Lesson 13 - Socially Responsible Investment (sri) And Sustainability

SRI

SOCIALLY

RESPONSIBLE INVESTMENT & SUSTAINABILITY

SOCIAL ENTERPRISE MOVEMENT

GATHERING SUPPORTERS ACROSS THE GLOBE AS AN INNOVATIVE APPROACH TO BUSINESS ACTIVITY OFFERING DISADVANTAGED POPULATION A PATH TO HUMAN DEVELOPMENT AND ECONOMIC PROSPERITY

THE INCREASE IN RECOGNITION AMONG BUSINESSES, GOVERNMENTS, AND NON-GOVERNMENT ORGANIZATIONS THAT THEIR PARTICIPATION IN THESE INITIATIVES CAN LEAD TO SUBSTANTIAL BENEFITS FOR DISADVANTAGED AND UNDESERVED POPULATIONS, WHILE SIMULTANEOUSLY PROVIDING OPPORTUNITIES FOR INCOME GENERATION

NIELSEN AND SAMIA, 2008

SOCIAL SOCIAL ENTERPRISE

SOCIAL ENTERPRISES ARE ORGANIZATIONS WHOSE MISSION IS TO BRIDGE SOCIAL OPPORTUNITY INTO SUSTAINABLE REALITY INNOVATIVELY, EFFECTIVELY, AND EFFICIENCY.

BORZAGA & DEFOURNY, 2004

SRI

SOCIALLY

RESPONSIBLE INVESTMENT

AN INVESTMENT THAT IS CONSIDERED SOCIALLY RESPONSIBLE BECAUSE OF THE NATURE OF THE BUSINESS THE COMPANY CONDUCTS

HISTORY

BACKGROUND ABOUT SOCIALLY RESPONSIBLE INVESTMENT (SRI)

THE FIRST SHAREHOLDER RESOLUTIONS WERE FILED AGAINST COMPANIES INVESTING OR WORKING UNDER THE APARTHEID REGIME IN SOUTH AFRICA

1980s

1970 BILLIONS OF DOLLARS HAD BEEN DIVESTED FROM SOUTH AFRICA RELATED COMPANIES, (e.g., MOBIL, GOODYEAR, AND JOHNSON & JOHNSON). THEY WERE FORCED TO SELL THEIR OPERATIONS IN SOUTH AFRICA. THE US GOVERNMENT ENACTED STATUSES, SUCH AS THE COMPREHENSIVE ANTI-APARTHEID ACT OF 1986, BANNING NEW INVESTMENTS IN SOUTH AFRICA. ALL OVER THE WORLD SIMILAR ACTIONS WERE TAKING PLACE.

IN RESPONSE TO THE GROWING CONCERN ABOUT ENVIRONMENTAL ISSUES, “GREEN” UNIT TRUSTS ARRIVED IN 1988 WITH THE LAUNCH OF THE MERLIN ECOLOGY FUND

1990s THE DOW JONES SUSTAINABILITY GROUP INDEXES WERE LAUNCHED

THE ARRIVAL OF THE FTSE4GOOD INDEX MARKS A FURTHER MOVE OF SRI INTO MAINSTREAM INVESTMENT

1988 THE FIRST SOCIAL INDEX WAS CREATED BY THE SOCIAL RESEARCH FROM KINDER, LYNDENBERG, DOMINI & CO., INC. (KLD): DOMINI 400 SOCIAL INDEX

1999 2001

SOCIALLY RESPONSIBLE INVESTMENT AN INVESTMENT THAT IS CONSIDERED SOCIALLY RESPONSIBLE BECAUSE OF THE NATURE OF THE BUSINESS THE COMPANY CONDUCTS

01 Investments in companies and governments that the investors believes best to values of importance of the investors.

Shareholders advocacy is exactly what it would seem; socially responsible investors proactively influencing corporate decisions that would otherwise have a large impact on society.

02

03 Community Investinas become the fastest growing segment within SRI.

SOCIALLY RESPONSIBLE INVESTMENTS HAVE A SPECIAL ROLE TO PLAY IN ALLEVIATING POVERTY, CREATING EMPOWERMENT, AND ESTABLISHING ENTITLEMENT AT THE GRASSROOTS LEVEL OF SOCIOECONOMIC DEVELOPMENT. THEY REQUIRE EASILY ACCESSIBLE, LOW COST AND AMENABLE FUNDS AND TECHNOLOGY THAT CAN BE SUSTAINED IN THE LONG-TERM RATHER THAN BE SOME QUICK FIX SOLUTION.

