SRI by any other name continues to help the sustainability movement grow.
By Joe Sibilia
For many years language used to describe the movement towards a more economically just and environmentally sustainable society included many terms. One of the most popular terms has been ‘socially responsible investing’ (SRI). Today, there’s movement away from this term and towards a new incarnation of the same idea – ‘impact investing.’
It seems the philanthropic industry (at least in the U.S.) is moving closer towards measuring the impact of investments, as opposed to citing a specific (social) initiative, and calling for a public/private partnership that includes philanthropy, creating what some others call the ‘fourth sector.’ It’s a vibrant effort.
The Rockefeller Foundation in participation with the Initiative for Responsible Investment (IRI) at Harvard University and InSight at Pacific Community Ventures recently published a report, Impact Investing: A Framework for Policy Design and Analysis, that argues ‘investments that effectively deliver social benefit invoke a strong case for government support.’ The language used in the report moves the conversation closer to impact as opposed to social, as the term of choice. This report comes on the heels of the seminal report from the IRI titled: From Transparency to Performance – Industry-Based Sustainability Reporting on Key Issues. From Transparency to Performance argues government mandates to broaden disclosure be not meant purely as a measure, but as a way to get a more generally acceptable set of reporting requirements to compare and contrast peers.
SRI grows up to become impact investing, and impact investing is attracting the attention of public policy initiatives. Sometimes a shift in language is the impetus to advance ideas.
Government, business and philanthropy sectors cannot individually solve the plethora of problems facing developing countries and the planet as a whole. The recent financial crises in Greece and the U.S. (and elsewhere) demonstrate the need for greater transparency, especially in financial instruments. Hiding under the cover of homeownership as a right and ample credit as a privilege, financiers took advantage of a gullible public. If we begin to measure our investments in relation to its impact on solving social and environmental problems, we begin to look at the process through a new lens.
Consider the connection between the recent financial crisis, where investors were asked to ‘bet’ on the rising value of a financial instrument (credit default swap) without any knowledge of its underlying value and an impact investing instrument where its intrinsic value is connected to solving a social and/or environmental problem while being financially rewarding. Everyone wins in the latter, while the former benefits the first few financiers and leaves the underlying problems to the government and general public.
As the evolution away from single bottom line capitalism matures toward a more comprehensive view of how we organize society, it seems intuitive that measuring impact will bring us closer to our goal.
About Joe Sibilia
As a visionary of the socially responsible business movement, Joe Sibilia is founder and CEO of Meadowbrook Lane Capital (MBLC), described by the Wall Street Journal as a “socially responsible investment bank” specializing in turning values into valuation.
He is also the CEO of CSRwire, the social responsibility newswire service that distributes and archives corporate social responsibility/sustainability news to journalists, analysts, investors, activists, academics, public relations and investor relations professionals worldwide.
Joe also founded the Gasoline Alley Foundation, a 501(c) 3 corporation that has incubated forty-three small businesses since 1985 and teaches inner city and/or underprivileged persons to be successful entrepreneurs using socially responsible/sustainable business practices while revitalizing inner city neighborhoods.
Through MLBC, Joe has worked with a number of Socially Responsible Companies and has been widely recognized for his work in attempting to take Ben & Jerry’s Homemade Ice Cream private, while creating a private stock exchange for CSR companies. MBLC successfully preserved many of the founders’ social initiatives, and advancing the connection between good corporate citizenship and increased share value.
His long range plan for CSRwire is to establish a “platform for innovative revenue sharing applications advancing the ‘Movement’ towards a more economically just and environmentally sustainable society and away from single bottom line capitalism.”
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