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February 01, 2011
Oxfam's Better Returns in a Better World Project Seeks Poverty Alleviation Through Investment
    by Robert Kropp speaks with Helena Viņes Fiestas of Oxfam about the results of roundtable discussions with institutional investors seeking to incorporate social considerations into investment.

In 2008, when Oxfam launched its Better Returns in a Better World Project, the global economy was embroiled in an unprecedented financial crisis, brought on in large part by excessive risk-taking and a focus on short-term profits by financial institutions.

"This project was launched during the financial crisis, and we feared that the issues might prevent institutional investors from getting involved at all," Helena Viņes Fiestas, policy adviser to the private sector team at Oxfam GB, told "But in fact, the opposite occurred. The financial crisis has called into question the role of institutional investors in society."

Published in November, 2008, the
discussion paper that launched the project addressed the "proper role of investors in society" directly, "both in terms of the specific investments that they make and the manner in which they use their influence to ensure that the positive social and environmental impacts of their investment activities are maximized, and the negative impacts minimized."

While Oxfam's initial discussion paper concluded with the observation "that the integration of poverty and development issues into investment activity offers the potential to significantly improve the lives of millions of people living in poverty, while also enhancing long-term investment returns," the organization then sought to engage with institutional investors in a series of nine roundtable discussions to meet its goal of poverty alleviation through investment activity.

The results of the roundtables were summarized in a recently published report entitled
Better Returns in a Better World, which the investment implications of social issues such as human rights, poverty, and sustainable development have not received anything close to the level of attention accorded such environmental issues as climate change.

"Poverty reduction and development are not, at present, seen as integral parts of the responsible investment debate," the report stated.

Viņes Fiestas told, "Very few institutional investors have had a big percentage of their investments in emerging markets," despite her observation that "Investors realize that future growth is not going to come from the classic market. Growth will come from emerging markets."

In order for such growth to occur, however, a number of currently unanswered questions will have to be resolved, according to Viņes Fiestas.

"How are companies going to manage the risks?" she asked. "Increasingly, that will be part of the ongoing financial analysis."

Furthermore, she continued, "What will be the responsibilities, not only of institutional investors, but of other actors in civil society? What changes in regulatory frameworks are necessary?"

Oxfam's initial discussion paper proposed the
Millennium Development Goals (MDGs) as the basis for a focus on poverty alleviation by institutional investors. The first MDG includes the goal of reducing by half the proportion of people whose income is less than $1 a day by 2015.

Asked if the MDG's goal of poverty alleviation by 2015 added a sense of urgency to Oxfam's project, Viņes Fiestas said, "The 2015 goal for alleviating poverty offers a physical reminder of how appalling the situation is. However, the goal is not the end of the story. The process is about learning a different way to work, and we need collaborative approaches. We don't need to be experts in every development area, but we do need to start working together."

A significant collaborative approach to addressing poverty alleviation by institutional investors, according to the discussion paper, is the United Nations'
Principles for Responsible Investment (PRI), which at the time of the paper's publication had over 400 institutional investors representing some $15 trillion of assets under management.

Since the financial crisis, the number of signatories to PRI has grown to more than 800, with $22 trillion in assets under management.

"The growth in PRI indicates that fund managers and asset owners are aware that they need to take their social responsibilities very seriously," Viņes Fiestas said. "The PRI is a wonderful initiative, but it's not enough to sign. You need to show that you're working toward implementation, and that you're making progress."

The roundtables yielded a number of areas for collaboration, not only among institutional investors themselves, but among all key actors in civil society. The
minutes of Oxfam's discussion in Stockholm reveal a focus on arms trade, for instance, "which has so far been given very limited attention by investors."

Following the discussion, a number of investors committed to publishing a statement in support of an Arms Trade Treaty (ATT), which has not yet been ratified as an international agreement.

"We're trying to get governments to implement some of the recommendations," Viņes Fiestas said. "It's striking to see how many private investors are by far more advanced in this agenda than governments."

"We're trying to raise awareness among the public as well," she continued, pointing to
National Ethical Investment Week (NEIW) as an example of such an effort. Coordinated by UK Sustainable Investment and Finance (UKSIF), the initiative seeks to encourage financial advisers and investment consultants to include sustainable investment criteria in their services to clients. NEIW also provides guidance to consumers wishing to establish sustainable criteria for their investments.

Going forward, Oxfam intends to increase the benchmarking of pension funds and asset managers against standards for incorporation of environmental, social, and corporate governance (ESG) criteria in investment analysis and decision-making. While Oxfam itself has not yet established such benchmarking, "We're co-founders of
FairPensions, which has done benchmarking of pension funds and asset managers on their ESG investment," Viņes Fiestas said. "We foresee that our work with FairPensions will continue."

Pointing out that much important work has been done by sustainable investors in the US and Europe, but too often independently of each other, Viņes Fiestas concluded, "There needs to be more collaboration between both sides of the Atlantic."


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