The role of private sector engagement in the Ukrainian refugee crisis

**This post is written by Christine Mahoney, professor of public policy and politics at the University of Virginia and author of Failure and Hope: Fighting for the Rights of the Forcibly Displaced and John Kluge, a social entrepreneur and founder of the Refugee Investment Network. **

• The problem: With millions of Ukrainians displaced, the refugee crisis continues at pace and the country will likely take years of rebuilding.
• **Why it matters: **The private sector is uniquely positioned to do the most good in creating long-term economic pathways to help in the crisis.
• The solution: A clear pathway for the private sector to invest in the companies and funds that refugees start, lead or which improve their lives.

Over four million refugees have fled the Russian invasion of Ukraine in less than one month. The speed and scale of this refugee crisis is unprecedented. While President Zelensky has optimistically indicated the conflict could be over by May, if history is our guide, it will take much longer for the displaced to return home. The European Union has implemented an extraordinary policy in support of the displaced: granting temporary residency to Ukrainian refugees. This policy will grant those fleeing Ukraine a residence permit and access to employment, social welfare and housing for up to three years. The legal ability for refugees to work, access healthcare, and enrol their children in school in the first weeks of a conflict is unprecedented.  

It’s time for the private sector to stand up

There is now an important opportunity for the private sector to stand up, to support this historic leadership of the welcoming governments, and to pick up the mantle from the humanitarian organisations working to provide immediate life-saving food, medicine and shelter.  As we move into months of the Ukrainian crisis, and likely years of rebuilding, the private sector is uniquely positioned to do the most good in building long-term pathways to economic integration.

We have spent the past 15 years researching what does and does not work when it comes to supporting refugees. Today, over 80 million people are in protracted displacement crises, and in most countries, they are legally barred from working, starting businesses, opening bank accounts, or taking microloans. This inability to economically integrate leads to countless bad outcomes from poverty and alienation to conflict, tension and radicalisation. In an effort to change the status quo and move from warehousing refugees to economically integrating them, we built a coalition of investors, businesses, aid workers, policymakers and entrepreneurs and launched the Refugee Investment Network (the RIN). The network is the first impact investing and blended finance collaborative dedicated to creating durable solutions to global forced migration.

Refugee lens investing is an investment approach that seeks to turn the abstract idea of investing for the benefit of refugees and displaced people into an intentional and functional investment strategy.

The RIN connects investors with refugee-led, refugee-hiring and refugee-supporting ventures, builds the field of refugee investment, changes the narrative around the contribution of refugees, and advocates for more inclusive refugee policies, with the ultimate goal of creating quality jobs, economic growth, and measurable improvements to the livelihoods of millions of refugees and host community members. 

The RIN built the concept of Refugee Lens Investing to provide a clear pathway for the private sector to invest in the companies and funds that refugees start, lead or which measurably improve their lives. The refugee lens designates six different types of refugee investments, each with specific baseline criteria for qualifying as a refugee lens investment:

1. Refugee-owned
2. Refugee-led
3. Refugee-supporting
4. Refugee-supporting and host-weighted
5. Lending facilities
6. Refugee funds

With at least six different types of refugee deals, impact investors are developing a range of investment strategies to use capital to tackle the global displacement crisis. These investments can be deployed at three different stages of displacement and movement: Resilience, Response and Recovery. 

Resilience: investments that reduce the risk of displacement, reduce further harm, or address root causes.

In the case of Ukraine, there is a wide and deep bench of investment funds, family offices, pensions, and corporations, from Norway's $1.3 trillion sovereign wealth fund to the Chicago Public School Teachers' Pension & Retirement Fund_, which _are actively divesting from any assets that contribute financing and other material resources to the Russian state and the broader Russian economy. These strategies, conducted in a vacuum, are not likely to serve as an active deterrent to further harm, but taken together, are a powerful force that is restricting Putin’s ability to wage his war successfully. Beyond this, emergency grants, debt, and longer-term equity instruments are also being deployed to provide real-time, truthful coverage of the Russian invasion and the unfolding humanitarian disaster. The Media Development and Investment Fund (MDIF) is supporting clients who are providing essential and free information to Ukrainians seeking safety, others reporting daily from within Kyiv. Independent media offers a counter to state propaganda, at the least, serving as a reliable source of truthful and current local information while often saving lives. 

Response: investments and capital deployment strategies that improve humanitarian response capacity and innovation during emergencies and crisis.

There are numerous examples of private sector innovation, investment, and financing deployed to improve humanitarian response. The most obvious is perhaps private philanthropy, which tends to be more nimble and responsive at the onset of major emergencies. The war in Ukraine has jarred private and public donors alike, triggering an avalanche of private funding towards emergency response efforts led by the United Nations High Commissioner for Refugees (UNHCR) - unprecedented in a context like this for countries like Japan - and organisations like World Central Kitchen, which delivers emergency food by contracting with private restaurants and chefs. 

Individual ventures and companies are playing an increasingly vital role in the frontline response, particularly as traditional humanitarian financing mechanisms are facing budget constraints due to compounding and protracted crises – not to mention COVID. These range from corporations like Inglot, a large cosmetics company headquartered in the border city of Przemyśl, Poland, which is offering work and accommodation to those fleeing their homeland, to insurance provider Generali, which is raising an emergency fund to support UNICEF’s Ukraine response efforts. This also includes much smaller but built-for-purpose social enterprises like Hala Systems, which deployed its ‘Sentry’ software during the Syrian war as an early indication and warning system, reducing the lethality of airstrikes by around 20-30%in areas under heavy bombardment in 2018. It is now deploying its civilian intelligence system in Ukraine.

**Recovery: investments that support economic inclusion and integration. **

As we mentioned, the EU’s policy of immediate residency status for Ukrainian refugees is remarkable. The policy is in place, now it is up to other actors to help Ukrainian refugees take full advantage of that good policy. One great model for facilitating fast economic integration comes from Mexico. Mexico has been working to support ever-increasing numbers of displaced people from Guatemala, Honduras, El Salvador, and Venezuela. Similar to the EU, the Mexican government has offered residency passes to some of these displaced communities, and they have facilitated the movement of refugees from Mexico’s cramped southern border to centres of economic activity in cities in the northern part of Mexico. In partnership with the UNHCR and national and local migrant support organisations, this initiative has resulted in thousands of families being settled, housed, employed, and enrolled in school.

Opportunities for impact investors

How do individual investments or projects fit together into a broader strategy of inclusive investment? The RIN has undertaken market assessments in countries around the world to identify Refugee Lens Investing (RLI) opportunities for impact investors that want to achieve both a financial return and improved outcomes for the displaced. Investors are investing in affordable housing for the displaced, eco-friendly manufacturing to create jobs and prevent displacement, as well as investing in funds that supply microfinancing to displaced entrepreneurs like KIVA’s World Refugee Fund. Investors looking for a model to invest with the Refugee Lens in support of Ukraine luckily can learn from those that have done the work in other parts of the world.

Refugee lens investing is an investment approach that seeks to turn the abstract idea of investing for the benefit of refugees and displaced people into an intentional and functional investment strategy. The European Union has taken the first important step in providing the policy framework to all Ukrainian refugees to build some stability and safety for themselves and their families. Now it is up to the private sector to pro-actively reach out to the displaced through hiring and recruiting and up to private sector investment to invest in the companies hiring and helping these four million refugees.

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