Help Yourself by Helping Others

Sindhu Janakiram, CEO of Refugee Integration Insights, explains how investors can support efforts to integrate refugees into host economies.

One billion people could be refugees by 2050. This is the terrifying prediction from The Ecological Threat Register, which measures the world’s resilience to climate change-related disasters.

The latest United Nations High Commissioner for Refugees (UNHCR) global trends report 2021 published this June reveals 89.3 million people – or one in 88 of us – were forcibly displaced by the end of last year.

This is more than double the 42.7 million total at the end of 2012 and represents an 8% increase of almost seven million people in just 12 months.

Since these figures were collated, another seven million Ukrainian refugees have joined the tally in what the UNHCR says is “one of the largest forced displacement crises since World War II, and certainly the fastest”.

The UNHCR states: “Greater international solidarity and responsibility sharing is urgently required. Otherwise, the 21st century risks being increasingly shaped by the growing number and intensity of conflicts and a consequent rise in the numbers of people forced to flee, further exacerbated by exposure to climate change.”

Beyond philanthropy

Sindhu Janakiram, Co-Founder & CEO at Refugee Integration Insights (RII), an organisation compiling data on companies’ actions to mitigate the refugee crisis, says the private sector is already a central part of the ‘solidarity and responsibility sharing’ that is so desperately needed.

“The private sector has been instrumental in providing support to refugees through philanthropy and providing tangible items that people need like bars of soap or laptops. But they are also taking actions that integrate refugees into the economy. These are longer-term solutions that put refugees on a path to self-reliance,” Janakiram says.

He identifies six actions – hiring; entrepreneur support; education and skills development; products and services; philanthropy; and general (including gender and LGTBQ support and refugee advocacy) – which he says should be of interest to asset owners and other shareholders, since they “pay dividends for both the refugees and the corporations”.

“When corporations support refugees beyond philanthropy, they create a host of positive outcomes for the company and its stakeholders. They improve their diversity and inclusion, and their human rights performance.”

Hiring and training refugees can help counter labour shortages and improve the economic outlook for local communities. Meanwhile research reveals that 63% of US consumers are more likely to purchase from brands involved in helping refugees; exceeding the percentage who back brands selling fair trade products or environmentally-friendly products.

Janakiram continues: “Investors need to be aware that it is in the best interest for a company to start a refugee initiative – or if they already have one to improve it – because it’s only going to serve the company’s shareholders, stakeholders and the bottom line.”

By investing in companies with an effective refugee initiative, asset owners can reinforce their ESG strategies and align with the UN Sustainable Development Goals (SDGs). At least 10 of the 17 SDGs and many of their underlying targets are directly relevant to refugee issues.

“Refugee issues are all issues because everybody is a refugee and refugees are everywhere. These are issues that intersect the E and the S,” says Janakiram. “There are huge climate change implications when people are displaced. These are human rights issues; these are gender rights issues – 94% of those displaced from Ukraine are women and children – these are also about LGBTQ rights.”

Measuring action

While refugee initiatives may be increasingly important to asset owners, identifying companies that offer the actions Janakiram advocates has not been part of the mainstream ESG investing landscape.

This is why – after winning the 2020 Kellogg-Morgan Stanley Sustainable Investing Challenge – Janakiram and co-founder Ignacio Paullier set up RII to not only identify refugee-focused companies, but score them the aforementioned six actions.

RII’s Refugee Lens Scorecard is weighted so that corporate action that enhances refugee economic integration and self-reliance is valued more highly than lower-impact actions such as philanthropy or donating products and services.

Janakiram says RII “goes hunting for data” in publicly available documents, reports from companies and information from NGOs, to inform 39 qualitative and quantitative metrics covering 2,000 listed businesses.

“I am clear-eyed about how cynical people are about ESG. They need data that can tell them what a company’s impact is and their footprint on a specific issue. Our data can show exactly how many refugees Unilever, for example, has impacted. We are showing a company’s impact down to a community and livelihood level.”

The scorecards are used to place companies in RII’s Refugee Leaders Index (RLI). Janakiram says the index is already driving companies to do more to alleviate the refugee crisis.

Since its Spring 2021 launch, companies in the RLI have “significantly improved their refugee impact scores across all scorecard pillars”.

While welcoming these improvements, Janakiram would like the RLI to drive more positive action towards the refugee crisis sparked by Russia’s invasion of Ukraine.

He says that much of companies’ and asset owners’ focus was on withdrawing operations from Russia, when instead there could have been greater effort to help refugees.

“Rather than do the relatively easy thing, which is to follow everyone else, and pull production or sales out [of Russia], companies could positively contribute to the lives of those who are fleeing. That will have a bigger and longer-term impact than simply pulling out because you are worried your stock will be screened out of investors’ portfolios.”

This March, 50 multinationals including Amazon, Pfizer, and recruitment agency Adecco pledged assistance to Ukrainian refugees, offering financial aid alongside recruitment and training, and accommodation.

With the conflict widely expected to continue into next year, there is ample opportunity for firms to further evolve their present efforts.

He continues: “If companies know that investors will reward them for helping refugees, then we can create an environment where private finance is channelled towards positive action, and everyone wins.”

Lack of investible products

RII won the Kellogg-Morgan Stanley prize for a refugee exchange-traded fund, but the organisation chose not to pursue the instrument, since Janakiram says it is not-for-profit and as a start-up, issuing financial products was not viable.

Instead Janakiram says RII’s data should, in theory, make it easier for the financial services industry to build an investable product, and financial service providers are showing interest.

“We are in active talks with a global asset manager about launching a product, but any new [product development] carries its own level of risk. There is an ongoing education process with asset managers and owners.”

According to RII, of the tens of trillions of dollars in global sustainable investments, less than US$50 million is currently earmarked for refugees. If the world is to handle the indisputably calamitous spectre of one billion displaced people on the planet within then next 20 years, this is an area that needs considerably more attention – and capital – from the private sector.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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