The S in ESG – ESG Feature
The dawn of this millennium was a dark time for Argentina. The country, once one of the most prosperous in Latin America, was in the midst of a three-year recession which saw the econ- omy shrink by 28%.
The situation was so dire that an early attempt to print money was thwarted by the government not having enough cash to buy the paper to print it on. That problem was solved, but it did not feed through to those who were lucky enough to have kept their jobs. One news report showed a shoe factory worker buy- ing groceries with a pair of trainers he had received in lieu of his salary.
That period in Argentina’s history has been labelled “The Great Depression”. Yet a look at the country today shows that the recession of 1999 to 2002 should be re-classified. With infla- tion at 64% and bond yields reaching an eyewatering 70%, the country is on the verge of another default and another recession.
There are signs that this downturn is even harsher on its citi- zens than the last one. A third of the population suffers from a shortage of affordable food, the United Nations (UN) says, and some people are scavenging in landfill to feed their families. Argentina is not an isolated case when it comes to problems accessing food as economies re-open following the pandemic. There have been protests over the rising cost of food and energy as well as access to medicine in Cuba, Iran, Indonesia, Peru, Pakistan and Tunisia. But in Sri Lanka, anger over rising poverty, and claims that corruption exacerbated the situation, led to the president fleeing the country after protestors invaded his house. Such actions are unsurprising, with the UN claiming that 150 million people globally have regularly missed meals since the outbreak of Covid. With little sign that the price of food and energy will fall in the short term, the number of hungry mouths across the world looks set to rise.
And this is the next phase in the evolution of the social pillar of ESG. Initially, the S was about respecting indigenous people and their communities. But in recent years the focus has switched to diversity, inclusion and human rights. Now, it has been expanded to include income inequality, accessing educa- tion and healthcare, adequate housing and creating the infra- structure that connects urban and rural areas. “The industry is evolving to another way of framing the S. It has taken many forms and is not only about diversity,” says Delphine Riou, an ESG analyst and Inclusive Growth lead at BNP Paribas Asset Management.
A broad theme
The huge rises in food and energy prices are a sign that the world’s infrastructure and supply chains need to be more effi- cient. Investors can play a role here by pushing companies to change their business models and invest in technologies that
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