Anti-corruption Report Flags Land, Labour Risks 

New guidance for impact investors seeking to ensure business integrity while pursuing sustainability goals has warned of the high corruption risks around labour issues and land transactions. The concerns are raised in ‘Investing with Integrity II’, an updated report from Transparency International UK, an anti-corruption NGO, published in collaboration with development finance institutions (DFIs) Swedfund and the British International Investment. The report notes that business activities and projects supported by impact investors often require land to be purchased or land use to be changed. It warns that land transactions can present a high corruption risk, leading to “severe” environmental and social issues, with resettlements adding further complexity. Transparency International UK also says exploitative and abusive labour practices by companies can indicate that bribes have been paid to public officials, either directly or via a third party supplying the workforce. As such, labour-related red flags should alert impact investors to corresponding business integrity risks. The guidance in the report focuses on corruption risks likely to arise in the context of impact investing, setting out a clear approach for investors to identify, assess and manage them. It draws on more than 30 interviews with experienced practitioners, including leading DFIs, private impact investors, and investee companies, and uses questions to help investors identify potential risks, as well as case studies. “Impact investing can play a hugely positive role around the world, delivering real and measurable social and environmental impact alongside financial returns,” said Chara de Lacey, Head of Business Integrity at Transparency International UK. “However, it is not without difficulty, with the most need for this type of investment being markets with the highest corruption risks.” 

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