Sands Capital is a staff-owned growth manager founded in 1992 by Frank Sands Sr. in Arlington, Virginia, running high-conviction concentrated portfolios of innovation-led growth businesses with about $46bn in client assets. Its "What We Think" column publishes deep research on technology, healthcare and emerging supply chains.
This piece says modern slavery (forced labor, human trafficking) is a real financial risk for investors, not just an ethical issue—companies can face boycotts, fines, or failed IPOs. The author, Sands Capital, is cautious, noting risks have spread from apparel to tech minerals (like tin, tantalum, tungsten, gold, and cobalt for chips) and AI's 'ghost workers' (hidden contractors doing data labeling). Three key holdings: Anta Sports faces scrutiny for sourcing Xinjiang cotton, with core traceability unresolved despite many audits; Britannia, an Indian food firm, bought sugar from a flagged supplier and is tightening oversight; Dexcom, a glucose monitor maker, is working on conflict mineral traceability but progress is limited.
One-sentence summary: Modern slavery (forced labor, human trafficking) has evolved from a peripheral ethical issue into a systemic investment risk affecting corporate strategy, regulatory exposure, and operational resilience; active investors must embed it into their research processes. [Cautious]
The article opens by stating that modern slavery (forced labor, human trafficking) is widespread and often overlooked in global supply chains, and for long-term investors, it has escalated from a peripheral issue to a core factor affecting corporate strategy, regulatory risk, and operational resilience. The author emphasizes that through focused research and active ownership, they seek to identify red flags and help portfolio companies mitigate the problem, thereby safeguarding long-term client value.
The author states: "Modern slavery, including forced labor and human trafficking, continues to present significant and often hidden risks across global supply chains. For long-term investors, these risks are no longer peripheral—they can affect corporate strategy, regulatory exposure, and operational resilience."
The article cites the 2013 collapse of the Rana Plaza building in Bangladesh (killing over 1,000 garment workers) and allegations of forced labor in Boohoo's UK supply chain (leading to a stock price crash and retailers delisting its products) as examples of the human and financial consequences of labor exploitation. The author notes that while unsafe conditions and low wages do not in themselves constitute modern slavery, they can signal labor governance gaps that warrant closer scrutiny.
The article argues that the risk of modern slavery extends far beyond the apparel industry, reaching deeply into raw materials and digital services that underpin numerous sectors. The author specifically highlights a prominent challenge facing their portfolio companies: conflict minerals (3TG: tin, tantalum, tungsten, gold) and the use of cobalt. These materials are critical for semiconductor, electronics, and battery production, but are often sourced from high-risk regions with forced labor and weak governance.
Furthermore, in the AI race, companies have faced criticism for relying on "ghost workers"—low-paid, often hidden contract workers who perform critical but invisible tasks such as data labeling and content moderation. The author states: "Whether embedded in physical supply chains or hidden behind digital services, these labor concerns can be difficult for companies and investors to detect and assess."
The article cites data from Walk Free's 2023 Global Slavery Index, indicating that nearly 50 million people are enslaved worldwide, with 28 million trapped in forced labor and over 12 million victims being children. The author believes that the growth of modern slavery is driven by a combination of globalization, rising inequality, climate-related displacement, political instability, and the lingering effects of the pandemic, all of which increase worker vulnerability and conceal abuse within supply chains.
The article systematically elaborates on how modern slavery risk translates into specific financial damage, supported by concrete company cases and institutional actions.
| Risk Category | Specific Impact | Case/Data |
|---|---|---|
| Rising Cost of Capital and Stalled Growth | Accused companies face financing difficulties, blocked IPOs, falling stock prices, and loss of investor confidence | Shein abandoned its New York and London IPOs in favor of Hong Kong due to forced labor allegations in its supply chain; Norway's sovereign wealth fund ($2.2 trillion) made 19 risk-driven divestments in 2025 due to human rights issues |
| Regulatory Risk and Compliance Pressure | Exposure to evolving labor laws, supply chain disclosure requirements, and due diligence obligations; non-compliance can lead to fines, import bans, and restricted market access | In 2026, the U.S. imposed additional tariffs on 60 economies for failing to adequately ban forced labor imports or enforce existing bans |
The author emphasizes: "Labor exploitation, while a serious ethical issue, is also a material business risk that can erode consumer trust, impair a company’s reputation, and destroy shareholder value."
