Investing For Inclusive Growth And Social Impact

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Sustainable investing continues apace and looks to have a banner year in 2022. Recently, greater scrutiny of greenwashing and tighter rules defining sustainable investing have emerged too.[1] ESG-oriented assets under management (AUM) now equals $35 trillions, roughly a third of total AUM. Green, social, sustainability and sustainability-linked bond issuances from corporations and governments worldwide crested US $1 trillion last year.[2]

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Despite ESG’s popularity, the social factor has not earned the same attention as environmental and corporate governance concerns. The global pandemic has changed this equation. Pandemics and epidemics, by their nature, bring into relief and further exacerbate pre-existing socioeconomic inequalities.[3]

For us, the social component of ESG investing is at once the most important and most vexing.

The urgency of climate change is rightly at the forefront of investors’ minds. Yet, the right to dignified work and economic security, the ability to support a family and pursue goals and dreams, will require firms to devote more resources more consistently.

Increasingly, investors, asset owners, and asset managers believe that firms must concern themselves with the welfare of their employees and the communities in which they operate and the employees and the communities in their supply chains.[4]

The S In The ESG

It may seem unclear to the investor how to determine what the S means in practice and how it can inform investment decisions.[5]

We suggest retail investors rely on the foundational international declarations that affect the global interstate system and address the responsibilities of businesses, specifically the 1948 Universal Declaration of Human Rights, the 1966 International Covenant on Civil and Political Rights, the eight Fundamental Conventions of the International Labour Organization, and the 2011 Guiding Principles on Business and Human Rights.[6]

One can support the abstract ideals expressed in these documents and still be lost about implementing an investment strategy.

The Sustainable Development Goals (SDGs) may help resolve this problem.

The 17 SDGs come out of the UN’s 2030 Agenda for Sustainable Development and distil the declarations’ and conventions’ ideals, why they matter, and how to activate and support them.[7]

While each SDG will bring about healthy and sustainable societies, of particular interest to socially oriented retail investors are SDGs that address gender equality (5), decent work and economic growth (8), reducing inequality (10), and peace, justice, and strong institutions (16).[8]

Pinkwashing And ESG

Pinkwashing, a term of increasing popularity, often refers to companies who promote themselves as being ‘gay-friendly’ in cause marketing campaigns, including investing, to hide aspects of actions in other areas that are regressive. It can also refer to gaps between a company’s stated policy on gender equality and its practice as it relates to pay and workplace safety for women.[9]

The recent news about the Chinese female employee being fired who called out alleged sexual abuse by her manager at Alibaba, the Chinese tennis player, Peng Shuai, who also talked about alleged sexual abuse, disappearing from public view all help to undermine the Chinese #MeToo movement and highlight some of the potential violations of human rights that are happening around the world.[10]

Yet, this is not an issue solely in the developing world, and retail investors should examine actions closer to home. How many invest, perhaps unknowingly, in companies and by extension their supply chains where basic human rights are not taken into consideration? The British fintech firm Revolut, for instance, has a gender pay gap of 31 percent and women only account for a quarter of its workforce.[11]

Social impact investing has been around for a while growing to a $715 billion market in 2020, according to the Global Impact Investing Network.[12] For many years the only financial instrument used to improve social and environment conditions was through 100% lossmaking grants to charities.

As ‘impact investing’ has grown over the last decade it has enabled a diverse set of financial instruments with a wider set of organisations to help generate more impact. Investing has the potential to be an exciting opportunity to build more inclusive economies.[13]

Still, investors must heed a word of warning.

The winner of the Medium sized enterprise (MNC) ‘Empowerment to Women’ award in the China 2021 Social Impact Awards was Ant Group, an affiliated company of Alibaba.

The S And The Supply Chain

Investors should also consider how the supply chain factors into investment decisions.

Many reputable firms in Europe and North America rely on manufacturing facilities in countries with fewer labor protections and greater hostility towards workers. Many of these same countries are less committed to the democratic ideals that underpin the SDGs.

Myanmar, for example, has nearly 400 apparel production and laundering facilities. A US $5 billion industry, these factories employ more than 700,000 Burmese who assemble and launder clothes and shoes for such stores as Zara, H&M, NEXT, and C&A.

Ninety percent of garment workers there are women.[14]

In February 2021 the military seized control through a coup d’état, removing the democratic government in Yangon and initiating a campaign of state terror featuring torture and murder.[15]

Still, Swedish clothing retailer H&M, the Irish fast fashion retailer Primark, which is owned by Associated British Foods, and the apparel retailer Zara, which is owned by the world’s largest fast fashion group Inditex, continue sourcing materials from Myanmar.[16]

Several firms, including UK clothier NEXT, have paused placing orders with certain suppliers in Myanmar, but there is no recognizable systemic policy.[17]

Garment industry union workers in Myanmar are leading the pro-democracy protests, risking their jobs and personal safety, and calling on brands like Zara, Primark, Bestseller, and H&M to support their efforts.[18]

Institutional and retail investors are right to hold directors of these global brands to account, demanding they take seriously the SDGs and the Guiding Principles on Business and Human Rights.

And while cutting and running may be the easiest path for firms operating in such places, investor engagement can push firms to challenge inhumane and regressive atmospheres in their supply chains and act in support of social and human rights, making for inclusive growth and empowerment.