THERE YOU HAVE IT, THAT WAS

SOCIALLY RESPONSIBLE INVESTMENT (SRI)

ETHICAL BANKING

AN IMPORTANT PREREQUISITE FOR REALIZING THE INCREDIBLE POTENTIAL OF THE REGION IS TO ESTABLISH AND MAINTAIN A BUSINESS CLIMATE THAT IS ALIGNED WITH WORLD STANDARDS IN CRITICAL AREAS SUCH AS BUSINESS ETHICS.

ERDENER, 2011

THE POOR HAVE A VERY REALISTIC IDEA ABOUT THEIR CONDITIONS AND HOW TO IMPROVE THEM, AND THEY ARE ALSO READY TO GOVERN THEMSELVES RESPONSIBLY

BUT THEY ARE TOO POOR TO SOLVE THEIR PROBLEMS ON THEIR OWN

THE MODEL OF ETHICAL BANKS AND SOCIAL ENTERPRISES PROVIDES A MUCH NEEDED

MORAL FRAMING TO THE WHOLE DISCUSSION, WHICH IS HELPFUL IN CLARIFYING THE FACT THAT MISTAKEN BUSINESS ASSUMPTIONS HAVE EFFECTIVELY EXCLUDED ETHICAL CRITERIA FROM THE BEHAVIOR OF PEOPLE AND DECISION MAKERS AND FROM THE FUNCTIONING OF THE MARKET

THE PERVASIVENESS OF BUSINESS AND ITS WIDESPREAD EFFECTS SHOULD HAVE ALREADY MADE IT CLEAR THAT ITS ACTIVITIES ARE SUBJECT TO A MORAL EVALUATION OR SHOULD BE GUIDED BY MORAL PRINCIPLES.

MABAQUIAO, 2007

ETHICAL BANK’S VERY MISSION IS TO BRIDGE SOCIAL OPPORTUNITY INTO SUSTAINABLE REALITY INNOVATIVELY, EFFECTIVELY, AND EFFICIENTLY, WITH THE SPECIFICATIONS THAT ETHICAL BUSINESS AND VALUES ARE INHERENTLY EMBEDDED IN THE IDEOLOGY, PRINCIPLES, STANDARDS, AND OBJECTIVES OF THE BANKING ORGANIZATION.

EVIDENCE SHOWS THAT TRANSPARENCY OF INFORMATION AND PLACEMENT OF ASSETS ARE FACTORS THAT DIFFERENTIATE BANKS FROM OTHER FINANCIAL INTERMEDIARIES.

BORZAGA & DEFOURNY, 2004

THERE YOU HAVE IT, THAT WAS

ETHICAL BANKING

COMMUNION

ENTERPRISE

OF

ECONOMY

A CALLING TO LIVE WORK AND BUSINESS IN AN INTEGRATED WAY, IN CONCERT WITH ALL OF THE OTHER PEOPLE IN OUR LIVES

IT IS A PROJECT OF THE FOCOLARE MOVEMENT THAT SEEKS TO UNITE PEOPLE THROUGH ECONOMIC ACTIVITY AND ENTERPRISE. IT IS, FIRST OF ALL, ROOTED IN TWO IDEALS OF THE FOCOLARE; THAT WE MIGHT ALL BE ONE, AND THAT NONE AMONG US BE IN NEED. IT THEREFORE UNITES THOSE IN MATERIAL AND SPIRITUAL NEED WITH ENTREPRENEURS, THEIR COMPANIES, CUSTOMERS, EMPLOYEES, COMPETITORS, AND SUPPLIERS IN A GLOBAL EFFORT TO CREATE MATERIAL AND SPIRITUAL ABUNDANCE AND TO FREELY SHARE THAT ABUNDANCE IN WAYS THAT MAKE US ALL BETTER OFF.

FORMED MORE THAN 20 YEARS AGO, IN 1991 IN SAO PAULO BRAZIL, THE ECONOMY OF COMMUNION (EOC) NOW INCLUDES STUDENTS, SCHOLARS, BUSINESSPEOPLE, RELIGIOUS AND LAY PEOPLE, TEACHERS, AS WELL AS THE DISADVANTAGED AND MARGINALIZED MEMBERS OF OUR SOCIETY IN AN EFFORT TO PROMOTE ECONOMIC ACTIVITY THAT SERVES REAL HUMAN NEEDS.

