An African finding ways to make sustainable development real in the 21st century. Advisor on sustainable finance and responsible investment for institutional investment via integration of environmental, social and corporate governance [ESG] factors. Research and advisory engagements range from trillion-dollar money managers assessing emerging markets to launching initiatives including the Africa S...
Good News in Social Investment
Directing capital toward meeting social goals above financial goals is, like hiking up Table Mountain, not a stroll in the park [no, the cableway was not open!]. You have a good 1.5-2 hours up a steep "stairclimber" of rocks and boulders to talk, think and admire the mighty cliffs as you wind your way up the Platteklip Gorge from Tafelberg Road. So it was this past Saturday on a perfect blue sky winter's day in the Cape of Storms that I was hiking behind a local entrepreneur talking about how to build economies one small, medium, micro enterprise [SMME] at a time. Especially where the needs of society may be great and not met by those with purely cash profit motives. A strong movement currently in directing capital to meet social needs is in tapping into the entrepreneur, in the form of the social entrepreneur, similar to the work of Ashoka and the Skoll Foundation prize winners, to name a few. Sustainable finance is able channeling capital to good work in building and rebuilding sustainable livelihoods.
Some good news for social investment has come of late from the UK government. Earlier in July it released the start of a process to build a new bank where social benefits rank higher than cash profits; the "consultation" will take 12 weeks and had been announced back in April in the UK Chancellor's [finance minister] budget. Organizations like the UK Cooperatives, itself a respected generator of enterprise and funding, have welcomed the Whitehall announcement of the consultation on the Social investment Wholesale Bank. As the release stated:
...[A]ccess to appropriate funding and finance is often the single biggest concern facing organisations driven by social or environmental purpose. A Social Investment Wholesale Bank could help enable third sector organisations to access the finance they need to grow and become more sustainable...More broadly, the Bank could help increase investment in society, the environment and the economy at the same time, delivering against a 'triple bottom line' of more effective interaction between greater economic growth, social cohesion and sustainable development.
I am most interested to see what metrics are deployed to measure social return, and how the "triple bottom line" will be assessed, and audited. The ClearlySo team in the UK reported on the launch, and see some of Rodney Schwarz's comment at Will The Government Ever Listen? This is challenging stuff attempted in different ways by many financing and investing institutions, including the IFC with its standards for ESG as well as seed capital [see note in Central Asia for the controversial Baku-Tbilisi-Ceyhan (BTC) pipeline in 2003, note on first Paua New Guinea investment in 2006]. See the solid library of IFC materials on ESG integration in investment. Where capital is deployed with primarily a social return expected, less a financial return if at all, practitioners in Africa tend to describe it as social investment, and where it is funded by the private sector, often termed "corporate social investment". It is closely tied to CSR and to what in North America is described as "corporate philanthropy". See examples of companies framing their social investment such as BMW SA, Anglo American, Coca Cola and De Beers in Canada. As I may often offer as reference in framing the view from emerging and frontier markets to my MBA seminars on sustainability in investment strategy, any company doing business in such markets whether in Chile, Botswana or Indonesia is probably filling some public sector need because it may well not be provided by the local or national government. Social investment funds range from the global like Acumen Fund [see also the Acumen Fund blog] to the local, like the Heart Venture Fund or Tembeka Social Investment Fund in South Africa.
In South Africa this month we marked a second roll-out of the SA Social Investment Exchange, SASIX. Local organization Greater Good leads the initiative. [Another partner back in 2006 was Fidentia, a financial services firm subsequently shutdown for fraud, ouch!]. Globally the ClearlySo.com online marketplace also seeks to match capital with social entrepreneurs. The SASIX social exchange was first mooted in 2006 with a back-end technology in partnership with the Johannesburg Stock Exchange, and following the model from similar southern hemisphere emerging markets major, Brazil, where BOVESPA [the Brazilian stock exchange based in mega-city Sao Paolo with over 15 million inhabitants] launched BVS&A - Environmental and Social Investment Exchange in May 2007. See http://www.bovespasocial.org.br/English. Similar concepts have been in development around the world for some time, including GEXSI in Germany and variations of the concept in the UK, with mixed success. A mate in Iberia tells me a Social Stock Exchange is now being setup with Euronext in Lisbon. Earlier this year in Bellagio, Italy some plotting for a global social investment exchange was mapped out at Maximizing Efficiencies In The Social Capital Market 3-6 February 2009 Rockerfeller Conference Centre, Bellagio, Italy funded by Rockefeller Foundation and discussed at Philanthropy 2173. See also Social Capital Index launched at the SoCap 2008 conference, and look forward to SoCap 2009 in SFO early September 2009 posted on our JustMeans events page at:http://www.justmeans.com/listeventnew. So today on SASIX you may find "investment opportunities" in a math and science centre, artisans, rehabilitating a community-based blueberry orchard and mother-tongue storybooks. A great way to understand the opportunity and impact in social investing is to read The Blue Sweater by Acumen Fund's Jacqueline Novogratz, see the Facebook page. Also check out video of her at the TED conference on investing to end poverty. Read, watch, and try not be inspired to do good work through sustainable finance; pretty much like the hike and talk up Table Mountain.