The report notes that modern slavery incidents entail costly supply chain due diligence, restructuring, supplier renegotiations, and logistical challenges for many companies. Industries reliant on low-cost labor or high-risk materials are particularly vulnerable, as forced labor issues can lead to product bans, contract terminations, and production slowdowns. Sectors dependent on critical minerals—such as cobalt and 3TG metals used in electronics and electric vehicle batteries—face increasing scrutiny over labor conditions in their supply chains, often resulting in operational disruptions and rising compliance costs.
The author cites the Uyghur Forced Labor Prevention Act (UFLPA), implemented by the United States in 2022, as an example of the severity of operational disruptions. This law presumes that goods produced wholly or partly in China's Xinjiang region are made with forced labor, barring their entry into the U.S. unless importers can rebut this presumption. Companies reliant on Xinjiang cotton have been forced to seek alternative sources, often disrupting operations. The author states: "Patagonia, for example, stopped sourcing cotton from China in 2020 and restructured its supply chain." The report adds that while Patagonia's decision predated the UFLPA, it illustrates the operational disruptions such transitions can cause. Patagonia has since adopted isotope testing to verify the origin of its cotton, ensuring compliance with U.S. regulations.
The report argues that in today's interconnected world, many consumers are more informed and outspoken about their values, demanding accountability and transparency from the companies they support. Brands linked to modern slavery scandals face not only reputational damage but also the risk of losing customers.
The author cites multiple industry examples:
The report emphasizes that understanding these risks requires specific research into a company's sourcing practices, business relationships, and management oversight. Active managers employing long-term, concentrated strategies can leverage their knowledge of portfolio companies and ongoing dialogues with leadership to assess these risk exposures and discuss countermeasures.
Sands Capital's approach includes:
The report notes that assessing modern slavery risk goes beyond checking whether a company has policies or conducts supplier audits. It requires understanding where its greatest risk exposures lie, how it identifies problems, and how it responds when issues arise. Greater disclosure aids assessment, while investors should also look for signs that companies are putting commitments into practice and making meaningful responses when problems are identified.
The report distinguishes between direct and indirect risks, noting that the nature and severity of risks depend on a company's specific circumstances, including sourcing locations, labor practices, and controls.
The report cites data from Walk Free's 2023 Global Slavery Index:
The report notes that consumer and industrial companies face greater and more direct modern slavery risks due to their reliance on complex supply chains involving raw-material extraction, agriculture, manufacturing, and construction. Limited visibility into multi-tier suppliers makes it difficult to identify abuses such as forced overtime, movement restrictions, and wage withholding, which disproportionately affect vulnerable workers including women, children, and migrants. The author states, "Companies in the consumer and industrials industries may face greater and more direct modern slavery risks because they often rely on complex supply chains involving raw-material extraction, agriculture, manufacturing, and construction." This means: "Consumer and industrial companies may face greater and more direct modern slavery risks because they often rely on complex supply chains involving raw-material extraction, agriculture, manufacturing, and construction." The author emphasizes that limited visibility into multi-tier suppliers makes it difficult to identify abuses such as forced overtime, movement restrictions, and wage withholding, which particularly impact vulnerable workers like women, children, and migrants.
The report uses Anta Sports as a case study to illustrate the challenges of assessing supply chain oversight in a high-risk sourcing environment. Anta, China's largest domestic sportswear company, has faced international scrutiny for its continued sourcing of cotton from the Xinjiang region, which has been widely accused of involving forced labor targeting ethnic minorities. After withdrawing from the Better Cotton Initiative in 2021, Anta reaffirmed its decision to continue sourcing Xinjiang cotton under its internal standards, a move that triggered global criticism and heightened reputational risks. The author states, "Our engagement with Anta Sports Products illustrates the challenges of assessing supply-chain oversight in a high-risk sourcing environment." This means: "Our engagement with Anta Sports Products illustrates the challenges of assessing supply-chain oversight in a high-risk sourcing environment."
The report details a multi-year engagement process with Anta:
The report notes that the food industry faces similar supply chain challenges, with the Indian sugar sector being particularly prominent—a fragmented and opaque system where exploitative labor practices are deeply entrenched and difficult to trace. Following a 2024 New York Times investigation into widespread abuses in Maharashtra, the author directly engaged with India's leading food company Britannia to understand its procurement practices and oversight methods.
