From SRI to ESG: The Changing World of Responsible Investing

The terms socially-responsible investing (SRI), mission-related investing, impact investing and environmental, social and governance (ESG) investing -- all frequently grouped under the heading of responsible investing -- have become a familiar part of the vocabulary of institutional and retail investors. Just what these terms mean in practice, however, and how their practitioners' claims can be impartially assessed, has been less clear. Responsible investing can be broken into three main categories: Socially-responsible investing (SRI) A portfolio construction process that attempts to avoid investments in certain stocks or industries through negative screening according to defined ethical guidelines. Impact investing Investing in projects, companies, fund or organizations with the express goal of generating and measuring effecting mission-related social, environmental or economic change alongside financial returns. Environmental, social and governance (ESG) investing Integrating the three ESG factors into fundamental investment analysis to the extent that they are material to investment performance. While these terms may all be gathered under the term responsible investing, these approaches serve very different purposes. SRI and impact investing use funding and investment activities to express institutional values or advance the institution's mission. In contrast, ESG investing aims to improve investment performance, thereby making additional resources available for mission support. For a long time, SRI was by far the most widely-used of the three approaches. In recent years, however, it has been argued that, although negative screening can be a useful tool for institutions desiring to express ethical, religious or moral values through their investment portfolio, for many it may prove too restrictive. ESG analysis, on the other hand, takes a broader view, examining whether environmental, social and governance issues may be material to a company's performance, and therefore to the investment performance of a long-term portfolio. Thus, while not every institution will choose to engage in SRI or impact investing, fiduciaries of long-term institutional investors should seek to develop a well-reasoned view on their institution's approach to ES

Investing in People

Foundations have long created programs to provide grants to individuals—most often in the form of fellowships, scholarships, and prizes. Several of these programs have become so prominent that they are now institutions in and of themselves. Consider just a few examples: the Pulitzer Prize, Fulbright Program, and MacArthur "genius" awards. Governments, as well as foundations large and small, fund individual support programs.The Robert Wood Johnson Foundation has generously allowed the authors of this report to examine its portfolio of individual support programs to explore what the authors believe are some of the strategic fundamentals underlying this type of programming that could be applied to future individual support grantmaking. The purpose of this study is to inform those interested in individual support programs about not only some of the strategy considerations underlying this type of grantmaking but what these programs can be expected to achieve—and under what circumstances.

Business angel investing

Business angels are conventionally defined as high net worth individuals who invest their own money, along with their time and expertise, directly in unquoted companies in which they have no family connection, in the hope of financial gain. The term angel was coined by Broadway insiders in the early 1900s to describe wealthy theatre-goers who made high risk investments in theatrical productions. Angels invested in these shows primarily for the privilege of rubbing shoulders with the theatre personalities that they admired. The term business angel was given to those individuals who perform essentially the same function in a business context (Benjamin and Margulis, 2000: 5). There is a long tradition of angel investing in businesses (Sohl, 2003). Moreover, angel investing is now an international phenomenon, found in all developed economies and now diffusing to emerging economies such as China (Lui Tingchi, and Chen Po Chang,, 2007). However, it has only attracted the attention of researchers since the 1980s

Investing in Higher Education

Kirby (Noland) Dyess ‘68 learned early on she could do whatever she put her mind to

German crowd-investing platforms: Literature review and survey

This article presents a comprehensive overview of the current German crowd-investing market drawing on a data-set of 31 crowd-investing platforms including the analysis of 265 completed projects. While crowd-investing market still only represents a niche in the German venture capital market, there is potential for an increase in both market volume and in average project investment. The market share is distributed among a few crowd-investing platforms with high entry barriers for new platforms although platforms that specialise in certain sectors have managed to successfully enter the market. German crowd-investing platforms are found to promote mainly internet-based enterprises (36%) followed by projects in real estate (24%) and green projects (19%), with the median money raised 100,000 euro

