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discussion discussion Presentation Transcript

  • More Than A Profit? Measuring the Social and Green Outcomes of Urban Investments December 11 th 2007 Cambridge, MA Lisa Hagerman Labor & Worklife Program, Harvard Law School Oxford University Centre for the Environment Sponsored by the Rockefeller and Ford Foundations
  • Institutional Investors in Targeted Investing
      • Banks, insurance companies, foundations
      • Public sector pension funds over $12 billion
      • Transparency of returns both financial and social key for growth of industry and flow of institutional capital
      • Simplify social reporting $ invested
    © 2007 Hagerman
  • Financial returns
      • Fixed income, equity real estate and venture capital
      • Risk-adjusted returns against benchmarks
      • Benchmarks
        • Fixed income : Lehman Aggregate Bond Index
        • Real Estate : NCREIF (National Council of Real Estate Investment Fiduciaries) Property Index
        • Venture Capital : Thomson Financial Venture Capital Index
    © 2007 Hagerman
  • Moving beyond the financial
      • You Manage What You Measure
      • Kaplan and Norton’s Balanced Scorecard move beyond financial to measure customer perspective and innovation
      • Beyond traditional financial regulatory systems
      • International Organization of Standardization (IS0)
      • ISO 14000 certification in environmental management
      • Create an equal level playing field in a particular industry
    © 2007 Hagerman
  • Extra-financial language
    • Outputs or Outcomes
      • Tangible effects investment has had in the area
      • Measurable, quantifiable, positive results for:
      • Employee, Community, and the Environment
    • Impacts
      • Long term results - broader societal or economic change measured years after program completed
      • But for? factor would economic changes have happened anyway regardless of the investment?
  • Social and green outcomes
    • Employee outcomes : jobs and living wage, health insurance, profit sharing programs
    • Community outcomes : export-oriented sales, tax revenues
    • Green outcomes :
      • Business: clean-tech, recycling, company energy saving
      • Real estate: transit-oriented, LEED-certified, EPA Energy Star, global green, greenfield acres saved
  • Models of partnerships measuring social outcomes
    • For-profit fund manager & nonprofit advisory services
    • For-profit fund manager requires company side letter and reports outcomes to investor
    • For-profit fund manager contracts with investor to provides outputs, consultant hired to evaluate outputs
    • Foundations/Investors/Funds/Research Centers/Gov’t partner to obtain and evaluate data
    • Investors (e.g. foundations, pension funds) may track through internal targeted investing programs
    • © 2007 Hagerman
  • Challenges
    • Time is money – balance feasibility in measuring data and credibility of data
    • Quality of outcomes - health insurance, living wage
    • No benchmarks aside from comparing against state standards (social) and ISO, LEED, EPA (green)
    • Lack of resources and varying levels of detail
    • Often no 3rd party regulator
    • Balance tensions - investor type and reporting requests
    © 2007 Hagerman
  • Looking ahead
    • Manage what you measure - tracking ensures social and environmental returns happening
    • Saves money and increases profits to investors
    • How to simplify the process and standardize?
    • Engage investors in the process?
    • Research: http://urban.ouce.ox.ac.uk
    © 2007 Hagerman