After reading through the national headlines in relation to the Taliban’s takeover of Kabul, I expected to return from annual leave to an inbox filled with comments from the investment industry on the humanitarian implications for the people, particularly women, in Afghanistan given the increasing focus on the ‘social’ element of ESG over the past 18 months.
However, there weren’t any focusing on the humanitarian side – only one or two on the market impact.
At first, I was disappointed. The plights of the now refugees have been well documented. Taliban forces have surged across Afghanistan capturing the capital city causing thousands to flee, and women to fear the education and careers they have worked so hard for will now be in tatters.
When the Taliban ruled Afghanistan from 1996 to 2001, there was a ban on educating women and girls, which imposed punishments including stoning, lashing, and amputation. Women were also confined to their homes unless they were escorted by a male family member.
Since the Taliban took control on Sunday, there have already been reports of school closures, movement restrictions and women forced to leave their jobs, reported Human Rights Watch.
In a news conference, however, Zabihullah Mujahid, official spokesperson for the Taliban, said: “We are going to allow women to work and study within our frameworks,” and “women are going to be very active within our society,” but did not expand on dress codes and what roles women would be able to have within the country’s workforce, simply reiterating that all Afghans must live “within the framework of Islam”.
Why wouldn’t the investment management industry be openly commenting on this after more than a year of focus on society and equal opportunities for all? Human rights falls firmly under the ‘S’ of ESG after all, and many fund managers have commented on companies that support those in less developed countries.
“But why would they,” Ben Yearsley, co-founder of Fairview Investing, responded when I tweeted about the lack of investment management commentary on the Afghan situation.
“Not if they don’t/can’t invest there. I’m not aware of any stock market in Afghanistan so even frontier market managers won’t be making comment as what’s the relevance to what they do?”
He has a point, but does it always need to be about market impact and returns?
Of the very few releases I did receive addressing the issue, deVere Group’s CEO Nigel Green said investors are “more focused on other key factors that could impact returns” such as Covid variants, peak earnings, Chinese economic data and slowing growth.
“However,” Green added, “the major geopolitical turbulence triggered by the Taliban’s effective power grab will certainly be added to investors’ growing list of global issues to track as it could have longer-term implications for markets.
“There will be questions regarding stability in the Middle East, the global influence of the US and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi.”
Personal posts
That is not to say the humanitarian plight has been completely ignored. Looking through my LinkedIn feed there are numerous personal posts from the investment management community.
Richard Acworth, director at asset management PR agency Cornerstone Communicate, posted a letter from a relative who spent three years working for NGOs and charities in Afghanistan. He posted: “This is not about politics or religion. This is about humanity,” while his relative urged UK citizens to content local MPs and people of influence to put pressure on them in providing support.
Meanwhile, Harj Murria, head of international thought leadership at Columbia Threadneedle Investments, has shared numerous posts about how Afghanistan’s young women feel now: “They had bright lives ahead of them, now they are living in terror.” Please forgive me if I have missed any other important posts on this issue.
Returning to my initial point of that of disappointment this issue has not been publicly addressed by investment managers, who are usually keen to discuss their ESG credentials and outlooks, maybe it is because they still don’t see the relevance and impact it will have on the wider economy and portfolios.
At ESG Clarity’s Global ESG Summit in May, Preeti Sinha, executive secretary at United Nations Capital Development Fund (UNCDF), urged private sector participants to help raise the living standards for people around the world, particularly in the world’s pre-frontier and frontier markets or face “market failure”.
“How else should we describe the outcomes of a global financial architecture where commercial investments that also possess development potential in frontier and pre-frontier markets consistently fail to receive capital in the face of $4trn in private equity assets; while at the same time, projects that pollute our environment, lack any significant ESG value, and divert capital from those who need it the most have more capital than they know what to do with? How else should we describe this status quo if not ‘market failure?’,” she said.
The report Unlocking Humanitarian and Resilience Investing through Better Data published by the World Economic Forum (WEF) and Gulf International Bank (GIB) Asset Management (and covered in this piece), also reiterated the private sector has a key role to play in investing in the sustainable recovery and resilience of vulnerable communities.
The authors of the WEF/GIB report argued the private sector should work with humanitarian and development agencies, as well as data providers, to generate the data investors need in this area – so maybe data is the problem?
Or maybe we really need to ramp up education around the links between fairer opportunities for all, the economy and portfolio returns.
Through our work on ESG Clarity, including our partnership with the UNCDF and our Campaign for Better Governance, this is something we will continue to strive to do.