Engagement process and outcomes:
The core investment implication of the report is that active investors have a responsibility to understand and discuss the potential impacts of company operations, including modern slavery issues, through direct engagement. The author argues that through active ownership and in-depth research, investors can identify and mitigate these risks while pushing companies toward global best practices. However, it should be noted that this is a position-holder's perspective, and the report's description of progress at Anta and Britannia may carry a certain optimistic bias. Readers should be aware that core risks, such as Xinjiang cotton procurement, have not yet been fully resolved.
The article notes that minerals essential for manufacturing semiconductors and advanced medical devices—especially 3TG and cobalt—often originate from regions where human rights abuses such as hazardous working conditions, low wages, and child labor occur, making supply chain traceability extremely difficult. Despite regulatory requirements such as the Dodd-Frank Act, companies primarily rely on supplier reports and standardized tools (e.g., the Conflict Minerals Reporting Template, CMRT), which are often incomplete and unverified. The author states: "Despite regulatory advances...supply-chain traceability remains extremely difficult." The author acknowledges that investors also face limitations in addressing mineral sourcing risks—they do not control supplier contracts or procurement decisions and are several steps removed from the most vulnerable groups—but still leverage their position to assess how companies tackle these challenges.
The article uses Dexcom as an example to demonstrate specific measures and limitations in conflict mineral traceability. Dexcom, a global leader in continuous glucose monitoring (CGM) systems, uses electronic components containing conflict minerals such as 3TG. In 2024, Sands Capital engaged with the company and learned that it had implemented several due diligence measures: filing conflict mineral reports under U.S. regulations, conducting country-of-origin surveys to flag high-risk procurement, using CMRT through a third-party compliance platform, and achieving a 99% supplier response rate. However, at that time, the company had not yet adopted new technologies to enhance traceability beyond tier-one and tier-two suppliers. By the time of a follow-up in August 2025, Dexcom had joined the Responsible Business Alliance (RBA) and the Responsible Minerals Initiative (RMI), and was piloting facility-level traceability checks at its newly expanded manufacturing facility in Malaysia. If successful, this initiative would be rolled out to future facilities, including the new plant in Athenry, Ireland.
The article uses Uber as an example to illustrate how platform-based companies address the risk of minors using their food delivery platform. Media reports have highlighted the phenomenon of underage riders using food delivery services—these riders exploit the "substitution right" clause in UK labor law by renting or purchasing accounts from registered riders. The author states: "Such reports raised concerns about potential labor exploitation and the ineffectiveness of Uber’s safeguards to prevent unauthorized account sharing, especially in alleged cases of child labor." In engagements with Uber, the company stated that it requires delivery partners to verify age and identity, detects account sharing through real-time selfie checks, and deactivates accounts upon detection. To address the specifics of UK law, Uber’s UK policy mandates that any substitute must be at least 18 years old and have the right to work in the UK. Uber also indicated that it is collaborating with government authorities and industry peers, including Deliveroo and Just Eat, to tackle these challenges collectively.
The article notes that indirect risks in the financial services sector primarily stem from outsourced services (facilities management, cleaning, security, IT support) and the potential misuse of payment platforms for money flows related to human trafficking and exploitation. To better understand the risks faced by fintech companies, Sands Capital consulted the anti-human trafficking organization Polaris, learning that traffickers are increasingly using P2P payment apps for illicit activities. Polaris is developing collaborative solutions with P2P providers, including Block's Cash App. Leveraging its strong relationship with portfolio company Block, Sands Capital connected Polaris with relevant contacts at Block to exchange red flag indicators and potential solutions. The author emphasizes that this introduction was not due to any specific compliance issue at Block, but rather to illustrate another contribution investors can make: connecting companies with specialized organizations to help them identify and address emerging risks.
The report notes that Sands Capital has developed a comprehensive set of due diligence tools—including a modern slavery due diligence guide, a portfolio risk radar, and guidance on responsible mineral sourcing—to help its investment team identify exposures and guide company discussions. The author states, "We have developed a modern slavery due-diligence guide, a portfolio risk radar, and guidance on responsible mineral sourcing to help our investment team identify exposures and focus company discussions." These tools are not one-off creations but are continuously updated as risks evolve, focusing on industry- and company-specific issues that may affect portfolio companies' sustainable growth and clients' long-term investment returns.
