On Our Radar: Social Investment, Frontier Markets and Human Rights
Between traditional news channels, blogs, and social media, it can be hard to keep up with what’s making waves in the field of sustainable development. In this roundup we aim to cut through the noise with a handful of highlights that have caught our eye.
Social Investment Gathers Momentum
In the UK, a number of developments in the social impact space are creating momentum around the departure of business as usual. Last year saw the establishment of Big Society Capital, a social investment institution that has been set up by the UK government to provide access to finance for social enterprises. In early June this year, the Social Stock Exchange (SSE), an investment of Big Society Capital, was launched as an online platform where listed companies are connected to investors who are looking for measurement of social and environmental credentials. To be listed on the SSE, companies have to produce social impact reports that are assessed by a panel of experts in the field. The SSE is supporting the shift to a broader definition of shareholder value by enabling companies to make their social and environmental impacts more transparent and ultimately, more quantifiable to investors.
Earlier this year, the Social Value Act (SVA) went into effect, requiring public authorities in the UK to consider social and environmental value, rather than just costs, when awarding contracts to suppliers. The sheer scale of what this Act could achieve is impressive since, according to Green Mondays Opinion, public sector contracts are worth £3.75 billion and account for 55% of the UK’s annual contract spend. The SVA is now being used as a model to spur similar draft legislation in other countries. The shift toward more responsible markets has been strengthened by the The Social Economy Alliance, a formal collaboration of social enterprises, co-operatives, and think tanks that launched in late June to ensure that, regardless of which political party is in government, the social economy continues to grow.
Human Rights Issues Affecting Frontier Market Investments
An article in Quartz, BRICS, VISTA, BROOMS – Just because it’s an acronym doesn’t mean it’s an investment opportunity, argues that Mongolia, Myanmar and Mozambique – mineral-rich countries bordering the BRICS – are projected to be the fastest growing economies of the next decade. Two years after the end of military rule in Myanmar, this previously inaccessible market is witnessing a surge in investment by companies such as Coca-Cola, Unilever, General Electric and Ford. An article in Forbes Magazine, General Electric’s Last Frontier: Return To Myanmar (Burma), offers a cautious perspective on this investment, highlighting the challenges that companies such as GE face when entering into a market in transition—corruption, bureaucratic red-tapism and violent land disputes.
The Obama administration has recently announced new regulations requiring American companies investing in Myanmar to publically report the steps they have taken to respect human rights and labour standards. It is a possibility that such measures could equally be levied towards companies operating in countries with a track record of corruption and human rights abuses in the supply chain such as Bangladesh. Even in an established market like China, government crack downs on safety violations, accusations of corruption and bribery, and non-compliance with pricing policies are posing to be challenges for some global brands that will need to remain cautious in this regulatory environment.
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