edward Wong (7 July 2016): “China to Pillory, or Praise, Cities Based on Water Pollution”.



On December 18, 2015, the eve of the Christmas holidays, the University of California announced that it was withdrawing roughly $30 million worth of its investments in private prison companies.  U of C was not the first institution of higher learning to do so; Columbia University had divested itself of all of its shares in the private prison industry the previous June.  In both cases, the Trustees’ decision to divest came after months of pressure from black student groups.  By their action, Columbia and the University of California joined corporations like General Electric, Scopia Capital, and DSM, each of which has dumped millions of dollars’ worth of prison stock in the past few years in response to shareholder demands.  The Prison Divestment Campaign, launched in 2011 by a coalition of human rights organizations, is on track to match the success of the massive South Africa divestment movement of the mid-1980s, and success cannot come too soon.

The growth of the private prison industry is one of the most toxic byproducts of the “War on Drugs.”  The ratcheting up of drug law sentences by both the federal government and state legislatures throughout the l980s and 1990s led to a rapidly expanding prison population and the need for huge increases in corrections spending and prison building.  Many states could not keep up with the demands of mass incarceration.  Their need for more prison cells was met by for-profit prison companies, the largest of which are the Tennessee-based Corrections Corporation of America (CCA) and the Florida-based GEO Group, both publicly traded on the New York Stock Exchange.   With the intensification of deportation by Immigration and Customs Enforcement (ICE), the federal government has turned to the private sector for space to detain tens of thousands of undocumented immigrants.   Today, private prisons are a multi-billion dollar industry.

The reasons to divest from these companies are both moral and practical.  On the moral side, the privatization of punishment, or what I call the monetization of misery, has led to predictable human rights violations – predictable because the desire for higher profits inevitably leads to cutting corners when it comes to conditions of confinement.  Numerous lawsuits have been filed against CCA, GEO, and other companies charging unconstitutional prison conditions such as lack of medical care and excessive use of force and solitary confinement.  Just as insidious, private prisons have an incentive to maximize the number of days served by each person sentenced to its custody by meting out excessive infractions and thereby preventing earlier release.  A 2015 study in Mississippi, where 40 percent of prison beds are in private prisons, showed that people assigned to private prisons are likely to serve two to three times more months behind bars than those assigned to public prisons.   That extra time translates into an average of $3,000 more per person incarcerated at the expense of fairness and equal treatment.

The practical reasons to divest are becoming increasingly apparent.  First, the national prison population has declined for the past seven consecutive years, and that trend is likely not only to continue, but to accelerate as the criminal justice reform movement grows more powerful and Congress and state legislatures respond by adopting sentencing reforms.  Criminal justice reform is one of the very few issues about which there is bipartisan agreement.  JustLeadershipUSA’s goal of cutting the correctional population in half by 2030 is not an unrealistic one.  Second, the private prison industry is facing significant legal challenges.  Scores of lawsuits have been filed against private facilities and in many cases the courts are finding for the plaintiffs – men, women and adolescents serving time in for-profit prisons.  Last year, for example, the U.S. District Court for the District of Colorado authorized a multi-million dollar federal class action lawsuit against the GEO Group to go forward.   The lawsuit accuses GEO of slave labor, forcing its immigrant residents to do janitorial and maintenance work under threat of solitary confinement in violation of the Trafficking Victims Protection Act (TVPA).

My criticisms of the private prison industry should in no way be read as an endorsement of our government-led jails and prisons.  They too are overcrowded, unsafe, and inhumane.  I speak from personal experience.  As a young man, I was incarcerated for six years in New York State prisons.  My take away from that experience was that our criminal justice system suffers from a severe case of hypocrisy and racism.  Rather than rehabilitate, it grinds people down and leaves them with the life-long stigma of a criminal record.  For these reasons and more, prisons, whether public or private, are a bad investment.

Glenn E. Martin is the Founder and President of JustLeadershipUSA (JLUSA) , an organization that aims
 to cut the US correctional population in half by 2030 by elevating and amplifying the voice of people most impacted by crime and incarceration, and positioning them as informed, empowered reform partners.

It is an unfortunate reality that, in the 21st century, people are still bought and sold as property. Even though the transatlantic slave trade was abolished more than 225 years ago, an international human trafficking market continues to exist. The ILO estimates that forced labor in the private economy generates $150 billion in illegal profits per year. Collaboration across sectors is required to effectively change the market incentives that perpetuate the sale of people.

Speakers: Sir Richard Branson (via Video), Founder, Virgin Group

Randy Newcomb, President, Humanity United

Erika Karp, Founder & CEO, Cornerstone Capital

Rep. Carolyn Maloney, Congresswoman, U.S. House of Representatives

Ben Skinner, Founder & Principal, Transparentem

John Morrison, Executive Director, Institute for Human Rights and Business