Five Questions about SRI – Weekly Expert Interview with Mark V. Vlasic, Principal at Madison Law & Strategy Group PLLC, Adjunct Professor of Law at Georgetown University Law Center and Senior Fellow at Georgetown’s Institute of Law, Science & Global Security, Washington, DC, United States of America

Each week Emerging Markets ESG publishes an interview entitled, “Five Questions about SRI.”  The interview features a practitioner’s insights about SRI in emerging markets and through Emerging Markets ESG shares this expertise with a wide global audience.  The goals of Five Questions about SRI are fourfold:

  • To collect a catalogue of examples of SRI in practice in emerging markets;
  • To raise awareness about SRI in emerging markets;
  • To reflect on what SRI in emerging markets means to practitioners; and
  • To enable SRI practitioners in emerging markets to network with peers around the world.

This week’s interview is with Mark V. Vlasic, Principal at Madison Law & Strategy Group PLLC, Adjunct Professor of Law at Georgetown University Law Center and Senior Fellow at Georgetown’s Institute of Law, Science & Global Security, Washington, DC, United States of America

Madison Law & Strategy Group, PLLC, helps clients master the threats and opportunities presented by a changing international, legal, regulatory and policy environment. Its consulting partner, Madison Strategies, L.L.C., counsels clients on overarching policy strategy.  Madison provides tailored deliverables, legal analysis, and strategic guidance through unmatched policy depth, political judgment, relationships, and knowledge of the legal, regulatory and administrative process, both domestic and foreign.  It has worked with a range of entities on legal and strategic matters in domestic and international arenas, including Fortune 500 companies, sovereign states, institutional investors, and venture-funded start-ups. It has also represented presidential campaigns, large non-profits, and foundations.  Mark V. Vlasic has served as a soldier, a lawyer, a professor, and a diplomat, and has worked for the White House, the Pentagon, the World Bank, the United Nations, and a large international law firm. He is currently a senior fellow and adjunct professor of law at Georgetown University and a principal at Madison Law & Strategy Group PLLC, where he heads the firm’s international practice, and focuses on international law, international trade, business diplomacy, business intelligence, public policy, human rights, and stolen asset recovery matters. Mark also serves as a senior advisor to Madison Strategies LLC.  Mark’s private practice background includes: working with international organizations, sovereign governments, multinational corporations, and non-governmental organizations regarding complex international law, trade, and public policy matters, including World Bank and United Nations collaboration/procurement issues, state succession/boundary issues, sovereign property matters, INTERPOL “red notice” arrest warrant abuse issues, and social responsibility issues; providing advice regarding business diplomacy, public-private partnerships, international banking, and international litigation issues; participating in asset recovery, cartel, foreign corruption, and securities fraud investigations around the world (including the Charles Taylor/Liberia asset recovery case); and, advising clients on the application and enforcement of U.S. economic sanctions and embargos, export controls, and the Foreign Corrupt Practices Act. Mark has also advised companies subject to investigations and enforcement actions by the U.S. Departments of State, Commerce, Justice, and Treasury, as well as the Securities and Exchange Commission.

Emerging Markets ESG:  How would you define socially responsible investment (SRI)?

Mark V. VlasicSocially Responsible Investment (SRI) seek both financial and extra-financial returns from investments, and thus involves the consideration of environmental, social, and governance (ESG) issues, direct engagement with shareholders, and, when possible, the generation of wealth at the local level by investing in economically deprived or under-developed regions.  When done well, SRI is a means that can be used to eliminate or balance the negative human and environmental impacts of corporate practices.

Emerging Markets ESG:  What distinguishes SRI from mainstream investment? 

Mark V. Vlasic:  Generally speaking, mainstream investment only seeks to maximize wealth, and such investment understands corporations as purely profit-generating entities that have no need to generate socially, environmentally, or governmentally responsible results. SRI modifies this traditional structure, and incorporates human values into investments – evaluates investments using the ESG factors – and ultimately seeks to achieve ethical, profitable investments.

Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for companies in emerging markets to manage?

 Mark V. VlasicAll three.  Each emerging market poses unique challenges to investment management: oftentimes the domestic needs or wants of a particular emerging market influence which ESG theme takes priority or which is sidelined.  Also, (foreign) investors may value the social or environmental benefits more than the emerging market itself.  Local laws may also constrain investment management.   Thus, each market will present its own challenges and rewards, and each theme will factor in different ways in each individual market.

Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for investors in emerging market companies to analyze?

Mark V. VlasicAgain – all three.  The ESG factors in emerging market companies are challenging to analyze for a host of reasons, often due to particularities of the market at question, but also because the reliability of the data necessary may be in question and reports may be issued on an infrequent basis.  This can be attributed to a variety of political and structural factors.  Moreover, data in emerging markets is sometimes challenging to find as it may be collected by a variety of domestic governmental agencies and independent foreign agencies.

Emerging Markets ESG:  What is the nexus among corruption, international development and SRI?

Mark V. VlasicSRI is an extraordinary means to increase the flow of capital into emerging markets.  Developing nations benefit from properly executed SRI that produces positive social and environmental gains and responsible corporate governance.  Yet, as we know only too well, many emerging markets face significant corruption challenges.  And depending on the market involved, investing in companies or organizations that work closely with local, regional, or national governments and businesses may risk exposure to corruption pressures.  For example, an investor may encounter unlawful, unethical or personally-motivated requests, which would inherently inhibit SRI’s goals. As such, investors must ensure they are working with the right partners – with a healthy respect of all applicable laws – and the spirit of the law – to ensure the success of SRI that not only looks good on paper – but looks good in practice as well.