IDB World: Fiscal Strategy, the Costs of Crime & Exports
We present three selected IDB Group blog entries, on the need for a fiscal strategy for the region to emerge from the coronavirus crisis, the cost of crime in El Salvador and the importance of exports
How to Leverage Green, Social and Sustainable Bonds in Our Region?
Multilateral development banks are playing a major role in the creation and expansion of a green, social and sustainable bond market, known as thematic bonds, in Latin America and the Caribbean. What should investors and clients expect from them?
Development Effectiveness: Adding Value beyond Financing
A new private sector In his recent annual letter to CEOs, Larry Fink, the founder and CEO of the investment firm BlackRock, called on companies to incorporate both profit and purpose into their business strategies. “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
Making social investments count
When someone searches the word “sustainability” online, images of wind farms, trees, and waterways dominate the results. What is often missing from these photographs are people. It remains a challenge to break the habit of equating sustainability just with the environment. Sustainability, at its core, is something that should conjure not just these images but illustrations depicting people and the benefits of a positive healthy community. The private sector, in particular, should desire sustainable communities since this can often translate into better economic performance. According a study conducted by Deutsche Asset Management and the University of Hamburg, there is a positive correlation between good environmental, social and governmental practices and improved corporate financial performance. In other words, it literally pays to incorporate sustainability at the core of one’s primary business. An example of this is the Kingston Freeport Terminal Limited (KFTL) sustainable program at the Kingston harbor, in Jamaica. After winning the 30-year concession to operate the Kingston Container Terminal, KFTL saw an immediate need to seek out partners to become the catalysts for development in the harbor. Making room for sustainable infrastructure The first field visits to KFTL were challenging. I arrived at Greenwich, one of the largest fishing beaches in the harbor, to be immediately struck by the complexity of its location. Situated between the harbor and the state oil refinery on a slim piece of land, I wondered how these two could coexist. The visible conditions were extremely poor: no basic infrastructure and a landscape dotted with makeshift wooden shacks. Despite this, there was a real community there; fisherfolk (as they are called in Jamaica), who for several generations have made their livelihood from fishing these waters, have adapted to an extremely challenging environment. They are the largest —more than 4,000— and most economically vulnerable stakeholder. [clickToTweet tweet="Private sector should desire sustainable communities since they improve economic performance" quote="Private sector should desire sustainable communities since they improve economic performance" theme="style1"] As we began our conversations with the fisherfolk the tension was clear. The main concern was about the impact in their business, since previous experiences negatively affected their fish catch for more than a year. To define a social investment strategy and successfully structure the deal, IDB Invest (formerly known as Inter-American Investment Corporation) began working with KFTL. The purpose was to help the company to develop a long-term sustainability approach to ensure that investments produce benefits not only to private sector companies working with us but also to society. Coming to a sustainable agreement KFTL concession allows the company to modernize the harbor and to conduct dredging operations to receive larger Panamax vessels, which are designed to pass through the Panama Canal. These operations will increase employment opportunities for the surrounding communities, and help port operators engage with other stakeholders to ensure long-term sustainability for all harbor users. However, the creation of a long-term sustainability program was also a main objective for the company. This will be paramount to enhance relationships among port stakeholders, and invest in improving fisherfolk conditions. To increase social inclusion and incentivize an open dialogue, we recommended the creation of a committee with the fisherfolk fishing beach representatives, the Jamaican Port Authority, and KFTL staff. The committee has defined three main activities to revitalize the harbor: 1) provide livelihood support during dredging activities; 2) conduct solid waste cleanup of fish nurseries within the harbor; and 3) develop a fish sanctuary and artificial reef outside the harbor. These programs are still in their planning phases. However, their investments will provide long-lasting benefits to a community that has experienced declining incomes and economic vulnerability for years. On the business side, the 830 government workers from the port were employed by KFTL, and as container traffic increases additional labor growth is expected. Moreover, since the handover an additional 40 staff have been hired in various positions throughout the company. Ultimately, KFTL commitment will help shaping what it means to be a sustainable company while simultaneously providing a tangible improvement to an extremely vulnerable population. This is one clear example of how the private sector can leverage its resources to create economic benefits not only for itself, but also broad societal benefits for key stakeholders. Subscribe to receive more content like this! [mc4wp_form]
