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RI Comment: On World Refugee Day, how should investors view the US migrant family separation policy?

Business leaders have taken a stand against migrant policy

Give me your tired, your poor,
Your huddled masses yearning to breathe free

As the world marks World Refugee Day today, the shocking events in the US are thrown into sharp relief.

A chorus of outrage has met the migrant crisis unfolding on the US-Mexico border, with business leaders from JP Morgan’s Jamie Dimon to Apple’s Tim Cook united in their condemnation.

How should investors view this situation?

Firstly, it seems clear that the US is in breach of the Universal Declaration of Human Rights, whose Article 16 states: “The family is the natural and fundamental group unit of society and is entitled to protection by society and the State.”

The US’s withdrawal from the UN Human Rights Council in thus deeply concerning.

Investors should, in the first instance, check to see whether any companies they own are implicated in the crisis. Blogger Shannon Coulter runs the grabyourwallet.org site which lists companies with links to Donald Trump and there is a sub-section of firms linked to the current crisis, including some listed, household name companies.

On top of this, are banks in investor portfolios supplying financial services to those companies?

Another issue thrown up by the crisis is the potential for human trafficking and modern slavery breaches, both hot-button investor issues.

“Every single person needs to do everything in their power to end this human rights abuse,” tweeted Louise Rouse, the capital markets advisor formerly with ShareAction. “Are investors looking at corporate complicity of invested companies?”

But, in truth, this goes far beyond investors’ ESG risk or potential reputational damage.

As long ago as last August, Finland’s Varma Mutual Pension Insurance Co. was speaking of the Trump administration’s lack of “moral” power.

Couple this with the fact that it is the only country in the world which is not aligned with the Paris climate accord and a picture starts to build of the US being at risk of becoming almost a pariah state.If it were any other entity it could face being on exclusion watch-lists. There are some very positive developments out of the US in terms of ESG, for example Chicago’s recent decision to integrate ESG into its massive treasury assets – a sign that investors in the US ‘get’ responsible investing more than ever before. It’s a crying shame that the head of state is a walking contraction of this.

In normal circumstances, one route would be to engage somehow, with the potential to divest if there’s no progress.

But Trump is cutting off friendly relations with everyone except dictators so that avenue cannot work. The art of engaging with sovereign entities on ESG is in its infancy unfortunately and it is surely unrealistic to call for a blanket divestment in US Treasuries.

The country is so far beyond the pale that it would be unthinkable for the Federal Reserve to join its peers in a group like the new Central Banks and Supervisors Network for Greening the Financial System or for the US to consider issuing a green bond.

It is to the credit of the Business Roundtable, a corporate lobbying body not normally in the good books of the responsible investment community, that it has gone public on the issue, calling the policy of separating accompanied minors from their parents as “cruel and contrary to American values”. There’s been no comparable investor statement.

Just last month saw the launch of the Investor Alliance for Human Rights at an event held at Bloomberg. It’s designed to empower collective investor action on business and human rights and has been convened by the Interfaith Center on Corporate Responsibility (ICCR).

It aims to “coordinate investor action on priority human rights and business issues — engaging corporations, state actors, and international organizations to ensure greater corporate respect for human rights”, according to a statement. Although the organisers probably could not have predicted a crisis on their own doorstep, it could be that this is the best channel for investors to address the current issue.

But the reality is that the world is witnessing an unprecedented change at the top table and investors will be as perplexed about the ultimate outcome as anyone else.