The report uses five companies—Anta, Block, Britannia, Dexcom, and Uber Technologies—as examples to demonstrate engagement practices from the holding to exit phases. Among them, Anta and Block were still held in certain strategies as of October 5, 2026, representing what the author considers "companies we have engaged with on modern slavery issues." Britannia (bought in February 2016, exited in Q2 2026), Dexcom (bought in March 2020, exited in Q4 2025), and Uber Technologies (bought in February 2020, exited in Q2 2025) are no longer in the portfolio, but the author emphasizes that "these engagements occurred during our holding period and remain relevant for illustrating our approach to identifying and addressing modern slavery risks." The report explicitly states that these cases were "selected by the author based on objective criteria to reflect Sands Capital's historical stewardship efforts" and are not current investment recommendations.
The report uses extensive external links to suggest that modern slavery risk is evolving from a reputational risk to a regulatory and legal risk. Cited sources include the Uyghur Forced Labor Prevention Act (UFLPA) by U.S. Customs and Border Protection (CBP), the full text of the regulation in the U.S. Federal Register, a UK government review of modern slavery risks in NHS supply chains, and an International Labour Organization (ILO) study on digital labor platforms. These links point to regulatory trends such as U.S. import bans on Xinjiang cotton and electronics, UK scrutiny of public sector supply chains, and global attention to "ghost workers" on digital platforms. The report argues that these external environmental changes will force investors to assess labor risks more systematically.
Sands Capital treats modern slavery risk as a material factor affecting long-term investment returns, not merely an ESG label. Its institutionalized approach (due diligence guide, risk radar, mineral sourcing guidance) indicates that the firm views proactive identification and engagement as effective means to mitigate such risks. Readers should note that this is a holder's perspective—the engagement cases cited are all from its own portfolio, which may introduce selection bias. For other investors, the key takeaway is that modern slavery risk has shifted from a "moral issue" to a "quantifiable risk factor in investment analysis," particularly in industries such as semiconductors, electronics, apparel, food, and digital platforms.
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Anta Sports | Hold & Monitor | A challenging case for assessing supply chain oversight in a high-risk sourcing environment; progress is limited but engagement continues | 1,047 ESG audits in 2025, 88% of Tier 1 and Tier 2 suppliers rated "Good" or above; core risk of Xinjiang cotton sourcing unresolved |
| Britannia | Reduce (Exit in Q2 2026) | Engagement has pushed the company to strengthen sugar supply chain oversight; it has reported enhanced supplier risk management and independent ESG assessments | Indirectly sources a small volume from flagged sugar mills via intermediate traders; has stepped up targeted engagement with high-risk suppliers |
| Dexcom | Reduce (Exit in Q4 2025) | Demonstrates both progress and limitations in conflict mineral traceability; has joined RBA and RMI and piloted facility-level traceability | Supplier CMRT response rate 99%; piloted facility-level traceability checks at its Malaysia plant in August 2025 |
| Uber Technologies | Reduce (Exit in Q2 2025) | Platform-based companies face risks of underage drivers in the gig economy; has implemented identity verification and account-sharing detection measures | UK policy requires substitutes to be at least 18 years old; collaborates with Deliveroo and Just Eat to address challenges |
| Block | Hold & Monitor | Leveraged strong relationships to connect anti-trafficking organization Polaris with Block, sharing red flags and solutions | No specific compliance issues; P2P payment apps used by traffickers for illegal activities |
| Patagonia | Not Disclosed (Non-Holding) | Cited as a case of operational disruption, illustrating supply chain restructuring costs | Stopped sourcing cotton from China in 2020; uses isotope testing to verify cotton origin |
| Shein | Not Disclosed (Non-Holding) | Cited as a case of rising capital costs; abandoned NY and London IPOs due to forced labor allegations | Shifted to a Hong Kong listing |
| Starbucks | Not Disclosed (Non-Holding) | Cited as a case of consumer boycotts; faces lawsuits over coffee sourced from farms using child and forced labor | Accused of using coffee from farms employing child and forced labor |
| Estée Lauder | Not Disclosed (Non-Holding) | Cited as a case of consumer boycotts; under investigation for sourcing from farms using child labor | Investigated alongside L'Oréal |
| L'Oréal | Not Disclosed (Non-Holding) | Cited as a case of consumer boycotts; under investigation for sourcing from farms using child labor | Investigated alongside Estée Lauder |