A Sustainable Private Sector Solution to the Refugee Crisis
Refugee economic integration gets results, but scaling it will require data and investment
Authors: Sindhu D Janakiram & Ignacio Paullier, Co-Founders, Refugee Integration Insights
When the Biden administration decided in April to keep Trump-era restrictions on U.S. refugee admissions, the subsequent outcry was so forceful that the White House quickly reversed course and raised the cap to 62,500 in 2021. While this episode underscored how the plight of refugees can capture public attention, admissions is only the beginning. What happens once refugees arrive in their host countries? The process by which a refugee finds a job, starts a business, or receives education or skills training is called refugee economic integration. And it’s a sustainable solution to the refugee crisis that benefits refugees, their host communities, and the private sector.
A GROWING CRISIS
Due to a variety of underlying factors such as growing sectarian conflict, increased income inequality, and climate change, refugee displacement rates have sharply increased in the last ten years and are projected to rise at an even higher rate this decade. The UNHCR reports that at the end of 2020, approximately 82 million people were forcibly displaced of which 26 million are refugees¹.
Moreover, 77% of the world’s refugee population remain in “situations of long-term displacement”².
“We are witnessing a changed reality in that forced displacement nowadays is not only vastly more widespread but is simply no longer a short-term and temporary phenomenon.” — Filippo Grandi, UN High Commissioner for Refugees
And while less than 1% of refugees are resettled on an annual basis, the projected global resettlement needs for 2021 alone totaled 1.4 million people.³ These needs will only grow as the global climate crisis could lead to the displacement of more than 1 billion people in the next 30 years, as ecological disasters drive mass migrations and greater armed conflict, according to a report released by the Institute for Economics and Peace (IEP).⁴
As displacements accelerate, governments and the private sector must confront acute material social risks and opportunities in the short term before the refugee crisis spirals into an irreversible humanitarian disaster. Most refugee solutions rightfully focus on mitigating refugee displacement — that is, improving conditions in developing countries such that populations aren’t forcibly displaced by conflict and/or disaster. But for those who are already displaced — the overwhelming majority in long-term situations — sustainable solutions such as economic integration are needed.
THE PRIVATE SECTOR HAS STEPPED UP
While governments and NGOs have done important work to mitigate displacement, their resources are limited when it comes to integrating refugees. It is in this context that some actors in the private sector have stepped up by integrating refugees into host countries in three ways: hiring, entrepreneur support, and education & skills training. In turn, these activities boost corporate diversity & inclusion performance, improve human rights practices, and mitigate social risks as the ‘S’ in ESG (Environmental, Social and Governance) becomes more relevant for companies and their shareholders & stakeholders. As Edelman’s 2020 Institutional Investors Trust Report highlights, the ‘S’ in ESG “climbed to the most important ESG priority for U.S. Investors.”⁵
While there are many more examples of refugee corporate action like those above, this support is not represented in the rapidly growing sustainable finance sector. Of the tens of trillions of dollars in global sustainable investments, less than $50 million are earmarked for refugees, with no investable products in the public markets.⁶
FILLING THE DATA AND INVESTMENT GAP
If companies are spending considerable resources to integrate refugees, where does the refugee crisis fit within the ESG agenda? Why aren’t these actions being tracked by investors, like corporate sustainability action on issues such as climate change and gender equality? Quite simply, it’s because there has historically been a lack of data and research on this type of corporate action, leaving investors unsure where to direct their capital to help tackle this issue. Until now.
Refugee Integration Insights (RII) is the first company to collect and structure corporate refugee data, score companies on their refugee support, and develop indices listing the top-rated companies on refugee corporate action. The RII Dataset comprises structured qualitative and quantitative data on hundreds of global companies’ activities and contributions towards refugees. The Refugee Lens Scorecard is a proprietary methodology assessing companies on six refugee pillars including hiring, entrepreneur support, and education & skills development.
RII’s innovative Refugee Lens Index (RLI) Top 50, developed in partnership with Solactive, lists the top ESG screened companies on refugee action. RLI Top 50 portfolio companies have had a significant impact on the livelihoods of refugees. These companies not only have generated strong impact performance, but also consistently outperformed the S&P 500 and STOXX 600 for 5 years.
Thanks to RII’s advancements, asset owners and managers now have the tools they need to make informed refugee-lens investment decisions. Integrating refugees into the economy makes not just moral sense but also financial sense, as these actions are proven to generate alpha to investors while improving the livelihoods of refugees and restoring the dignity that all human beings deserve.
For more information about RII please visit refugeeinsights.com