Impact Investing and Inclusive Business Development in Africa: A research agenda

Impact investing aims to create sustainable social and environmental impacts for investee enterprises and communities as well as adequate financial returns. As an attractive emerging market investment strategy, it involves development finance institutions and philanthropic foundations partnering with mainstream private venture capital to create impact funds with the goal of catalysing inclusive market-based enterprise development in low income countries. In this paper, we present findings from a scoping study discussing the nature and operations of impact funds in African economies and the associated research opportunities on this topic. To facilitate the assessment, we reviewed the existing literature on impact investing, considering this along three interrelated perspectives, namely 1) impact investing as development finance policy for economic development, 2) impact investing as a development in socially responsible investing, and 3) impact investing as capacity-building for inclusive business development in African economies. The interplay of these perspectives shapes the constitution and operational strategies of specific impact funds and provide a conceptual context for understanding impact investing at country level. Drawing on interviews, email exchanges and roundtable discussions with representative global and country-specific (Sierra Leone, Cameroon and Kenya) stakeholders our analysis makes three contributions to the impact investing debate. First we explore a model for understanding the ways in which impact funds are being channeled into inclusive businesses in Africa and the associated catalytic effects on poverty alleviation, social and economic development. Second we identified and tested access to, a range of impact funds and associated sector-specific inclusive businesses for future case writing – hopefully ‘failures’ as well as ‘successes’. Finally, we reflect on some of the unanswered managerial and policy-related questions that require a more rigorous inquiry-led appraisal to better understand and enhance the contribution of impact funds to inclusive business development in Africa

The Power of Strategic Mission Investing

A growing number of foundations are offering low-interest loans, buying into green business ventures, and investing in other asset classes to advance their missions. Yet most mission investing remains haphazard and inconsequential. To bring about real change, foundations need to take a fundamentally different approach, making strategic mission investments that complement their grantmaking. Authors Mark Kramer and Sarah Cooch talk about strategic mission investing in the Fall 2007 issue of Stanford Social Innovation Review

Ethical investment in superannuation funds; Can it occur without breaching traditional trust principles?

Ethical investing in commercial activities is a topic which has received considerable attention of late. This has occurred in the areas of company law at all levels, with the concerns of consumers in relation to the production of products, and also in trust law, in particular superannuation trusts. Superannuation Trusts are of particular significance as they have become significant institutional investors in a number of substantial commercial activities. Ethical investment which requires the trustees to take account of issues other than financial when investing is seen to run counter to traditional trust law principles. Relevant issues relating to ethical investing include: human rights and labour concerns, environmental and moral issues such as investing in the alcohol and tobacco industries. This paper focusing upon superannuation law in the Australian and New Zealand jurisdictions considers the investment obligations of trustees in superannuation trusts. Such obligations closely resemble what may be referred to as traditional or core obligations of trustees. It acknowledges that difficulties arise when attempting to include ethical considerations in investment decisions with trust property. Having acknowledged this, the paper in upholding the place of ethical investing in the current environment proceeds to outline a means by which ethical investing can be adopted without compromising the position of trustees in any manner and which still focuses upon the best financial interests of the beneficiaries

The Landscape for Impact Investing in East Africa

The Global Impact Investing Network (GIIN), in partnership with Open Capital Advisors, published the full release of The Landscape for Impact Investing in East Africa, a "state of the market" analysis of the impact investing industry in the region. The most comprehensive study of impact investment activity in East Africa to date, the full report includes detailed chapters for five countries -- Kenya, Uganda, Tanzania, Ethiopia, and Rwanda -- plus chapters on six additional countries in the region.The report analyzes an active impact investing market across East Africa. Development finance institutions (DFIs) are a significant player in the market, having deployed nearly $8 billion in impact capital to date. However, many other types of investors -- including VC/PE funds, foundations, family offices, commercial banks, and angel investor networks -- are increasingly active, with these non-DFI impact investors having deployed over$1.4 billion to date in the region through more than 550 deals

Impact at Scale: Policy Innovation for Institutional Investment With Social and Environmental Benefit

Explores policy options to maximize impact investing opportunities for institutional investors and accelerate the development of impact investing practices and products. Presents case studies of and insights from investors and service providers