The practice of investment is changing. A rapidly growing share of assets around the globe are making investment choices targeting not just return, but also sustainability, values-alignment or impact.
More than $23 trillion assets globally are subject to a non-traditional (environmental, social, and governance and impact screen), including over 25% of all professionally managed assets. This approach is growing, for example, in 2018, Larry Fink, CEO of the world’s largest asset management firm, Black Rock, wrote in a public letter: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
This statement reflects an increasingly broad-based sentiment that asset owners should include ESG and impact criteria in their investment process. Most large asset managers (e.g., Goldman Sachs, Bain Capital, TPG, Blackrock, State Street) are establishing sustainability, “ESG” or impact investment practices, and developing products to meet the demands of capital owners, including pension funds, endowments, and family offices.
Through teaching, research and engagement with practitioners and alumni, we are critically examining questions such as: What is the purpose of investing for impact? What return profiles are realistic? How do different strategies actually create social value? How is and how should social value be defined and measured? What does it mean in practice to be an impact investor?
An active community of faculty are teaching on and researching these topics from various perspectives, including Shawn Cole, Vikram Gandhi, Michael Chu, Kash Rangan, George Serafeim, Julie Battilana, and others. As importantly, our alumni are shaping, accelerating and leading investing for impact across the globe – from BlackRock, to Root Capital, to Social Finance, to Omidyar Network to Wellington Asset Management.
This second-year MBA elective course focuses on how and whether investors should incorporate what have traditionally been considered “non-financial” criteria in their decisions: for example, climate risk, environmental sustainability, minority representation on boards, and even the potential to create social good.
Over 100 students are engaged in the student-run, student-led club. From speaker series to career treks to the MINT Competition, MBA students are dynamically exploring and engaging investing for impact.
As impact investing has emerged as a new, fast-growing category of private investing, so too has the awareness of the stark disparity between access to capital among small business owners. The course will help students understand why certain business founders lack access to capital and work to understand whether and how small investments might help these businesses grow. The course primarily involves teams of 4-5 students conducting investment diligence on small businesses who are looking for flexible capital to scale their businesses.
An overview of a finance course offering comprehensive coverage of the investing for impact market including, private and public market strategies.
HBS Faculty have written more than 25 cases on this topic that explore challenging problems in finance and investment, financial management, leadership, entrepreneurship, and social enterprise.
The Impact CoLaboratory (Impact CoLab) is a multi-faculty effort to advance knowledge and practice in the rapidly growing field of investing for impact and scaling for impact.
Visit the Faculty & Research Impact Investing topic search to find recent publications on this topic from HBS faculty.