ECONOMY OF COMMUNION ENTERPRISES One of the crucial manifestations of this project is the more than 800 businesses around the world (more than 40 in North America) whose owners and founders commit their business activity to these ideals.

01

At the same time, they seek to promote these ideals by their actions and involvement in their local communities, and by serving in a mentoring and support role to each other.

They willingly share profits to help those in material need, provide opportunities for meaningful work, offer products and services that meet real human and social needs, and seek to manage their companies with moral integrity.

02

THERE YOU HAVE IT, THAT WAS

ECONOMY OF COMMUNION ENTERPRISE

IMPACT INVESTING

INVESTMENTS MADE INTO COMPANIES, ORGANIZATIONS, AND FUNDS WITH THE INTENTION TO GENERATE A MEASURABLE, BENEFICIAL SOCIAL OR ENVIRONMENTAL IMPACT ALONGSIDE A FINANCIAL RETURN

IMPACT INVESTMENTS PROVIDE CAPITAL TO ADDRESS SOCIAL AND/OR ENVIRONMENTAL ISSUES. THEY CAN BE MADE IN EITHER EMERGING OR DEVELOPED MARKETS, AND DEPENDING ON THE GOALS OF THE INVESTORS, CAN "TARGET A RANGE OF RETURNS FROM BELOW-MARKET TO ABOVE-MARKET RATES". IMPACT INVESTORS ACTIVELY SEEK TO PLACE CAPITAL IN BUSINESSES, NONPROFITS, AND FUNDS IN INDUSTRIES SUCH AS RENEWABLE ENERGY, BASIC SERVICES INCLUDING HOUSING, HEALTHCARE, AND EDUCATION, MICROFINANCE, AND SUSTAINABLE AGRICULTURE. IMPACT INVESTING OCCURS ACROSS ASSET CLASSES; FOR EXAMPLE, PRIVATE EQUITY/VENTURE CAPITAL, DEBT, AND FIXED INCOME.

IMPACT INVESTING IS A SUBSET OF SOCIALLY RESPONSIBLE INVESTING (SRI), BUT WHILE THE DEFINITION OF SOCIALLY RESPONSIBLE INVESTING ENCOMPASSES AVOIDANCE OF HARM, IMPACT INVESTING ACTIVELY SEEKS TO MAKE A POSITIVE IMPACT BY INVESTING, FOR EXAMPLE, IN NON-PROFITS THAT BENEFIT THE COMMUNITY OR IN CLEAN TECHNOLOGY ENTERPRISES.

THERE YOU HAVE IT, THAT WAS

IMPACT INVESTING

MISSION RELATED INVESTING

MISSION RELATED INVESTMENTS (MRIS) ARE ONE OF THE MOST POWERFUL TOOLS AN ORGANIZATION CAN USE TO ACHIEVE SOCIAL IMPACT. THE DEFINITION OF MRIS IS DECEPTIVELY SIMPLE: AN MRI IS ANY INVESTMENT ACTIVITY THAT FURTHERS THE INVESTOR’S ORGANIZATIONAL MISSION. SO FOR A NONPROFIT DEDICATED TO CREATING AFFORDABLE HOUSING, AN MRI MIGHT INVOLVE PROVIDING FINANCING TO A NEW AFFORDABLE HOUSING DEVELOPMENT PROJECT.

allows for internal/external investment data collection and an organizational level-set. It establishes the “state of the organization” and a comparison to the broader market and market leaders

STAGE

01

provides an opportunity to broaden and deepen impact investing education for Board and staff and refine organizational alignment. It sets the groundwork for developing near-, medium- and long-term plans to Achieve philanthropy and impact investing integration

Implementation

Evaluation

STAGE

04

STAGE

03

STAGE

02

Data Collection & Assessment Strategy and Design

involves the deployment of an organization’s resources – both capital and personnel – to achieve articulated goals and impact outcomes

creates a transparent, iterative feedback process to support those managing an organization’s investments and missionfocused activities

THERE YOU HAVE IT, THAT WAS

MISSION RELATED INVESTING

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