Ethical investment strategies – those seeking beneficial environmental, social and governance (ESG) outcomes – are becoming more prominent in the financial and broader business sectors. ESG principles increasingly guide financial investment strategies but are also used more broadly by private sector organisations interested in promoting social progress.
The Institute for Economics & Peace’s (IEP) research is employed in the ESG arena in different ways. Some stakeholders and users adopt the work on negative peace and its social impact; others concentrate on Positive Peace’s potential to create favourable and sustainable operating conditions for business.
One example is producer of financial benchmarks IHS Markit, a finance and business research house with global reach. It uses the Global Peace Index (GPI) as a gauge for the ‘Level of Peace’ of nation states, a component of the ‘Human Rights Performance Score’ used in many of its ESG indices. Some examples are the iBoxx MSCI ESG USD Liquid Investment Grade Ultrashort Index; the iBoxx Global Green, Social & Sustainability Bonds Index; the Markit iBoxx Euro Sustainable Corporate Bond Custom Index; and the iBoxx MSCI ESG EUR Corporates 0-1 TCA.
The London School of Economics (LSE) invited IEP to explore the challenges of measuring corporate impacts in fragile and conflict-affected environments. The work focussed on the need to develop new tools to be used by ESG ratings agencies, advisory firms, companies and investors. The initiative “discussed how the approaches of human security and Positive Peace from IEP could add value to existing measurement practices.”
ADEC Innovations is a leading US-based provider of ESG solutions, helping private organisations operate and grow sustainably and responsibly. The company has assessed the link between peace and sustainable development using IEP’s Positive Peace framework. It highlights that “promoting peace and sustainable development reduces poverty and prevents conflict, translating to a healthier business environment that allows for a more effective delivery of products and services.”
In a recent address to shareholders lodged with the Australian Securities Exchange, the chairman of the Global Masters Fund Ltd Mr Murray D’Almeida explained how the firm was expanding operations to provide their investors with exposure to emerging markets. Mr D’Almeida underscored the cooperation of their group with IEP in developing the ECP Global Positive Peace Growth Fund to assess the level of peace and socio-economic development of potential investable markets. He stated: “Recently, the [Global Masters Fund Ltd] invested in the ECP Global Positive Peace Growth Fund which employs data from the Institute for Economics and Peace to aid the assessment of regions with favourable economic climates. Here, the strategy aims to identify peaceful microeconomic foundations which provide the optimal conditions for quality-growth investments to drive superior long-term investment returns.”
IEP is also collaborating with Microsoft Corporation and the CyberPeace Institute in Geneva to develop a framework to measure nation states’ contributions to peace in cyberspace. The framework was discussed in the European Cyber Agora 2021 and other fora.