Posts Tagged ‘SRI’

What is Socially Responsible Investing?

Monday, July 11th, 2011

You may have heard about SRI, but odds are you haven’t heard the whole story. We explain it to you in about three minutes.

Business Head, Philanthropy Heart: Steve Beck On Impact Investing

Tuesday, June 28th, 2011

steve-beck.jpgSteve Beck is the Co-founder and CEO of SpringHill Equity Partners, an impact investment manager providing capital and support to growing businesses supplying basic goods and services to low-income households in Africa. After spending most of his career as a management consultant, Steve recently launched into the world of social venture capital. His goal? To more intentionally integrate his business “head” and philanthropy “heart.” He’d probably encourage others to do the same.

TILE: How would you describe social venture capital in your own terms?
Steve: Social venture capital is about providing money (“growth capital”) and lots of help to fast-growing, for-profit ventures, with the intention of generating significant social (and/or environmental) benefits along with a financial return to the investors. This whole area has been struggling for a few years now to find language to describe what it is and does. The name that seems to have taken hold is “impact investing” — that is, investing with the intention to deliver social and/or environmental benefits in addition to financial returns. Think of it as venture capital to “not-just-for-profit” enterprises.

TILE: Why is impact investment important? In other words, why the middle ground between philanthropy and for-profit investment? Why not keep dollars for giving and dollars for investing in separate jars?
Steve: Well, we have kept them in “separate jars” for too long and look where that binary thinking has got us. Global problems of chronic poverty, conflict, disease, oppression and injustice are simply too big and too urgent to be left to charity and the NGO community, which have neither the resources nor the reach to address these issues at scale. Impact investing has the potential to tap into the much larger pool of for-profit investment capital and unleash entrepreneurial creativity and the disciplines of the market to address these issues in a much more dignifying, sustainable, and scalable way.

An ‘impact investment’ example might help here. Nearly half the world’s population uses open fires to cook their food, with devastating consequences. Cooking in the global south presents a triple threat: to health (cooking over an open wood fire is like smoking 40 cigarettes…each meal!), personal economics (poor families spend up to a third of their annual income on cooking fuel or spend hours each day foraging for wood), and the environment via deforestation and global carbon emissions.

SpringHill invested in a business in Kenya that is producing and distributing fuel-efficient cookstoves to low-income households. Each stove saves half the fuel and eliminates 85% of the toxic smoke emissions. It’s a product that saves health, money, and the environment. The business is designed to be profitable by selling the stoves at $14 each — not an “impulse buy” for the families that need them, but one that is within reach, and in any case will pay for itself within about 8 weeks from the fuel saving. The business is on track to sell 80,000 stoves in its first full year of operation. As a business, it’s accountable to the consumer (not to a donor) — the product had better be good or we will go out of business. If the product performs well, the business will be profitable and we’ll have sufficient capital to continue to grow the business from Kenya to neighboring countries. As stove sales expand, we make a growing dent in the triple threat described above…and we make money doing it, thereby attracting other entrepreneurs and investors into the market for a better stove.

TILE: Is there a place for young people in the social investment world?
Steve: Yes, there are numerous places for young people in this world — and it’s essential they take them up. But first let’s widen the lens beyond the narrow “world” of financial capital. Whether or not they have access to substantial financial means, each of TILE’s members possesses extraordinary assets that can be intentionally invested for the benefit of others. I’m talking about knowledge, skills, gifts, aptitudes, time, energy, perspective, and optimism — much more important currencies than dollars and cents. Every time you intentionally invest your assets to address social problems you are a social investor. And young people are often the best entrepreneurs because they are not locked into conventional thinking and are prepared to take more risks early in their careers.

TILE: How did you end up where you are today?
Steve: Via a circuitous route: 18 years in business, 3 years’ graduate study, 6 years in professional philanthropy, and now 2 years in social venture capital. Having studied international development, I emerged from college with an idealistic, “save-the-world” ambition and attitude. (I actually wrote a paper for one of my undergraduate classes entitled “World Hunger: Causes and Solutions”…that’s how idealistic I was). I got an entry-level job in management consulting and, without a lot of forethought, built a career analyzing markets and enterprises, (eventually) providing strategic advice to leaders of some of the world’s largest companies. My job was to help them decide “where to play” and “how to win”. After 18 years in business, I had an opportunity to give more direct expression to my ideals and went into the professional philanthropy world, running a company that applied investment discipline to grant-making aimed at addressing problems in some of the world’s hardest places. I did that for six years before starting an impact investment firm focused on Africa. My answer to question #2 explained one of the reasons for this move. In hindsight, I’m grateful for the experience I had working with leaders of firms that were competing in the world’s most competitive markets – this was a great training ground for what was to follow.

