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Calls for more responsible investment practices

Oxfam New Zealand has launched a research paper outlining ways in which investment practices can help address ways to reduce world poverty and support development initiatives.

Tuesday, August 2nd 2011, 10:52AM

by Ruth Le Pla

Speaking at the 2011 Responsible Investment Briefing in Auckland, executive director Barry Coates said some parking metres earn about as much in an hour as 70% of the world's population each earn in a day.

"Some 1.4 billion people live in extreme poverty", he said, "and the tragic thing is that things are not getting any better. They're getting worse in many ways. This is due to multiple crises of food and water, climate change and the global financial crisis.

"There are 50,000 people dying every day of poverty-related causes. This is an issue that we have to make sure is included in an integrated approach to responsible investment."

The Oxfam research paper -- ‘Better returns for a better world. Responsible investment: overcoming the barriers and seeing the returns' -- identifies three major structural barriers that prevent poverty reduction and development issues being more fully integrated into investment practices.

These barriers are: a lack of demand from, and oversight by, asset owners; short-termism; and a general lack of transparency in the investment industry.

Coates told delegates at the briefing that the report draws on feedback from a series of workshops for investment and development experts in Europe and the US.

These workshops covered topics as diverse as access to medicines, the arms trade, food security, access to water, and transparency, bribery and corruption.

To stimulate demand and improve transparency, the report recommends that:

·        All institutional investors develop, implement and report on their responsible investment strategies, with a particular focus on how they will address poverty and development issues within their overall approaches to responsible investment.

·        Asset owners explicitly demand and reward investment managers who take particularly proactive approaches to responsible investment.

Coates told delegates that the report recommends governments introduce regulations that require pension funds and other asset owners not only to have a policy on responsible investment but also to publish details of how they intend to implement it.

The report also suggests governments report regularly on the resulting social, environmental and financial outcomes.

Coates said governments should make responsible investment an integral part of how they run the financial assets that they control.

The study makes further sets of recommendations around analytical tools for both institutional investors and governments.

Coates said the world's food and agriculture problems are of "Malthusian proportions".

"We live in a world where around 1 billion people go hungry while a similar number of people are obese."

"We were well on the way to reducing hunger in the world but we've had some reversals. If the trends from the mid-1990s had continued we'd be looking at about 400 million fewer hungry people in the world today.

"But what we see is an era of high food prices, land grabs, speculation in food commodities and an increasing crisis of declining yields in many agricultural crops with climate change impacts yet to be factored in to the future."

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