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More than 11 percent of investments under U.S. professional management were selected for companies’ financial performance and their social and environmental responsibility in 2012. That’s $3.74 trillion of the $33.3 trillion in investments scanned for environmental, social and governance criteria (known as ESG), according to a November report by the U.S. SIF Foundation. Individuals and institutions are increasingly on the lookout for investment strategies that help them achieve environmental and social goals. Call it what you like — sustainable investing, responsible investing, socially responsible investing, impact investing, green investing or just ESG — this practice is bringing new approaches into the traditional investment industry.
For more than a year, media outlets have posted stories on various major venture capital firms throwing their arms up in frustration and feeling woe over their cleantech investment portfolios. These down-and-out VC stories have been coupled with broader reporting on the drop in the total VC funds issued for cleantech after two years of growth in 2010 and 2011. Indeed, Q4 2012 experienced a particularly low VC investment period for the alternative energy and fuels subset of cleantech, with just about $70 million in investment, the lowest quarterly mark in at least four years. Total cleantech investments in Q1 2013 were at an even more dramatic seven-year low.
LONDON — The divide between rich and poor is widening in developed nations, according to a new report released Wednesday by the Paris-based Organization for Economic Cooperation and Development. According to the new data, economic disparity has risen more from 2007 to 2010 than in the preceding 12 years. Over this period, the OECD has documented increasing income inequality caused by the financial crisis, which it says is “squeezing income and putting pressure on inequality and poverty.” In 2010, the richest 10 percent of people across 33 OECD member states earned 9.5 times the income of the poorest 10 percent. That factor is up from 9 in 2007.
What is social entrepreneurship? The past decade has seen a growing interest in the subject and MBA programmes that include an element of social ntrepreneurship are on the rise. But what exactly constitutes a social entrepreneur? While some describe it as doing good while making a profit, others place it firmly in the not-for-profit sector.
Some interesting news came in earlier this week from the impact investing space. Nine impact investors, including Aaviskaar, Omidyar Network, Elevar Equity and Unilazer Ventures, have come together to set up a self-regulatory body called Indian Impact Investor Council (IIIC), reports The Economic Times. Unitus Seed Fund is also a founding member. The trigger for the initiative appears to be the recent microfinance crisis, which saw several impact investors (venture capital investors who focus their investments on opportunities at the bottom of the pyramid) burn or struggle to salvage a significant chunk of their investment portfolios. IIIC proposes to make it binding for members to conform to certain best practices while pursuing their investment objectives. These could range from defining the sectors that qualify for impact investments, the tenure of investments and metrics for measuring returns.
Last week, my friend Paul Hudnut posted a follow-up from a conversation we had around what Paul calls the “original sin” of impact investing: liquidity. In Paul’s words, “what if, in the end, (impact investing) doesn’t matter?” Investors put money into companies and enterprises grow; however, the only way investors get money back is if the company has a “liquidity event”—which is, most commonly, an initial public offering, an acquisition by a larger backer, or another event that gives cash back to the original investors—a requirement for the whole “investing” thing to work....We have to get this liquidity question right. The investor question of “how am I going to eventually get my cash back?” has killed more innovation from day one, in my experience, than any other investor concern. Many would-be impact investors just throw up their hands and don’t get involved—and I don’t blame them for having questions.
MUMBAI: In order to avoid excesses of the kind that derailed the Indian microfinance industry three years ago, nine entities doing 'impact investing' - picking up equity stakes in businesses that are anchored in both financial and social returns - have come together to form a grouping that will define what they can do and cannot do in their investment practices to always stay aligned with their stated objectives.
While international aid for economic development often fails, business has the potential to bring millions of people out of poverty. For no enterprise is this more true than the unsung $300 billion industry known as Business Process Outsourcing. Business Process Outsourcing, often referred to by the acronym BPO, means contracting business functions to third-party service providers. While call centers are the most visible part of this industry, BPO also includes many types of back office processing. This industry largely operates invisibly for consumers in North America and Europe. However, the sector employs several million people worldwide - primarily in India, the Philippines and China. In India, the industry has grown from 1.2 percent of GDP 1998 to 6.4 percent in 2011 -and has created more than 700,000 jobs in the Philippines.
