A new report out today profiles an emerging investment niche called “Labor Lens Investing” organized around financing opportunities that produce good financial results and improve working conditions along global supply chains.
Labor Lens Investing: The Business Case for Fair Labor Practices breaks new ground in at least three ways:
First, it is the only published analysis of a growing international effort, “to apply a human rights framework to social impact investing related to working conditions in the global trade economy.”
Second, it marks the opening of a new investment window for investors seeking human rights impact.
Third, it is the first time I have written on the topic. I was lead author of the paper, working with a talented team including Lead Researcher Faris Natour of Article One Advisors, Michele Demers and Abby Degenhart of Boundless Impact Investing, and an Advisory Committee of practitioners, advocates, activists, and investors. The paper was funded by Humanity United and The Freedom Fund.
In the year or so since I started work on it, the topic of Labor Lens Investing has stirred up no end of controversy, as you might expect when you ask capital and labor to be on the same side.
It is that unlikely alignment that got me interested. I am focused on financing that does unexpected and unconventional things. “Labor Lens” investing meets and exceeds that standard.
More than 25 million people are now trapped in forced labor situations, and more than 150 million children are victims of child labor practices, according to recent data from the International Labour Organization (ILO). More than 2.3 million workers die each year as a result of occupational accidents or work-related disease and more than 317 million are injured on the job. Poor treatment of workers is also bad for the economy. The ILO says $51 billion in illicit profits annually line inhumane pockets at the cost of mainstream businesses and economies. As a result, 4% of global production (GDP) is lost to unsafe working conditions.
Labor Lens investing is no easy road. Human rights activists and advocates have invested millions, if not billions, of collars worth of time and effort to protect vulnerable workers, to uncover life-threatening conditions, and to help people one person and one workplace at a time.
Remarkably, in the wide world of Environmental, Social, and Governance (ESG) investing that is central to many socially responsible investing strategies, humans often are overlooked. An important research report published last year by the New York University Stern Center for Human Rights and Business documented how the “S” in ESG gets the least attention of the three categories and that human rights, as an important component of the “S,” is ignored perhaps most of all. Putting the ‘S’ in ESG: Measuring Human Rights Performance for Investors is a must-read for socially motivated investors everywhere who find it a struggle to make sense of what investors say they do.
Labor Lens Investing is an attempt to focus more attention on working conditions, human slavery, and global supply chains, which at their best create significant opportunities for economic and social mobility and growth. There is a long way to go to prove this newly defined asset class, and that’s why this new paper seems important to me. Like they say, the best time to plant a tree is 30 years ago.
Pinsky, Mark. Labor Lens Investing: The Business Case for Fair Labor Practices. New York, NY. Boundless Impact Investing. March 2018.