About the Author

Jane Duscherer is a Fixed Income Specialist at AxeTrading and has for 30 years utilized her strong understanding of financial markets, credit risk, technology and infrastructure to meet clients’ needs. Steven Hyland Jr., Ph.D. teaches in the Department of History and Political Science at Wingate University. Please connect with Jane and Steven on LinkedIn.

This article is the third in a series examining sustainable finance and ESG investing for individual investors. You may link to the first and second articles.

[1] For a particularly brutal account, see Cam Simpson, Akshat Rathi, and Saijel Kishan, “The ESG Mirage,” Bloomberg Businessweek, 9 December 2021,

[2] Catherine Bosley, “Green Investment Frenzy Runs Risk of Becoming a Bubble, BIS Says,” Bloomberg, 20 September 2021,; Rebecca Isjwara, Yuzo Yamaguchi, and Rehan Ahmad, “Global green bond sales may set record in 2021 on Europe’s sustainability push,” S&P Global, 15 July 2021,; David Caleb Mutua and Olivia Raimonde, “Runaway ESG Debt Issuance Poised for Fresh Boost From Junk Sales,” Bloomberg, 23 December 2021,

[3] Pippa Stevens, “Sustainable investing is set to surge in the wake of the coronavirus pandemic,” CNBC, 7 June 2020,; Matthew A. Winkler. “Socially Conscious Investing Thrives Amid Pandemic,” Bloomberg, 28 July 2020,; Sara Silano, “The Social Impact of Covid-19 on Investments and Business, Morningstar, 17 February 2021,; Michael Moran, “COVID-19 Made Sustainable Investments Go Viral,” Foreign Policy, 31 March 2021,

[4] Casey O’Conner-Willis, Making ESG Work: How investors can help improve low-wage labor and ease income inequality, NYU Stern Center for Business and Human Rights, October 2021, p. 19; Siobhan Riding, “World’s biggest pension fund steps up passive stewardship
efforts,” Financial Times, 15 September 15 2019,; GPIF, “Report of the 6th Survey of Listed Companies
Regarding Institutional Investors’ Stewardship Activities, 12 May 2021,

[5] Some notable exceptions include O’Conner-Willis, Making ESG Work and Jonathan Neilan, Peter Reilly, and Glenn Fitzpatrick, “Time to Rethink the S in ESG,” Harvard Law School Forum on Corporate Governance, 28 June 2020,

[6] “Universal Declaration of Human Rights,” United Nations, [Accessed 23 December 2021]; “International Covenant on Civil and Political Rights,” United Nations Human Rights Office of the High Commissioner, [Accessed 23 December 2021]; “Conventions and Recommendations,” International Labour Organization, [Accessed 23 December 2021]; United Nations Human Rights Office of the High Commissioner, “Guiding Principles on Business and Human Rights,” (New York, 2011), The Universal Declaration notes that “the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed as the highest aspiration of the common people,” and that the international community “reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined to promote social progress and better standards of life in larger freedom.” To achieve this, signatories affirmed “no one shall be subjected to arbitrary arrest, detention or exile,” “everyone has the right to freedom of thought, conscience and religion,” “everyone has the right to freedom of peaceful assembly and association,” “everyone, as a member of society, has the right to social security and is entitled to realization… of the economic, social and cultural rights indispensable for his dignity and the free development of his personality,” and “everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.”

[7] “Sustainable Development,” United Nations Department of Economic and Social Affairs, [Accessed 23 December 2021.

[8] See “The 17 Goals,” United Nations Department of Economic and Social Affairs, [Accessed 23 December 2021].

[9] “Feminism 101: What is Pinkwashing?,” FEM, 2 March 2019,; Harriet Allner, “Revolut’s campaign shows why we need to talk about ‘pinkwashing’ in finance,” PR Week, 15 December 2021,; Alistair Marsh, “‘Social Washing’ Is Becoming Growing Headache for ESG Investors,” Bloomberg, 9 April 2020,

[10] “China’s Alibaba accused of firing female employee who alleged colleague sexually assaulted her,” The Guardian, 12 December 2021,; Rose Minutaglio, “Inside the Mysterious Disappearance of Chinese Super Star Peng Shuai,” Elle, 21 December 2021,

[11] Allner, “Revolut’s campaign,” Op. cit.

[12] Bruce Allen, “Scaling Social Impact: Trends in Impact Investing,” LinkedIn, 10 June 2021,

[13] “Can impact investing both solve inequality and bring high returns?,” Financial Times, 24 September 2018,

[14] “Myanmar,” Business and Human Rights Resource Center, [Accessed 1 January 2022]

[15] Helen Regan, “Why the generals really took back power in Myanmar,” CNN, 8 Febraury 2021,; Rebecca Henschke, Kelvin Brown and Ko Ko Aung, “Tortured to death: Myanmar mass killings revealed,” BBC World Service, 20 December 2021,

[16] Louise S. Donovan, “Violence Spikes As Myanmar Garment Workers Say Factories Are Colluding With the Junta,” Vice News, 23 November 2021,

[17] Nishita Jha, “Zara’s Billionaire Owner Was Praised For Helping In The Coronavirus Crisis. Workers In Myanmar Paid The Price.,” Buzzfeed News, 7 May 2020,; Michael Sainato, “Zara and Primark factory workers say they were fired after forming union,” The Guardian, 24 June 2020,

[18] Elizabeth Paton, “Myanmar’s Defiant Garment Workers Demand That Fashion Pay Attention,” The New York Times, 12 March 2021,; Donovan, “Violence Spikes,” Op. Cit.