Listen to Your (Human-Rights) Lawyer

    Stockholm (NordSIP) – A prolonged period of global pandemics and its devastating effect on poverty and inequality, alongside racial tensions in the US, have shone a light on the ‘S’ pillar of ESG recently. Surely it must be good that businesses and investors alike are becoming more aware of the issues? Yet Kristina Touzenis, founder and managing partner at BST Impact and an expert on the topic, is slightly sceptical.

    “I think that everything ESG suffers a little from being turned into ‘the flavour of the month’,” she tells NordSIP in an exclusive interview. “It is a complex and specialised field, but suddenly, it has turned into something ‘we can all do’, and everyone has an opinion on. Professionalism and competence get overlooked, and people with no training or experience try to tackle the problems as if they were financial KPIs,” she adds.

    Having worked with these issues for more than twenty years, Touzenis is highly aware of the enormous challenges that lie ahead. Companies and investors are being asked to work on human rights and labour standards implementation, engage with multiple stakeholders, address the social effects of environmental decisions, show progress on advocacy issues and access to justice, prove that they have done no harm and verify any possible positive impact, among others. “These are all perfectly legitimate and necessary requirements, but they also take years of training and professional development to deal with in a meaningful way,” she argues. “There is an urgent need to cross-fertilise between professions.”

    Recognising this challenge is what led Touzenis to found BST Impact in the first place. Her motivation is clearly to help companies and investors implement the human rights agenda into their respective sustainable strategies, investment processes and risk assessment management systems. And she seems the right person for the task, having created the International Law Unit at the International Organization for Migration – IOM, the UN Agency for Migration, and served as Head of the Unit from 2011 to 2020. For years, she designed policies and guidelines, developed indicators and methodologies to measure and leverage the benefits of socially responsible actions.

    “I always wanted to be a lawyer,” she recalls, “to speak for those who have no voice, to fight for justice.” Growing up in Denmark, she appreciated early on that free access to education, good health care, and the absence of random violence are not to be taken for granted. Grateful for the chances that she has been given, Touzenis has at the same time always been aware that it is just a “freak accident” she did nothing to deserve. “Human rights laws and other international standards are about levelling the playing field, about making that freak accident less of a determining factor on whether you grow up with the possibility to become a lawyer or end up tortured arbitrary in detention. They are also about holding those in power accountable and protecting the week. Always. In every situation,” she adds emphatically.

    Another topic that Touzenis feels strongly about is the need to dispense of the notion that social impact cannot be quantified. “True social impact and good governance cannot always be put into exact numbers in an excel sheet, but that does not mean you cannot formulate meaningful goals or measure your progress towards those,” she says. She points out that all incoming regulations attempting to reign in the ‘S’ aspect of sustainable investing are based on existing international standards that most states have signed up to and ratified. “Unlike the environmental field, where everything norm-based had to be invented over the last ten years,” she adds.

    Naturally, Touzenis is excited about this week’s proposal by the EU Platform on Sustainable Finance to introduce a new social taxonomy alongside the green taxonomy that has already come into power. “The proposal is based on international human rights, labour law and already existing standards. There is also clear evidence that the social taxonomy aims to go beyond the labour space and look at the broader effects on society. The differentiation between horizontal and vertical effects is interesting – and useful – and again something that those of us who have worked on the implementation of international law have been operating with forever.”

    Wrapping up the interview, we ask Touzenis to give some words of advice for investors who want to stay abreast with the latest regulatory developments and to avoid the risks associated with human rights violations. “Understand, first of all, what it looks like to have decent standards of work. What is the difference between substandard working conditions, exploitation, and slavery? Implement the ILO frameworks and verify that the processes are effective and trusted…” She starts going through a list of basics, but when it gets too long reverts back to her main recommendation: “Acknowledge the need for professional competence. Sometimes you need the help of an expert to meaningfully engage with your portfolio companies on how to improve as well as address the multitude of shortfalls and pitfalls.”


    Photo courtesy of Kristina Touzenis

    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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