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Social impact bond case study
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Impact Investing is part of a trend of concepts that aimed to review the way people were investing their money. The idea of harnessing the power of the market in alignment with investor values dates back to the 19th century, when religious institutions sought to avoid investing in "sin" stocks, such as tobacco or alcohol industries. In the modern times, we can see the environmental and anti-apartheid movements in the 70’s as the return of these values. It was also in the 70’s that the concept of Social Responsible Investment (SRI) emerged. SRI was the inclusion of social and environmental variables besides financial return in the investment decisions. The idea was to avoid companies that could harm the environment or that could behave in unethical …show more content…
This new concept does not compete with the previous concepts listed because Impact Investing is one step further. Impact Investing aims to do more than doing no harm, it wants to use investment as a positive tool to support companies that have the potential to solve social challenges, but that also produce financial returns. In this spectrum line of concepts, Impact Investing sits in middle, while SRI is on one side and Venture Philanthropy is on the other. It was not only the term impact investing that was coined in 2007. It was also the creation of global network of individuals and institutions that shared the same idea of growth, known as Global Impact Investing Network. (Rodin & Brandenburg, …show more content…
This is considered the most innovative model of impact investing. It included many other areas into the game, like nonprofits organizations, foundations and governments. The most common pay for performance model is the Social Impact Bond (SIB). Social Finance (“Social Impact Bonds,” n.d.) was the first institution to implement a SIB and defines it as “a financial mechanism in which investors pay for a set of interventions to improve a social outcome that is of social and/or financial interest to a government commissioner”. It means that a private investor – commonly played by private foundations – funds the social intervention. If the social provider – usually played by nonprofit organizations – perform successfully, the government pays back the investor according to the performance. SIB proposes a new alternative to charitable private investment that is usually limited to donations and philanthropy (Cohen,
progressed away from the negative association. In this paper, I will be focusing on activist investments
Duane Windsor, via the aforementioned article regarding the future of social responsibility, purports “there are three emerging alternatives or competitors to responsibility: (1) an economic conception of responsibility; (2) global corporate citizenship; and (3) stakeholder management practices (pg. 225).” Windsor first provides a historical reflection of social responsibility beginning in the Progressive Era through the twentieth century and concludes with predictions for the future of corporate social responsibility. Corporate social responsibility, although not widely discussed or defined until post World War II, can be dated back to Ancient Rome as citizens exhibited a sense of civic responsibility. Andrew Carnegie, a man now compared to modern business tycoons/philanthropists such as Warren Buffett and Bill Gates, published this concept in the 19th century. Windsor does note, however, Carnegie’s philanthropic acts and published views followed his extensive success and wealth as a business mogul. Despite early literature discussing the importance of businesses responsibility to societal success rather than solely on shareholder profits, Windsor shares his interpretation of “anti-responsibility trends” in recent literature. He emphasizes, throughout this article, a concern regarding “wealth-oriented practices” dominating the future of corporate social responsibility. Windsor reviews prominent corporate social responsibility theorists who all contributed greatly to the distinctions between responsibility and responsiveness businesses have to ...
Corporate Social Responsibility is the obligation from corporations to utilize their resources to aid and benefit the larger society. The four components of CSR are economic, legal, ethical, and philanthropic. Social Responsibility is a fundamental force in the wealth creation process. If correctly demonstrated, CSR should heighten competitiveness and boost the value of wealth creation to society. A company's CSR Initiatives directly represent who the company is and what it believes it. The m...
Social responsibility allows for the market system to be centrally controlled by forcing shareholders to unwillingly contribute to social responsibility. While this idea of social responsibility may help companies in the short run, it will ultimately hurt them in the long run. Each person has their own values and responsibilities and “society is a collection of individuals and of the various groups they voluntarily form” (55). Businesses, as Friedman understands, are separate from this society since individuals are the only ones who can hold values and responsibilities. Subsequently, businesses are freed of the need to embed social responsibility into their practices and should focus only on creating the largest profit possible for their shareholders
Gates’s idea regarding philanthropy due to the fact that upon setting up his foundation in 2000, he already was aware of the widespread criticism of existing programs to help the less fortunate. Moreover, successful programs, such as the Green Revolution, were overshadowed by growing awareness of their negative side effects on the environment and local cultures. Mr. Gates had growing awareness of such limits sparking new ideas on how businesses could approach poor countries. However, there is little evidence of benefit from the $2.3 trillion given in foreign aid over the past five decades. For example, all the aid given to Africa over the years has failed to stimulate economic growth on the continent. One might argue that there are just as many needy individuals in America, why not try to critically think of way to innovate to embody the struggling Americans, rather than poor countries around the
A corporations CSR should be shaped in order to fit the goals of the corporation, although every corporation’s CSR should differ, since most have different goals and different communities behind them. The CSR should be molded into fitting the corporation’s goals in order to make it easier on the corporation in giving back to the community while achieving its goals. For example, a corporation located in a desert wishes to be more efficient, by reducing water usage it is not only creating lower costs, which result in higher revenue, but also helps the community by not taking up so much water. Taking this into consideration, it is critical that the corporation goals and values are established and clear throughout the corporation, they should be developed by the board or directors and CEO, and the highest managerial level should stress their importance to the rest of the corporation. By making the goals and values at the top branch of the corporate hierarchy, it will be simpler for the corporates community to develop in order to nurture those goals and values. Therefore, a corporation can reach the “shared-value,” a value for both its shareholders and community in a simpler manner that can result benefiting the corporation in the end as well. Throughout the article many examples are given of actual corporations that have benefited and changed their CSR in order to fit their goals, therefore, providing solid proof that these methods work. Nevertheless, as acknowledged by the author’s themselves, most of the corporations taken into consideration where one’s that Harvard CSR students were employed
Globalization Phase, companies were known locally, regionally and internationally, their products were already improved offering innovative services. However, as The Economist (2007) has highlighted, while more global the companies are more aware of corporate social responsibility they need to be, namely, foreign stakeholders will expect, not only innovative and effective products, but also they will open their doors and invest their money to companies that are social responsible.