For individuals seeking to invest in line with their social values, it’s a whole new world. Until recently, socially responsible investing (SRI) meant avoiding companies in certain industries — an exclusionary practice that can lead to a lack of diversification and hinder performance. But lately a new approach, dubbed values-based investing (VBI), has been emerging, and it features a more positive and inclusionary methodology.
The 2013 Grow Africa Investment Forum, a gathering of 300 leaders from politics, business and civil society, closed today (9 May), “marking a historic shift in the quality and quantity of private-sector commitments to Africa's agricultural development,” said a press release. The meeting saw companies report on $3.5 billion of investments, supported by Grow Africa, that have been committed across eight countries over the past year. These investments - included in Grow Africa's inaugural annual report that was launched today (9 May) - mark a deliberate step to move Grow Africa into an operational phase by channelling the investment it has generated directly into projects, it said.
A cursory glance at the world of venture capital can feel a bit like staring at one of those framed group portraits that hang on fraternity walls: all too often, you’re just looking at a bunch of white dudes. But thanks to the efforts of folks like Natalia Oberti Noguera, the investment landscape is changing. HerPipeline Fellowship is an angel investing bootcamp for women philanthropists, and it’s yielding real-world results.
Africa is where it is at and its digital/tech scene is all the rage. Bigwigs are noticing the continent. The latest group to take interest in Africa is the Rockefeller Foundation, which announced a new initiative that will focus on Africa’s youth and employment, Digital Jobs Africa. The foundation has pledged nearly US$100-million to Africa’s digital sector in the hopes of impacting “one million lives in six countries through leverage and private sector partnership”. According to the foundation the investment will impact people who would not otherwise have an opportunity for sustainable employment through jobs and skills for youth in the tech sector.
Trade can be an important catalyst to poverty eradication. However, this has not been true in the African story, especially trade within the continent. Worldwide, Africa contributes only three per cent to world trade. This is insignificant and telling of the poverty levels in the continent. Trade among African countries accounts for 10 per cent of the continent’s total trade balance and it’s the least compared to trade between the continent and markets like Europe, America and Asia. Trade among African countries has been low and not highly regarded. There are reasons to this state of affairs.
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World Bank Group President Jim Yong Kim called on private equity firms to increase their investments in developing countries to help generate the growth, jobs, and equality needed to end extreme poverty.
“We have a fantastic opportunity to work together,” Dr. Kim told hundreds of investors at the 15th Annual Global Private Equity Conference, hosted by the Bank Group’s private sector arm IFC and the Emerging Markets Private Equity Association (EMPEA).
“…Private equity is going to play a critical role in whether or not we can truly have high aspirations for the 1.2 billion people living in absolute poverty in the world,” he said in a speech that was liveblogged and followed on Twitter with #wblive and #GPEC2013.
NEW YORK: Socially responsible investing has long been associated with avoiding companies in "vice businesses" like alcohol, tobacco and weapons. Yet managers at socially conscious fundssay screening companies based on how they treat workers is just as important, especially in light of the April collapse of a factory building in Bangladesh that killed more than 1,200 people.
The disaster triggered calls for US retailers such as Wal-Mart and Gap Inc to join a fire- and building-safety agreement backed by some of Europe's largest apparel brands. Both US companies have so far declined to sign on to the pact, saying their own safety plans will get faster results. Companies with a "best in class" environmental screen, for instance, returned an annual return of 13.07 percent from 1995 to 2003.
Organizations have nearly perfected implementing the industrial model of managing work — the effort applied toward completing a task. For individuals, this model ensures that we know what we're supposed to do each day. For organizations, it guarantees predictability and efficiency. The problem with the model is that work is becoming commoditized at an increasing rate, extending beyond manual tasks into knowledge work, as data entry, purchasing, billing, payroll, and similar responsibilities become automated. If your organization draws value from optimizing repetitive work, you'll find that it will be increasingly difficult to extract that value.
Corporate philanthropy was once defined by the checks a company wrote to charities. But money, while critical, is only one of many assets a company can bring to bear – and often times, it is far less powerful than the skills and capabilities that companies can draw from their business operations and apply to solving big social challenges. That is why increasingly global corporations are rethinking their approach to corporate responsibility, evolving toward a model in which traditional donations are supplemented by innovative programs and initiatives that tap into the core strengths of the business.
