In recent work with Purpose Capital and the Carleton Centre for Community Innovation, we argued that investors should refrain from viewing settlement and integration as an ‘impact sector’ in the same way that they view impact sectors like affordable housing or renewable energy. Instead, the settlement and integration of migrants and refugees is better understood as an investment ‘lens’ in the same way that gender is considered to be a lens.
Unlike a sector approach, a lens can be applied to all investment decisions and across asset classes (e.g., public listed equities, private equity, alternatives, etc.) and across a range of ‘impact sectors’ (e.g. refugees and affordable housing).
The following provides some concrete examples of how investors might apply a migrant lens to their investment decisions.
- Social Finance Models Targeted at Refugees
a. Micro-lending models for entrepreneurship
Refugee Integration Fund (EU): The fund is in pilot phase in Germany, Sweden and France, and for first four years it will provide grants to micro-finance institutions in Europe that provide loans to refugees for entrepreneurship. Over time, the fund will use a collateralized loan obligation structure that blends capital from a variety of investors (including pension funds, foundations, development FIs, etc.) with different levels of risk tolerance.
b. Investing in the settlement of refugees
Humanitarian Investment Fund for Refugees: The model proposes the establishment of an endowment fund capitalized by donations for refugees living in overseas camps, that would be used to invest in the settlement and integration of refugees in their new host societies.
c. Affordable housing and social infrastructure
Council of European Development Banks: Loans to member states for affordable housing initiatives for refugees, such as in Germany. The program also provides loans for micro-loan programs targeted at refugee entrepreneurs.
New Market Funds: Affordable housing investment fund (market-based) launched in Nov 2015, and while it does not have explicit focus on refugees/migrants, the model could be applied to migrants.
d. Social enterprises/innovations for refugees
Council of European Development Banks Social Innovation Competition: The theme of this year’s competition is innovation to address the refugee settlement and integration crisis in Europe. The competition will award funding to three social innovation proposals. Information on the 30 shortlisted candidates (with some interesting examples of social enterprise) is available here: http://eusic.challengeprizecentre.org/selected/
- Shareholder engagement with companies on migrant/refugee issues
Human rights abuses: e.g., A number of pension funds have either divested from or engaged with Transfield Services, a private firm that has been contracted by the Australian Government to operate off-shore asylum / refugee detention centers. The firm has been accused of a number of human rights abuses, prompting investors that own shares in the firm to divest on ethical grounds, or to engage with the company to change its behavior. Nordea (one of the largest asset mangers in Scandinavia) has recently said that it will be integrating refugees and immigrants into its responsible investment decisions. Sustainalytics, a firm that provides ESG data to investors, has suggested that investors will need to pay more attention to in the future to issues related to refugees and migrants.
Corporate board diversity/diversity at senior management level: The Shareholder Association for Research and Education, which provides engagement services to smaller and mid-sized investors has focused on engagements that push beyond gender diversity to include dimensions such as racial and ethnic diversity on corporate boards and in senior management positions. Engagement on diversity is underpinned by a business case. That is, more diversity leads to better decisions made by companies, ultimately leading to outperformance. McKinsey study provides a good starting point for understanding the business case for racial and ethnic diversity.
Another dimension to this issue is diversity within investment institutions themselves – so for example, investors that are making capital allocation decisions – do they themselves have diverse board and management? California Public Employees Retirement Fund recently emphasized the importance of diversity within their own organization. This could also apply to foundations, social investment funds, credit unions, etc. – are newcomers/refugees represented in institutions that decide where capital is allocated in society?
Corporate complicity in forced migration: Some investors take into consideration factors such as whether a company or its suppliers are contributing to forced migration. For example, Potash Corp. has been the target of engagement by some investors, for sourcing phosphate from Western Sahara on the basis of human rights and forced migration that corporate activity in this region is causing.
- Funding for service provider organizations
Immigrant Investor Programs (EB-5 in the US): Academics propose using funds to support investments in refugee- and newcomer-serving social enterprises and organizations.
- Others that are interested in SF and integration:
Big Society Capital has recently published a high-level paper addressing the potential of social finance for refugee integration, and it is interesting to note that Canadian models are featured in their initial scan.
Following the first-ever UN Summit on Refugees and Migrants, George Soros announced that he will be investing $500 million in the integration of refugees and migrants.