Tuesday, December 3, 2013

Investing for Impact

So, as everyone knows, I am very interested in how we put the vast amounts of private capital sloshing around in the market to productive and positive use for society. In particular, I'm intrigued by the possibility that there are potentially trillions of dollars out there to fund things like environmental sustainability, community revitalization, education, better governance, and other social causes. 

On February 25th, I'm going to be helping to host a panel on this topic as part of the UT Business for Good Summit. Here's the quick description: 

Investing for Impact

With $3.74 trillion invested in sustainable and responsible investment funds in the United States, we are rapidly approaching an era where even mainstream investors need to take into account the social, environmental, and community impacts of their investment decisions.

And the conversation no longer about “values” versus “value” in investing. In fact, the evidence is mounting that sustainable and responsible investing strategies actually can yield higher returns than strategies that ignore these factors. According to a 2012 Harvard Business School study, $1 invested in a portfolio comprised of “high sustainability” companies in 1993 would have been worth $22.60 by 2010. The same $1 invested in a control group would have only grown to $15.40.

In this dynamic and evolving space, large financial institutions are beginning to look beyond simple “responsible” investing metrics to create impact with their investments. Goldman Sachs recently announced the closing of deals around two new investment vehicles, “social impact bonds,” in which returns are explicitly linked to social justice or educational goals attainment.

This bodes well for those of us trying to use business for good.