Impact Investing in the Justice Entrepreneurs
By Marta Maretich @maximpactdotcom
Agriculture, healthcare, cleantech and financial services are all now recognized sectors of impact investing with growing track records of success. Businesses from these sectors are frequently the choice of impact investors who want to put their money into related areas of social and environmental benefit such as poverty alleviation or natural resource protection.
But what about investors who are interested in causes such as fairness, the rule of law and universal access to justice? Surely, these aren’t areas where impact investors can place their capital, are they?
Now, thanks to a burgeoning trend for justice entrepreneurship, they just might be.
Once the only way for impact investors to support justice was indirectly, through careful ESG investment screening coupled with impact metrics to assess outcomes. Now thanks to the emergence of bold new approaches to delivering justice, impact investors have the opportunity to put capital behind businesses bringing cost-effective justice solutions to citizens and governments alike.
The justice shortage
Most of us assume that justice is a matter for governments or international bodies like the European Court of Human Rights. But, just as the state monopoly in education is giving way to a more entrepreneurial picture, things are be beginning to change in the justice sector. According to HiiL (The Hague Institute for the Internationalization of Law), a justice sector advisory and research institute, there are important drivers behind this shift.
In the developed world, the cost of delivering access to justice continues to grow while state budgets are contracting. In the US, the number of unrepresented defendants is increasing and more people are representing themselves in court, mainly for financial reasons. Basic legal services, like will writing and land conveyance, are also expensive—too expensive for many who need them.
This means that a growing number of people are unable to afford legal counsel or legal services, a situation that leaves them without basic legal safeguards. This shortfall comes with a high social cost, especially when it denies justice to the poorest and most vulnerable members of society. Governments are now actively looking for more cost-effective ways to deliver access to justice to their citizens.
In the developing world, the problem is even more serious, according to recent studies by the World Bank. Many communities are simply unable to get access to justice, even when their constitution guarantees it. They may live too far from courts and legal services to use them. In many countries, only money buys access to the formal legal system. In others, the justice system works so slowly, or is so corrupt, that it is no help to citizens.
All this means that there is large and growing global demand for justice services, both from citizens and from governments who want to ensure access. And where there is a demand, of course, there is a potential market. For impact investors, the question now is: Who is opening this new market and how do we engage with them?
Enter the justice innovators
The Innovating Justice Accelerator is an early entrant into the field of justice sector entrepreneurship. Responding to what it saw as an urgent need for solutions, HiiL established the intermediary body in 2010, providing a platform and network for justice innovators and sponsoring an annual innovation award.
For any impact investor with an interest in justice and the rule of law, their website is an eye-opener. It features a range of innovative ideas and programs to improve justice and the rule of law, some of them potentially investable and scalable:
- Prison Paralegal Justice Centers is a program that helps prisoners become legal advisors within the prison system.
- I Paid A Bribe is a web-based tool to decrease corruption and make it more visible by using a platform for reporting instances of paying or not paying a bribe.
- Aahung, a reproductive rights organization in Pakistan, is producing a TV series with a commercial production house to spread its message in a financially sustainable way throughout the region.
- Made in a Free World, an anti-slavery organization, created the Forced Labor Risk Assessment Tool a software program for businesses that exposes forced labor in global supply chains and helps companies eliminate slavery from the way they do business.
- Rechtwijzer 2.0 is a justice platform developed by HiiL, offering legal information and advice to people in the Netherlands. It enables people to work on solving their legal problems in their own words, at their own pace, from their own homes with the support of legal professionals.
Democratizing access to justice
These examples provide a sense of where the global justice marketplace is heading, with digital approaches to delivery and remote support systems democratizing access to justice and making it more affordable for more people.
But there are still barriers. While digital delivery capabilities bring new possibilities, to be successful many of the new approaches require the cooperation of national governments; some require changes to regulation and law. Hiil, which campaigns in these areas, recognizes that bringing real change will take time.
Yet when you consider the potential benefits of a more innovative justice sector—universal access to justice, effective service delivery, reduced costs, and metrics resulting in a more robust rule of law throughout the world—opening the market seems the obvious thing for impact investors to do. In these early days, they are well positioned to play a key role in what could be the birth of an important new impact sector. Watch this space.
[Credit Images: 123RF Stock Photo]