TILE: What’s the best advice you would give to your teenage self?
Steve: Be an intentional investor. I’m thinking of two things in particular:

One, invest in significance over success. Don’t let your concept of success be defined by the size of your bank balance and the consumer goodies you own. Be intentional about what’s important to you. This means finding ways to give practical expression to your values. If you say you’re concerned about slavery and human trafficking, examine your consumption expenditures. Can you buy fair trade products…products that are free of slave labor?

Two, invest with conviction. The Irish poet, Brendan Kennelly wrote, “If you want to serve the age, betray it.” “Betray the age” means exposing the culture’s moral blind spots. What might those be? Maybe it’s our refusal to treat every person with equal worth and dignity? Or our obsession with our rights rather than our obligations?

Our youth — YOU — are best placed to expose the blind spots of today’s culture. So, harness and direct that rebellious energy (I was a rebellious teen) onto something that is worth spending your life doing…or un-doing.

>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. To read more, click on Ask the Experts in the TILE Library.

Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!

How to Stick to Your Values and Be Popular at the Same Time

Thursday, April 14th, 2011

ben-jerry.jpeg

It’s hard for anyone to stay true to themselves when they’re pulled in a million different directions by their adoring fans. (See: every celebrity breakdown in history.) But it’s especially hard when you’re a publicly-traded company.

Publicly-traded companies have a legal obligation to put the interests of their shareholders first. And often that means making money the fast and easy way instead of the most ethical way.

But there are actually two ways to judge a company’s success: the bottom line tells you how much money the company has made. The triple bottom line tells you how much good the company has done – for people and the planet – while it made that money. As a socially-responsible investor, you can choose to put your money behind companies that focus on the triple bottom line, which benefits shareholders AND the rest of the world.

Learn more about socially-responsible investing (SRI).

There’s a great opinion piece in the NYTimes that talks about how good companies can navigate the complicated world of hostile takeovers and shareholders’ rights while still staying true to their mission and values. For example, Ben & Jerry’s ice cream company, because of its obligation to shareholders, was forced to sell to an international corporation (Unilever). While the acquisition didn’t totally destroy the company’s founding principles, it sure wasn’t the same company after that.

What would you have done if you were Ben (or Jerry)?

Socially Responsible Investing (SRI) is…

Tuesday, April 12th, 2011

Socially responsible investing connects your interests and personality to your financial resources. When you invest in a socially responsible way, you ensure that your portfolio earns a competitive rate of return while also making a positive social and environmental impact. For example, you might invest in companies that have good employee relations, diversity in the workplace, a commitment to clean air, or that use sustainable forms of energy.

Companies are deemed socially responsible by research firms such as Calvert, Social Funds, and KLD Research & Analytics. They evaluate a company on its level of social responsibility based on the quality of its social, environmental, and governance (management) policies.

So how do socially responsible investors find a company they want to invest in? They use a process called screening, which considers whether or not a company’s values align with their own. For example, some investors screen out companies that pollute, that abuse their workers, or that produce harmful products like cigarettes.

Once you’ve found a company you like and decide to invest, you become a shareholder of that company. At socially responsible companies that means you stay involved and informed in the goings-on of the business. This is because socially responsible management is committed to keeping shareholders in the loop, and shareholders are encouraged to be involved corporate management.

Socially responsible investing is also called mission-based investing, sustainable investing, ethical investing, green investing, responsible investing, and value-based investing.

Putting Energy (and Investment) to Good Use

Friday, April 1st, 2011


(photo credit: Evan Prodromou)

We all know that carbo-loading is essential for running a marathon (or staying up all night writing papers/ playing video games). So why expect lasting social change to run on a cookie here, a handful of peanuts there?

“45% of the population of rural India live in villages with no electricity.” So it was only a matter of time before capitalist do-gooders found an opportunity to profit from lighting up the countryside. Providing affordable clean energy solutions is potentially a $2 billion industry in India alone. And it’s not just the entrepreneurs who profit: locals suddenly have light to study and work by, cleaner air and water, and a new job market for selling and repairing solar lanterns and other green gadgets.

Sounds like a pretty neat social venture to us. What do you think?

When it comes to supporting causes you care about, are you more likely to fund emergency projects, like disease and hunger relief, or longer-term strategies for change, like electricity?

Screening is…

Tuesday, March 1st, 2011

Screening is the way you evaluate potential investments based on certain criteria.  While the criteria is different for different objectives (for example, respect for human rights when looking for socially responsible companies or low price-earning ratios for value stocks), the process of making the list smaller based on specific criteria is the same.