Empower women and investors will follow
Gender equality is no longer a choice for companies. It is not only about fairness, but about business success. For investors, this has become so clear that one of the world’s largest asset managers has just placed a statue of a defiant girl in front of Wall Street’s iconic bull in New York City to remind businesses that the time to fight for gender equality is now. Why? Because investors have realized that companies that foster diversity yield higher returns. More diversity improves decision-making, reputation, productivity, and employee retention and satisfaction, whTry ich in turn leads to higher returns. Companies with more diverse workforces are also better equipped to innovate in product development, tapping into new business opportunities, such as the women’s market. Investors are looking for results on gender equality But how can companies take concrete actions in line with what investors expect? The answer is not easy, as it requires looking at your company through a completely different lens. Statements and mere commitments to gender equality are not enough. In today’s data-driven world, investors are looking for information to evaluate companies’ performance and their environmental and social footprint. In the past few years, several gender equality indexes have emerged to help investors make informed decisions. Examples include the Barclays Women in Leadership Total Return Index, Pax Ellevate Global Women’s Leadership Index and the Bloomberg’s Financial Services Gender-Equality Index, among others. These benchmarks are tracking gender outcomes, including equal compensation and the number of women in leadership positions, employee policies, ability to create products and services for women, and community engagement. Some of these indexes have investment products to capture the benefits of gender diversity. Since 2014, both Barclays’ Women in Leadership Exchange Trade Notes and Pax Ellevate’s Global Women’s Index Fund enable investors to allocate capital in companies with strong female leadership. As investors’ appetite grow, similar initiatives are under way. Last year SSGA and California State Teachers Retirement System, the second-largest public pension fund in the US, launched the SPDR SSGA Gender Diversity Index ETF (SHE) to invest in companies with high levels of diversity on their boards. With over $280 million in assets, Berkshire Hathaway Inc and Oracle Corp. are among its top investors. A free tool to evaluate gender equality For those willing to roll up their sleeves and move beyond good intentions, the first step is knowing where you are and what you are doing. With this goal in mind, IDB Invest (formerly known as Inter-American Investment Corporation) and the Multilateral Investment Fund, along with UN Global Compact, UN Women and other public and private partners, have created a tool to help companies assess their gender equality performance. The tool follows the UN Women’s Empowerment Principles (WEPs) to unleash the potential of women in the workplace, marketplace and the community. The assessment is free and confidential and can be done by any company from any sector in any country. It looks at corporate policies in place and evaluates the extent to which firms provide equal opportunities, adequate work life balance, support to gender equality in the supply chain and respect to women’s rights in local communities. The tool has far-reaching potential for companies. Designed with the feedback of nearly 200 companies worldwide, the tool has proven to be eye opening for the firms that participated in the pilot phase. Some found that the assessment made them rethink their approach to gender equality in procurement and marketing, while others said it compelled senior management to improve processes. Others highlighted that the tool provided a road map to better integrate gender initiatives into the broader company’s strategy. So, if you are ready to face the bull and reap the benefits, complete the assessment and take action. Investors are waiting. This article was originally published on The Huffington Post Subscribe to receive more content like this! [mc4wp_form]
The First Commandment of Social Impact Generation
By Pablo Antón Díaz, Opportunities for the Majority The first commandment for companies and organizations that aim at generating social impact is adopting mechanisms to measure it. Every line is the perfect length if you don’t measure it, and this same rule applies to impact investing. Narratives on a handful of beneficiaries can be useful and serve as great instruments for attracting new investors, but the only sure way of knowing whether your efforts are indeed being relevant in the lives of people is through systematic measurement.