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Teodora Nenova, Director of Steward Redqueen, speaks at the European Development Days 2019 in Brussels
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Teodora Nenova is a director who leads the innovative impact measurement practice at Steward Redqueen – a specialist consulting firm operating worldwide advising organizations on impact and sustainability. Nenova advises organizations that want to understand, measure and manage their economic, environmental and social impact.

She has led and conducted over 60 impact assessments of multinational corporations, impact investors, commercial banks and nonprofits. In an exclusive interview with the Dhaka tribune‘s SM Abrar Aowsaf spoke about the role of impact measurement in corporate accountability, Steward Redqueen’s latest report on the socio-economic impact of Coca-Cola Bangladesh, and strategies Bangladesh can use to attract more foreign investment.

What sparked your interest in measuring corporate impact? What role can impact measurement play in holding companies accountable?

I’ve been in this field for almost 10 years now, but our Steward Redqueen company has been doing this for over 20 years. We are driven by the belief that the private sector can and should use its resources to promote sustainable development.

Corporations are well aware of their financial implications, but when it comes to the wider economic, social or environmental impact, we see many executives driving without a card. Objective impact measurement is important as it gives companies insights into the channels through which they achieve social impact – both positive and negative.

Knowing what your baseline is can help you create plans of action to mitigate the negatives and maximize the positives. And that is what excites me most about this work – that it helps to develop actionable strategies and instruments for sustainable development.

Coca-Cola Bangladesh recently commissioned a report on the socio-economic impact of Steward Redqueen. Can you give us a brief overview of how you conducted this assessment?

The study is an economic assessment based on rich data sets. For this type of value chain impact analysis, we used a combination of financial and economic data from Coca-Cola, industry information and economic data from Bangladesh.

We used what is known as the “input-output” methodology developed by Nobel laureate economist Wassily Leontief. It is widely used by economists around the world. The method is based on the Social Accounting Matrix of Bangladesh, which covers all interdependencies of the financial sector in the economy. The money associated with Coca-Cola in the country – his local spending on the production of the drinks, but also the margins that the outlets generate from the sale of Coca-Cola products – serve as the first “injection” into the model. Using the financial matrix, we track how this money “flows” through the economy to support income and employment.

To better understand the business, verify the results and put the analysis in the local context, we always combine desk research with on-site visits. However, this was not possible during the Covid-19 era. Fortunately, this is our second time working for Coca-Cola in Bangladesh, so we already knew its structure and business processes. This helped a lot as it was easy for us to conduct the discussions and reviews in online meetings.

Has Steward Redqueen worked on other projects related to Bangladesh? Are you planning to do this in the near future?

Yes we have got that. Apart from Coca-Cola, a few years ago we made a similar assessment for one of the leading banks in Bangladesh. We used a similar methodology, but the pathways of action were different. The research question was to what extent distributed corporate loans supported employment and economic growth in the country.

We have also carried out various impact assessments of private equity funds and potential infrastructure projects. So we’ve done quite a bit of work in the country in the past and hope that with the advent of impact investing, there will be even more opportunities!

Bangladesh has been growing very rapidly for years – how can the country ensure that sustainable and responsible business practices are the bulk of its growth?

This is a tough question with no straight answer. There is always a combination of push and pull aspects to build a sustainable growth path.

There is clearly a legislative and regulatory role; adequate frameworks should be enforced in all areas related to responsible business practices, including human rights, employment and labor, climate, environment, anti-corruption, etc.

But legislative measures alone are not enough.

In order to enable companies to meet these requirements, obstacles to good practice must be identified and removed; this also includes working with companies to strengthen their behavior, including towards small and medium-sized companies. Public-private cooperation has worked well in these areas, and development aid and funding organizations have a role to play in building such capacity.

Multinational companies should also get involved. For example, as our study has shown, Coca-Cola has a sizeable local value chain. That means it works with numerous local companies. Large companies should require their partners to adhere to good business practices, and they could help them by sharing their expertise and investing in compliance.

A success factor in such commitments is to show companies that this is not only happening from a regulatory point of view – acting responsibly makes economic sense. We now have ample evidence that companies with better environmental, social and governance (ESG) practices have better financial performance and lower cost of capital.

What strategies do you think Bangladesh can use to attract more impact investment?

First of all, as with all traditional investments, real or perceived doubts about the stability of the business environment can stifle the flow of capital. This brings us back to the basics: Investors must be able to rely on an appropriate business policy and a stable, clear regulatory environment.

It is important for project developers and companies to remember that impact investors are driven by both the financial return and the execution of their impact mandates. The latter can differ depending on the financier, but often revolve around creating quality jobs, protecting the climate, social inclusion and access to critical services.

In recent years we have seen more and more institutions that commit themselves to investing in companies or projects that empower women economically and contribute to climate adaptation – topics that are very relevant for Bangladesh. Companies that contribute to such goals are the primary target audience for impact investors. If they present their concrete ideas and strategies on these topics, they can win impact funding.

This ties in with another role of the government: participation in blending programs through co-financing and co-investment. This can reduce the perceived risk associated with investing in projects and businesses in Bangladesh and provide more projects with access to private capital. The licensed financing of mixed financing is becoming more and more important in order to set the right incentives for scaling.

What role can impact investments play in dealing with the challenges of the Covid-19 pandemic?

As we now know, the Covid-19 pandemic is not just a health crisis, but also an economic one. The pandemic threatens lives and livelihoods around the world and brings with it challenges that may slow or even reverse progress in achieving the Sustainable Development Goals (SDGs).

The role of impact investing has always been to address issues such as access to health care, quality job creation, inclusive income generation, food security – issues that have become more pressing over the past two years. So impact investing continues to play a natural role in tackling these issues. At the beginning of the pandemic, the industry detracted from moving quickly and investing capital to help businesses cope and adapt.

If there is any silver lining, it is that the pandemic has accelerated interest in impact investing. We see leading mainstream banks and institutional investors like pension funds increasingly interested in impact investing and using their money to contribute to the SDGs. We hope this trend will continue during the recovery.