Screening is an integral part of socially-responsible investing (SRI). It refers to the way you evaluate potential investments based on certain social, environmental, and good corporate governance criteria. When you screen companies for social responsibility, you’re checking to make sure that they have respectable employee relations, strong records of community involvement, excellent environmental impact policies and practices, respect for human rights around the world, and safe and useful products.

So you want to be a socially responsible investor?

Friday, January 7th, 2011

joel-solomon.jpg Joel Solomon’s career is somewhere between entrepreneur, philanthropist, and activist. His philosophy is that companies should focus on socially responsible growth – meaning they should care about their impact on their society and the environment, but not give up on making money. Since 1996, he’s been the president of Renewal Partners, a company focused on creating a “triple bottom line” economy. And he’s a pretty big dreamer – while most companies focus on a 10 or 20 year strategic plan, Joel has a 500-year vision about how the work of current generations is crucial. He was nice enough to share a bit about his plans and how you can play your part in changing the world.

TILE: What is socially responsible investing?
Joel: Socially Responsible Investing is about placing your money into companies whose products and services represent your values and beliefs. Every dollar you spend or invest is a direct vote by you for what matters in life and on the planet.

TILE: How can businesses make money and be socially responsible at the same time?
Joel: Business can make plenty of money by being good citizens of the environment – for their workers, and for the communities where they make products and in those where they sell them. Good ethics and planet-responsible behaviour* are fully compatible with making reasonable financial returns. In fact, clear values and true purpose, when combined with the tools of business and money, make a powerful combo that can drive social change.

TILE: Why do you do what you do?
Joel: My life is committed to respect for the hard work my ancestors did to give me my life, and to do everything I can to see that what matters most to me is available to future generations. Those commitments led me to make business and finance serve my long term goals. Every day I get to meet some of the brightest, most creative, most inspiring entrepreneurs and leaders in the world. That’s my reward for staying true to my values and purpose.

TILE: How do you think young people can play a role in philanthropy?
Joel: Young people with access to philanthropy should learn all they can about the issues of our times, especially those that touch your heart and mind the most. Ask lots of questions. Read. Get exposed. Volunteer in organizations you believe in. Find a career that expresses your true values. Learn all you can about the non-profit world. Ask for observer status at foundation meetings. Ask for a small grants budget so you can gain experience making decisions with donations. Seek mentors and experienced advisors. Attend conferences.

TILE: What’s the best advice you would give to your teenage self?
Joel: Commit to your own maximum potential to learn, lead, and live, such that your life and work make a positive impact for today and tomorrow. Follow your inner calling. Develop creativity. Do deep work on yourself, soon, and continually.
Develop pragmatic skills. Travel. Be compassionate.

* Please excuse our extra ‘u’s. Though he was born in Tennessee, Joel is now a resident of sunny Vancouver, Canada.

>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. To read more, click on Ask the Experts in the TILE Library.

Have a burning question or an expert you’d like to see interviewed? Just Ask TILE!

The Principles of Responsible Investment (PRI) are..

Wednesday, October 6th, 2010

The Principles of Responsible Investment (PRI) are the guidelines for investors who are conscious of environmental, social, and corporate governance (ESG) issues (like human rights or climate change, for example). Like the title says, they’re basically guidelines to help investors investing responsibly.

The six Principles say that “as investors,

1. We will incorporate ESG issues into investment analysis and decision-making processes.

2. We will be active owners and incorporate ESG issues into our ownership policies and practices.

3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.

4. We will promote acceptance and implementation of the principles within the investment industry.

5. We will work together to enhance our effectiveness in implementing the principles.

6. We will each report on our activities and progress towards implementing the principles.”

The Social Investment Forum is…

Wednesday, October 6th, 2010

The Social Investment Forum is an association for professionals, firms, and organizations that practice socially responsible investing. Members of the Forum work to come up with better strategies for managing socially responsible investments. Businesses and individuals are only allowed to join if their investments have a positive impact on society and the environment.

Shareholder Activism is…

Wednesday, October 6th, 2010

Shareholder activism is when a shareholder of a publicly-traded company uses their rights to pressure that company to make change. Basically, it’s a way that shareholders can influence and change a company’s behavior in a certain way. For example, shareholders may influence a company to become more environmentally friendly or disinvest from a country with a record of human rights abuses. Shareholder activism can take the form of voting for or against certain corporate actions or members of management, and/or in organizing groups of voters to block or force a corporate  action.