In recent years, companies are becoming socially responsible and now stakeholders almost expect a company to have CSR policies. Therefore, in twentieth century, corporate social responsibility (CSR) became an important development in public life (Barnett, ND).Corporate social responsibility is defined as “the ways in which an organisation exceeds the minimum obligations to stakeholders specified through regulation and corporate governance” (Johnson, Schools and Whittington, N.D cited in March, 2012). Stakeholders can be defined as “those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn, the organisation depends” (Johnson, Schools and Whittington, N.D cited in March, 2012). There are many purposes for this essay, the first purpose is to descried the key principles of corporate social responsibility and explain their importance for stakeholders. Secondly, is to show how far this company follows those principles in order to be accountable to at least three of its stakeholders. In this essay, three stakeholders, environment, customers and employees will be evaluated respectively and the key principles of the stakeholders will be examined.
Impact Investing can be defined as: investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return (Merriam Webster). In her book, The Power of Impact Investing, Judith Rodin is trying to show readers about opportunities that are opening up for investors and show how impact investing. In the book, Rodin and Brandenburg compare how impact investing compares to more traditional investments. Impact investing is usually tied to social or environmental issues, where investors are looking to invest in businesses, nonprofits and funds that can gain the positive power of companies. Whereas traditional investing is concerned with making as much money as possible and solely concerned with the amount made. Although impact investing can be good for society in the future, this book shows some issues on the industry of impact investing including: the field does not show a clear innovation progress causing confusion for investors, impact investments are more complex to accomplish than traditional investments, and lastly, keeping the younger investors interested in
The problem that was investigated consisted of a question that Milton Friedman posed in one of his articles, which was featured in The New York Times Magazine in 1970. The question was, “What does it mean to say that “business” has responsibilities” (Friedman, 2007, p. 173)? Friedman (1970) elaborated on how businesses cannot have assigned responsibilities. Furthermore, he described how groups or individuals should be the only ones that can hold responsibilities, not businesses. He stated that associating responsibilities with the word business is too ambiguous. I will examine three discussion questions and three compare and contrast questions which Jennings (2009) posed in a case study that is related to Friedman’s (1970) article “The Social Responsibility of Business is to Increase its Profits”.
Business organizations regularly run into demands from various stakeholders groups when conducting day-to-day business. These demands are generated from employees, customers, suppliers, community groups, governments, and shareholders. Thus, according to Goodpaster, any person or group of people that can shape or can be shaped by attainment of the objectives by an organization is considered a stakeholder. Most business organizations recognize and understand their responsibilities to these groups and endeavor to honor and fulfill them. These responsibilities are often communicated to the public by a statement of principles or beliefs. For many business organizations, corporate social responsibility (CSR) has become an essential and integral part of their business. Thus, this paper discusses the two CSR views: the classical view and the stakeholder view. Furthermore, I believe that the stakeholder view has brought ethical concerns to the forefront of businesses, and an argument shall be made that businesses would improve both socially and economically if CSR, guided by God’s love, was integrated into their strategic planning.
It has been shown that there are many different areas in which a company may choose to focus its corporate social responsibility. The top area of focus in corporate social responsibility is on environment. Other areas that should be considered in the development of corporate social responsibility programs are education, health, nutrition and employment. “Social responsibility investment combines investors’ financial goals with their obligation and dedication to factors that ensure the well being of society such as environmental friendly practices, economic growth and justice in society” (Anderson 9). These elements not only epic corporate social responsibility, but also represent ethical standards of a company. It is unethical for some individuals to own so much and earn so much, at the expense of other suffering members of society. It is also unethical for companies to damage environmentally that result in illnesses and loss of life. It can be concluded that Social corporate responsibility and the maintenance of high ethical standards is not an option but an obligation for all
Masaka, D (2008) Why forcing corporate social responsibility is morally questionable, Electronic Journal of Business ethics and organizational studies, 13, 1 pp. 13-21
Social sustainability is “identifying and managing business impact, both positive and negative, on people.” The quality of a company’s relationships and engagement will directly or indirectly “affect what happens to employees, workers in the value chain, customers and local communities” (Wynhoven). This definition focuses on the importance of sustainable relationships. It focuses on the social aspect, which can be good helping to determine what social sustainability looks like. The UN definition makes it clear that it is important to manage the corporation’s impact proactively so that employees, customers, and local communities all benefit from a corporation’s presence. BMW is an excellent example of a corporation that focuses on social sustainability. BMW promotes exchange between refugees, local youth, and BMW employees through a neighborhood project called “Lifetalk” which aims “to give young people a better idea of possible career paths” (BMW). These actions come from the company’s beliefs and goals. BMW states that “taking social and environmental responsibility for everything we do is an integral part of how we perceive ourselves as a company. We are convinced that the lasting economic success of any enterprise these days is based increasingly on acting responsibly and ensuring social acceptance” (BMW). BMW believes that sustainability is an
Corporate Social Responsibility is an organisation’s obligation to serve the company’s own interest and the one’s of the society. Moreover, Corporate Social Responsibility has a definition of a concept where the companies integrate social and the environmental concerns into their own business operation and also on a basis of voluntary with their interactions they have with the stakeholders. Corporate Social Resp...