Networking for an Ethical Economy
Fri, 27 November 2009
In a recent report on ‘responsible citizenship’, Time Magazine notes how, since the onset of the recession, we have had to re-learn one of the most important lessons of the Great Depression. The report cites Franklin D. Roosevelt, who summed up this lesson in 1937 saying: “We have always known that heedless self-interest was bad morals; we know now that it is bad economics.”
The Responsibility Revolution
Only a decade ago, “responsible consumerism” and its associated vocabulary (“fair trade”; “free range”; “carbon neutral”; “sustainability”; and so on) were located at the fringes of society. In recent years, largely as a result of the conscientious efforts of the environmental movement, we have witnessed a shift that has seen responsible consumerism emerge from behind the Lentil Belt, and into the mainstream. Increasingly, consumers are demanding that the products they buy should, at the very least, not do damage to the planet, and ideally should have a positive social and environmental impact.
Socially responsible investing (SRI) applies the same logic to financial investments as responsible consumerism does to buying products. SRI combines investors’ financial objectives with their commitment to social concerns, such as social justice, economic development, peace or a healthy environment. Globally, as people begin to take more responsibility for the impact their investment decisions might have, the number of SRI funds has been growing rapidly. These funds currently account for 11% of all money invested in US financial markets – amounting to around US $ 2.7 trillion.
The Need for Networks
In South Africa, to meet the demand for socially responsible investment products, the JSE launched the SRI Index in 2004. Although this effort to make socially responsible investing more accessible should be applauded, there is still much work to be done before a mature SRI market emerges in the country.
Here, as well as globally, investors are becoming more demanding about seeing their investments generate real social impacts that can be measured and reported on. This presents new challenges for SRI indexes, which still commonly rely on “do-no-harm” as their guiding criteria, where social impacts are anecdotal and incidental to the main operation of an investment. Investors are increasingly demanding that their investments have social and environmental development built into their operations, and that their financial bottom line is always accompanied by a social and environmental bottom line.
These ‘blended-value’ investments are a new and evolving way of investing.There is still a lot of debate about what criteria should be considered, and what the best tools and measures are for evaluating these criteria. Innovation and collaboration are needed to find solutions to the challenges presented by the transition from fringe to mainstream investment practice.
Finding SAIIN Solutions
In order to facilitate the debate on how best to achieve meaningful, measurable social impact, while still providing a financial return, GreaterGood South Africa in partnership with Cadiz Holdings and Noah Financial Innovation have founded the South African Impact Investing Network (SAIIN). SAIIN operates as a national membership organisation along the lines of other partner organisations operating around the world. Through research, networking and public education campaigns, SAIIN aims to facilitate a more dynamic impact investing sector in South Africa.
Frank Cadiz, MD of Cadiz Holdings and Raymond Ndlovu, Chairman of Noah Financial Innovation summed up their involvement in SAIIN saying: “As concerned corporate citizens, as well as members of the financial services industry, we at Cadiz Holdings and Noah Financial Innovation are enormously excited about this opportunity to be part of a new social enterprise movement which will give communities access to capital and investors the chance to get real social as well as financial returns on their investments.”The national discussion that SAIIN seeks to lead will help pave the way to meet both financial and developmental goals in South Africa. It will find ways to tap into the trillions of Rand invested in financial markets in order to make a positive impact on communities. Most importantly; SAIIN will be instrumental in finding ways for South African investors to make decisions that are not only good morals, but good economics too.
