Do Companies That Engage in BoP Markets Outperform the Market?

Grace Augustine — Wed, 11 Jun 2008 14:07:08 -0400

Thanks to Dana Krechowicz, Associate, Markets and Enterprise Program at WRI, for providing the background on Socially Responsible Investing.

In April of this year, The Opportunities for the Majority Office of the Inter-American Development Bank (IDB) and Innovest Strategic Value Advisors (Innovest) announced the completion of a groundbreaking project – to create the Opportunities for the Majority (OM) Index of publicly traded national and multinational firms operating in the Latin American and Caribbean (LAC) region that are engaged in BoP activity.

In Latin America and the Caribbean, the majority of people, estimated to be over 70 percent of the population, lives on less than $3,260 a year (about $9 per day). The Opportunities for the Majority program was launched to engage the private sector in addressing the needs of this population. According to the IDB, in Latin America and the Caribbean, this market represents a combined purchasing power of $500 billion USD per year.

The IDB’s partner in creating this index, Innovest, is a financial advisory firm with substantial experience in what it calls "sustainability-enhanced" and "community investment" indices.

Although the new OM Index is not a fund that you can invest in today, it attempts to create a benchmark for comparing large-scale companies that claim to be serving and engaging with BoP markets.

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Do Companies That Engage in BoP Markets Outperform the Market?