Visualizing the Social Risk of the World’s Top Investment Hubs

As social responsibility becomes an important aspect of doing business, it’s more crucial than ever for decision-makers to understand the risks associated with various global markets.

This graphic, using data from a report by Verisk Maplecroft, looks at the world’s top cities for foreign direct investment (FDI) and assesses their relative levels of social risk.

In the article below, we’ll take a look at the research methodology to explain how risk was assessed in the report and touch on some key markets that placed high on the ranking.

The Relationship Between FDI and Social Risk

To look at the relationship between FDI and social risk, the report identified the top 100 cities for FDI in 2020, using data from fDi Markets (the Financial Times’ foreign investment monitor).

From there, social risk in the top 100 FDI cities was measured using data from Verisk Maplecroft’s [email protected] Social Index​​. The index measures the social risk landscape of 575 different cities across the globe, using three key pillars:

• Civil and political rights: the right to protest, security force abuses
• Labor rights: child labor, modern slavery
• Poverty: portion of population in extreme poverty

After calculating scores based on these three metrics, cities were then grouped into four categories to measure their level of social risk:

• Low risk
• Medium risk
• High risk
• Extreme risk

Based on this analysis, citizens in 33 of the top 100 cities for FDI (representing $71 billion of inward investment) are at ‘high’ or ‘extreme’ levels of social risk, meaning they face significant threats to their civil, political, and labor rights.

Of the top 100 places, Istanbul and Izmir rank the highest when it comes to overall human rights risks, largely because of labor rights violations and the exploitation of migrant and refugee workers. This is something manufacturers should take note of, especially those who outsource production to these Turkish cities.

In contrast, Beijing, which places third on the list, scores high due to China’s various civil rights issues. Other major manufacturing and commercial hubs in China, like Guangzhou and Shanghai, place high on the list as well.

Overall Social Risk Index

While a third of the top FDI cities are at high or extreme social risk, this figure is even higher when looking at all 575 cities included in the [email protected] Social Index.

Of the 575 cities, 75% are classified as ‘high’ or ‘extreme’ risk. Mogadishu, Somalia is the highest risk city, followed by Damascus, Aleppo, and Homs in Syria, Pyongyang in North Korea, and Sanaa in Yemen.

While the high-risk cities are spread across the globe, it’s worth noting that 240 of the high and extreme risk cities are located in Asia.

Civil and Political Risk Index

In addition to the overall ranking, the report provides insight into specific human rights violations, highlighting which cities are most at risk.

Perhaps unsurprisingly, Pyongyang, North Korea places first on the list when it comes to civil and political rights violations. Under the current North Korean regime, some significant civil rights violations include arbitrary arrests and detentions, the holding of political prisoners and detainees, and a lack of judicial independence.

In addition to North Korea, Syria places high on the civil rights risk index as well, with three of the top five cities located in the war-torn country.

Labor Rights Index

When focusing specifically on labor rights, almost half of the ‘high’ or ‘extreme’ risk cities are in Europe and Central Asia.

The biggest problems across a majority of ‘high’ risk cities include child labor, the exploitation of migrant workers, and modern slavery. Pakistan in particular struggles with child labor issues, with an estimated 3.3 million children in situations of forced labor.

What This Means for Foreign Investors

Understanding a country’s social landscape can help organizations make decisions on where to conduct business, especially those that prioritize ESG efforts.

And, while organizations who invest in ‘high’ risk locations aren’t directly involved in any human rights violations, being associated with a ‘high’ risk city could impact a corporation’s reputation, or cause financial damage down the line.

Interactive Map: Tracking Global Hunger and Food Insecurity

Hunger is still one the biggest—and most solvable—problems in the world.

Every day, more than 700 million people (8.8% of the world’s population) go to bed on an empty stomach, according to the UN World Food Programme (WFP).

The WFP’s HungerMap LIVE displayed here tracks core indicators of acute hunger like household food consumption, livelihoods, child nutritional status, mortality, and access to clean water in order to rank countries.

After sitting closer to 600 million from 2014 to 2019, the number of people in the world affected by hunger increased during the COVID-19 pandemic.

In 2020, 155 million people (2% of the world’s population) experienced acute hunger, requiring urgent assistance.

The Fight to Feed the World

The problem of global hunger isn’t new, and attempts to solve it have making headlines for decades.

On July 13, 1985, at Wembley Stadium in London, Prince Charles and Princess Diana officially opened Live Aid, a worldwide rock concert organized to raise money for the relief of famine-stricken Africans.

The event was followed by similar concerts at other arenas around the world, globally linked by satellite to more than a billion viewers in 110 nations, raising more than $125 million ($309 million in today’s dollars) in famine relief for Africa.

But 35+ years later, the continent still struggles. According to the UN, from 12 countries with the highest prevalence of insufficient food consumption in the world, nine are in Africa.

Approximately 30 million people in Africa face the effects of severe food insecurity, including malnutrition, starvation, and poverty.

Wasted Leftovers

Although many of the reasons for the food crisis around the globe involve conflicts or environmental challenges, one of the big contributors is food waste.

According to the United Nations, one-third of food produced for human consumption is lost or wasted globally. This amounts to about 1.3 billion tons of wasted food per year, worth approximately $1 trillion.

All the food produced but never eaten would be sufficient to feed two billion people. That’s more than twice the number of undernourished people across the globe. Consumers in rich countries waste almost as much food as the entire net food production of sub-Saharan Africa each year.

Solving Global Hunger

While many people may not be “hungry” in the sense that they are suffering physical discomfort, they may still be food insecure, lacking regular access to enough safe and nutritious food for normal growth and development.

Estimates of how much money it would take to end world hunger range from $7 billion to $265 billion per year.

But to tackle the problem, investments must be utilized in the right places. Specialists say that governments and organizations need to provide food and humanitarian relief to the most at-risk regions, increase agricultural productivity, and invest in more efficient supply chains.