The arrival of more than 1 million Syrian refugees in Europe has brought unprecedented attention to the economic and social costs of failing to integrate migrants. Syrian refugees challenge the stereotype of migrants as lacking education and skills to match labor market needs—many are highly educated, and an overwhelming majority are under the age of 35, with years of productive potential ahead of them. As thousands of refugees continue to arrive on European shores each day and thousands more await asylum decisions, the private sector faces significant losses in human and economic capital by not engaging them.
Some private sector firms recognize the opportunities associated with the diverse skills and perspectives of migrants and refugees, many of whom have valuable connections to foreign markets and intimate knowledge of evolving consumer demands. These firms are stepping up as important partners to government and civil society organizations in responding to the challenge of integrating migrants. For example, some are participating in employee mentorship programs, offering financial services tailored to refugees and newcomers, and developing innovative products, such as toiletries that can be used without water, to meet immediate settlement needs of refugees.
However, scaling innovative and successful integration programs will not be possible until more investors focus their attention on migrants. Given their role in deciding how to allocate large sums of capital and monitoring its use, all investors—including pension funds, social investment funds, high net-worth individuals and foundations—have a stake in the successful integration of migrants. But in contrast to some private firms, the majority of investors have largely overlooked the opportunities associated with immigration.
The concept of gender lens investing provides a framework for how investors might begin to identify and to act on the opportunities that migrants and refugees offer. As an analytical tool, a gender lens helps investors to integrate gender considerations across all investment decisions. Investors can apply a gender lens in a variety of ways, including by investing in innovative products and services that benefit women, investing in companies that promote gender inclusion on boards and in senior management positions, and providing women entrepreneurs with access to capital.
“Migrant lens investing” could enhance traditional investment analysis in much the same way, benefitting both investors and migrants. For example, adopting a migrant lens could help investors to identify untapped investment opportunities in migrant-owned businesses, which many studies have found to be highly innovative and to have strong export potential. These investments would also give migrants much-needed access to capital, a key challenge for many newcomers for a variety of reasons, including a lack of access to investor networks and a lack of credit history. In Canada, some lending programs already target newcomer entrepreneurs in this way while also providing non-financial supports such as networking opportunities and training. The Nova Scotia Government guarantees loans from credit unions to newcomer entrepreneurs. In Europe, the proposed Refugee Integration Fund would provide capital to micro-finance institutions that lend to refugee entrepreneurs.
Investors can also apply a migrant lens to identify investment opportunities in organizations offering products and services that benefit newcomers. Social enterprises and private firms are offering some of the most innovative solutions to the refugee crisis. Consider Ikea’s temporary shelters for refugees, which offer a safe, secure, and sustainable alternative to traditional canvas tents. These initiatives can respond more quickly and with greater flexibility than governments, and many have secured large public contracts, making them an attractive option for investors at a time when the arrival of refugees shows no sign of abating. Some banks and credit unions are also recognizing migrants as a new business opportunity and have tailored financial products and services to meet their unique needs.
A migrant lens wouldn’t just serve foundations and social investment funds that have an explicit impact investment mandate. All investors would benefit from explicitly integrating concern for migrants’ and refugees’ social, economic, and financial inclusion into their existing environmental, social, and governance (ESG) criteria. Following reports in 2015 of horrific human rights abuses, several pension funds divested from a private firm operating migrant detention centers for the Australian Government. Migrants are a significant source of forced labor in industries such as agriculture and construction (for example, the Qatar World Cup Stadium), and some investors have engaged with companies to ensure that they address vulnerabilities unique to migrant workers in their supply chains, such as language barriers and the threat of deportation.
As for “E” (environment), climate change and environmental degradation will have significant impacts on migration patterns—consider the impact of drought on the present Syrian conflict, for example. Without an explicit investment lens for considering the impacts of human interaction with the environment on forced migration, investors overlook important opportunities to take a more-proactive approach to addressing portfolio risks associated with refugee crises through shareholder engagement or by making investments in renewable energy projects.
While investment in migrant-owned businesses or small businesses that actively promote migrants to leadership positions may not be a viable option for some investors, another way to apply a migrant lens is by filing shareholder resolutions and engaging in dialogue with publicly listed corporations on the issue of diversity. Beyond the positive impacts for migrants, there is growing evidence to support the business case for diversity. For example, a recent McKinsey study finds that more ethnically and racially diverse boards can enhance decision-making, and allow firms to draw from deeper talent pools and to improve customer orientation and employee satisfaction, among other benefits. Investors can also engage with policymakers to extend corporate disclosure rules beyond gender diversity to include racial and ethnic diversity.
While not all migrant lenses will be appropriate for all investors, all investors will need to find ways to bring consideration of the risks and opportunities of migrant integration into their investment decisions. Investors have an important role to play in supporting projects that benefit migrants, and encouraging corporate and public policies that are inclusive and protective of migrants’ rights. And at a time when anti-immigration rhetoric has captured the political agendas of many nations, migrant lens investing provides an important counterbalance to this hostility by drawing attention to the positive ways in which migrants—as producers, consumers, investors, employers, and employees—contribute to their local economies and society.