The Social Enterprise Alliance is structuring Summit ’13 around seven “building blocks” identified as core principles in building a for-purpose economy. I think it’s extremely important that SEA is motivating us to reflect on what it takes to build markets for new social enterprise. At Benetech, the nonprofit technology social enterprise I lead, we combine our passion for developing technology for social good with a pragmatic business approach—and we’ve developed an entire process that guides us in our work. Key to this process is our New Project Assessment Method that, coincidentally, is also built upon seven core elements. I discuss this method at greater length in my contribution to Ron Schultz’s latest book, Creating Good Work, and in this post I’d like to share some highlights.
The need for growth -- specifically, the kind of inclusive growth that can provide jobs for the vast number of out-of-work young people and combat rising levels of income inequality -- has never been more vital. Nevertheless, today’s debates about how to achieve sustainable, inclusive growth are too narrowly focused on the role of governments and policy makers. The role of the private sector -- with its multinational reach, vast piles of cash, and ability to innovate -- has been neglected. - See more at: http://www.bworldonline.com/content.php?section=Opinion&title=Capitalists-for-inclusive-growth&id=69712#sthash.1Tbtqx8o.dpuf
What is the state of impact investing? The panel of experts from large institutional investors to small foundations at the2013 Green Living Business Forum share their thoughts on the growth potential, risks and opportunities, and the valuation of social and environmental factors. Six common threads emerged from the discussion chaired by CBC host Evan Solomon. Impact investing is small but rapidly growing. Currently it accounts for $50 billion globally, according to Bart Houlahan, Co-Founder of B Lab, a non-profit that helps entrepreneurs solve social and environmental problems. While this is a very small part of the capital markets, it is the most rapidly growing segment.
Linking social ventures with potential overseas franchisees? Check. Helping social enterprises bring in specialist overseas tradesmen using their immigration teams? Check. The results from the first year of corporate social enterprise support programmes seems promising. While some believe that such programmes, run by the likes of Deloitte,Santander, Ernst & Young and Goldman Sachs, focus on social enterprises that are already doing well, attitudes appear to be softening. From those we interviewed at random, there is a genuine sense that these programmes are welcome in the current climate and can offer some impressive help.
The report 'Opportunities for the Dutch Social Enterprise Sector', highlighted several barriers for growth. First of all, like in most countries, social enterprise models are relatively unknown and ill understood by the general public. Social impact has traditionally been a non-profit or governmental affair, so there is an inherent distrust of any entrepreneur who tackles a social mission with a business model. Then there is the problem of access to capital. Patient growth capital has been scarcely available thus far. And finally, most importantly, the Dutch government has done very little to support the sector. Forcing social impact entrepreneurs to construct complicated entities to capture their social mission. Yet change is underway and the glimpses of an emerging movement have become apparent in the last year.
The walia is a species of ibex found only in northern Ethiopia. Some 40 years ago, with fewer than 200 left, the walia was in danger of extinction. It remains an endangered species, but through conservation measures, numbers are increasing. Things are getting better. The development of the walia's home country - Ethiopia - is even most robust. As leaders from around the world gather in Cape Town, South Africa, for the World Economic Forum on Africa, they will be talking not about the wali but about countries like Ethiopia, and comparing notes on the challenges and opportunities they represent.
Peru’s government said Wednesday that the country’s poverty rate declined two percentage points last year, to 25.8 percent. Peru’s national statistics agency, INEI, said that 509,000 people escaped poverty in Peru in 2012. However, 7.8 million people are still living under the poverty line, while 1.8 million of those people are living in extreme poverty. The decline in poverty last year is part of a general trend that has seen Peru’s poverty rate drop from almost 60 percent some 10 years ago. The INEI said that the decline is due to continued economic growth. Peru’s gross domestic product expanded 6.3 percent in 2012, 6.9 percent in 2011 and 8.8 percent in 2010. It is expected to increase by more than 6 percent this year.
When Japan recalled president of the Asian Development Bank, Haruhiko Kuroda, to head up its central bank, it seems to have missed an opportunity to promote openness. The Japanese and the ADB's board seem to have ignored the emerging international consensus favouring competition in electing the heads of multilateral banks. Just last summer the board of the World Bank, representatives of most world governments, decided it would be good practice to finally have a competition for their new president. There had been a little reluctance at first in Washington, but later the US felt it would be too embarrassing to refuse an open election for the World Bank presidency, though the man for the job happened to be another American.
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