Finance and multidimensional poverty: harnessing the former to eliminate the latter

In February 2022, Citigroup and SOPHIA Oxford launched a report presenting a robust social metrics framework for Environmental, Social and Governance (ESG) investing and impact assessment using a multidimensional poverty approach.

This groundbreaking framework – available to investors in equity and the debt capital markets, finance ministers and business executives – has the potential to shift the paradigm of social investment by unlocking a US$1.6 trillion opportunity through engaging the private sector in achieving SDG 1.

This focus on the use of the proven Oxford multidimensional poverty approach in social investment will complement the work being done directly with corporations on measuring and impacting the wellbeing of employees.

Oxford University Innovation, OPHI and SOPHIA Oxford have created a new, private company—called Wise Responder Inc.—to provide investors, corporates and governments with robust social factor analytics that can be traced from the capital market down to help individual people.

Almost two trillion dollars are being invested in ESG investment vehicles annually. And yet to date the instruments for investing and tracking the impact of social dimensions are weak.

The Citi-SOPHIA Oxford collaboration has uncovered a robust way to improve this. The Citi-SOPHIA Oxford report details a new way to reach those left behind through investments. Wise Responder Inc. will work with Finance Ministers in the development of social bonds linked to multidimensional poverty.

This will dovetail and complement the work of OPHI and national governments on national MPIs.

This will incorporate investments made through national and international bonds into the effort to reduce and eliminate poverty.

As MPPN participants know, poverty includes many social deprivations that people suffer at the same time. This idea has already caught on with governments. It is time for it to catch on with corporations, investors and issuers of bonds and social investment instruments. If we are going to tackle poverty globally, we are going to have to get the private sector involved in the social aspects of wellbeing and inequality upfront. We now have the tools for the private sector to do this.

The new methodology will provide financial markets with high frequency estimates of poverty and wellbeing data and at the same time provide regionally relevant frameworks to corporates and governments for benchmarking and showing sustainability leadership.

So, what does this mean for the wellbeing of employees or citizens?

It means that governments and companies can access more favourable pools of capital. It provides investors with robust impact metrics.

This social investment supports those companies investing in upgrading their human resources function to capture, measure, and act on social deprivations and assess impact. It can support government electrification, sanitation, and education programmes so that employees or citizens escape multidimensional poverty with their families.

At the launch of the Citi-SOPHIA Oxford Report, Carlos Alvarado, the former President of Costa Rica said, “The report presented by Citigroup and SOPHIA Oxford has the potential to be a game changer in the fight against poverty. Just as the MPI revolutionized the social policy of the government in Costa Rica and in many other countries around the world, its application as an ESG factor, as proposed in this report, can transform the equity and debt capital markets into powerful engines to end poverty, to comply with SDG 1.”

For further information Wise Responder can be reached a wiseresponder.com.

 

 

This article was published in Dimensions 14