(Corrects title in 12th paragraph of story run April 11.)
Microsoft Corp. (MSFT) founder Bill Gates, who has gifted $28 billion to his charitable foundation, gave some simple advice to Australia’s richest man Andrew Forrest on his crusade to end modern slavery: find a metric to quantify it.
“Global modern slavery is hard to measure and Bill’s a measure kind of guy,” Forrest, 51, the founder of iron ore producer Fortescue Metals Group Ltd. (FMG) who formed the Walk Free anti-slavery charity last year, said in a phone interview. In McKinsey & Co. “management speak, if you can’t measure it, it doesn’t exist,” he said.
Spurred by Gates, the world’s second-richest person, Forrest plans to publish the Global Index of Modern Slavery in August, ranking the existence and efforts to fight involuntary servitude in 160 countries. Slavery generates about $32 billion in profits a year, according to the International Labour Organisation, with activities such as sex trafficking and mining so-called conflict minerals used in electronics including laptops and mobile phones.
“When it comes to the superwealthy, they hide behind the parapet sometimes with tough social issues,” said Simon McKeon, chairman of the Melbourne office of Macquarie Group Ltd. (MQG), Australia’s biggest investment bank, who was named 2011 Australian of the Year for his charitable efforts. “When someone like Andrew says I don’t feel right that we still have slavery, then that’s music to my ears.”
Forrest, who has a $4.3 billion fortune, according to the Bloomberg Billionaires Index, and Virgin Group Ltd. Chairman Richard Branson in December officially started Walk Free in Myanmar, urging 25 top global companies and governments to stop using forced labor.
“Richard has indicated that he will be fully supporting Walk Free,” Forrest said. “He’ll be joining in and helping in any way possible.”
Branson and Forrest were among 12 new signatories who in February announced they had joined the Giving Pledge initiative started by Warren Buffett, chairman of Berkshire Hathaway Inc. (BRK/A), Gates and his wife, Melinda. Forrest and his wife Nicola pledged to donate A$2.5 billion ($2.6 billion).
“Andrew is quite an individual, and I can see similarities between him and Branson,” said Peter Rudd, resources and mining manager at Altitude Private Wealth in Melbourne who has more than 20 years of experience in the sector. “If they can achieve something on the charitable side, all the better.”
Fortescue (FMG) fell 0.8 percent to A$3.95 at the close of trading in Sydney today. They’ve fallen 15 percent this year. The benchmark S&P/ASX 200 Index gained 0.8 percent.
Members of the Giving Pledge commit to give away at least half their wealth to charitable organizations and philanthropic causes. Co-founder Buffett, 82, is the world’s third-richest person, with a net worth of $56.2 billion, according to Bloomberg’s daily ranking. Gates, 57, has $68.5 billion.
An e-mail to the Bill and Melinda Gates Foundation seeking comment about Forrest’s meetings with Gates wasn’t answered.
The slavery index is being developed by a co-founder of Free the Slaves, Kevin Bales, Professor of Contemporary Slavery at the Wilberforce Institute at the University of Hull in the U.K., and Fiona David, a visiting fellow at the Centre for International and Public Law at the Australian National University. It is scheduled to debut in August, Forrest said. The Ibrahim Index of African Governance, founded by Mo Ibrahim, the Sudanese-born billionaire founder of the telecommunications company Celtel International BV, was a source of inspiration, he said.
The index is based on data on slave numbers from governments, international organizations and surveys, supplemented with statistical analysis and estimation, Walk Free said in an e-mail. Measures of risk come from more than 20 global surveys of indices from groups such as the International Labour Organization, the United Nations and the World Bank.
Gates created the Seattle-based Bill and Melinda Gates Foundation to support organizations throughout the world aimed at improving education initiatives, enhancing health care and reducing poverty. Malaria, tuberculosis and polio are some of the diseases being targeted by the foundation. It was founded in 1997 and has an endowment of $36 billion.
Gates’s polio and malaria “campaigns are global campaigns, and you can actually measure it quite easily if someone has the disease,” Forrest said. “Modern-day slavery, because it’s so illegal, it’s much more difficult to measure. To get through this substantial measurement problem, we started the index.”
Forrest, who founded Australia’s third-biggest iron ore producer in 2003, established Walk Free after his teenage daughter Grace volunteered in 2008 at an orphanage in Nepal and became aware of the extent of child slave trading. Seeing the condition of some of its victims prompted Forrest and his wife to act and they have so far given $260 million to the campaign and associated charities.
“There was a little girl who had been given a one-way ticket from a city in the Middle East to India. She was from Kathmandu and had been sent back,” he said, adding the girl, who was about 11-12 years old, rocked and cried continuously in her bed. “She would have been part of the child sex slave trade into the Middle East. It just really strengthened my resolve.”
Forrest amassed his fortune supplying China (AUITIRCV)’s steel mills, after China’s rapid growth ignited a decade-long mining boom in Australia, the world’s biggest shipper of iron ore and coal. He has campaigned to improve Aboriginal employment and education and founded the Australian Children’s Trust in 2001 to help the underprivileged.
Global regulators and organizations have been increasing their scrutiny of “conflict minerals,” with the U.S. Securities and Exchange Commission introducing a rule last year forcing companies such as Apple Inc. (AAPL), Boeing Co. (BA) and thousands of other U.S.-listed manufacturers to find out whether their purchases of tin, tantalum, tungsten and gold come from Democratic Republic of Congo mines supporting violent armed groups.
Congo produces about half the world’s cobalt and about 3 percent of its copper and has large deposits of gold, tin, diamonds and coltan, an ore containing the metal tantalum, which is used in consumer electronics. Walk Free will target industrial minerals which are mined from “sweat-shop style” mines in West Africa, Forrest said. Fortescue’s own suppliers had been asked to check their supply chains aren’t inadvertently affected by slavery, though “not everyone could sign immediately” he said.
Mine to Products
“No company can want to knowingly have so-called conflict minerals in its supply chains and products,” Bennett Freeman, senior vice president for sustainability research and policy at Bethesda, Maryland-based Calvert Investment Management Inc., said by phone. “Responsibility goes all the way from mine to the end products.”
Walk Free is involved in several campaigns aimed at getting companies to seek to ensure they use supply chains free of forced labor. It had success with getting Inditex SA (ITX), the world’s biggest clothing retailer, to join a pledge concerning the use of cotton picked in Uzbekistan, Forrest said.
Inditex, which is controlled by Amancio Ortega, the world’s fourth-richest person with $54.5 billion, confirmed in an e-mail that it joined the Responsible Sourcing Network’s Cotton Campaign in October, adding it’s been involved with both garments manufacturers and exporters and textile mills associations in a number of countries for some years.
Walk Free is also campaigning for Nintendo Co., the world’s largest maker of video machines, to ensure that its supply chain is free of conflict minerals, Forrest said. Nintendo supports the sourcing of conflict-free minerals and prohibits their production partners from using conflict minerals from the Democratic Republic of Congo, the Kyoto-based company said in an emailed document. The company also visited the plants of production partners to be sure they weren’t used, it said.
“When it comes to changing attitudes we need a broad section of society,” said Macquarie’s McKeon, who was diagnosed with multiple sclerosis in 1999, and temporarily paralyzed. The diagnosis spurred his charity work that has included counseling heroin addicts and chairing the Global Poverty Project Inc. “If you’ve got someone of Forrest’s clout in the minerals industry, saying something’s not right, it obviously has enormous impact.”
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