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  1. 1. 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
  2. 2. Institutional Investors in Targeted Investing <ul><ul><li>Banks, insurance companies, foundations </li></ul></ul><ul><ul><li>Public sector pension funds over $12 billion </li></ul></ul><ul><ul><li>Transparency of returns both financial and social key for growth of industry and flow of institutional capital </li></ul></ul><ul><ul><li>Simplify social reporting $ invested </li></ul></ul>© 2007 Hagerman
  3. 3. Financial returns <ul><ul><li>Fixed income, equity real estate and venture capital </li></ul></ul><ul><ul><li>Risk-adjusted returns against benchmarks </li></ul></ul><ul><ul><li>Benchmarks </li></ul></ul><ul><ul><ul><li>Fixed income : Lehman Aggregate Bond Index </li></ul></ul></ul><ul><ul><ul><li>Real Estate : NCREIF (National Council of Real Estate Investment Fiduciaries) Property Index </li></ul></ul></ul><ul><ul><ul><li>Venture Capital : Thomson Financial Venture Capital Index </li></ul></ul></ul>© 2007 Hagerman
  4. 4. Moving beyond the financial <ul><ul><li>You Manage What You Measure </li></ul></ul><ul><ul><li>Kaplan and Norton’s Balanced Scorecard move beyond financial to measure customer perspective and innovation </li></ul></ul><ul><ul><li>Beyond traditional financial regulatory systems </li></ul></ul><ul><ul><li>International Organization of Standardization (IS0) </li></ul></ul><ul><ul><li>ISO 14000 certification in environmental management </li></ul></ul><ul><ul><li>Create an equal level playing field in a particular industry </li></ul></ul>© 2007 Hagerman
  5. 5. Extra-financial language <ul><li>Outputs or Outcomes </li></ul><ul><ul><li>Tangible effects investment has had in the area </li></ul></ul><ul><ul><li>Measurable, quantifiable, positive results for: </li></ul></ul><ul><ul><li>Employee, Community, and the Environment </li></ul></ul><ul><li>Impacts </li></ul><ul><ul><li>Long term results - broader societal or economic change measured years after program completed </li></ul></ul><ul><ul><li>But for? factor would economic changes have happened anyway regardless of the investment? </li></ul></ul>
  6. 6. Social and green outcomes <ul><li>Employee outcomes : jobs and living wage, health insurance, profit sharing programs </li></ul><ul><li>Community outcomes : export-oriented sales, tax revenues </li></ul><ul><li>Green outcomes : </li></ul><ul><ul><li>Business: clean-tech, recycling, company energy saving </li></ul></ul><ul><ul><li>Real estate: transit-oriented, LEED-certified, EPA Energy Star, global green, greenfield acres saved </li></ul></ul>
  7. 7. Models of partnerships measuring social outcomes <ul><li>For-profit fund manager & nonprofit advisory services </li></ul><ul><li>For-profit fund manager requires company side letter and reports outcomes to investor </li></ul><ul><li>For-profit fund manager contracts with investor to provides outputs, consultant hired to evaluate outputs </li></ul><ul><li>Foundations/Investors/Funds/Research Centers/Gov’t partner to obtain and evaluate data </li></ul><ul><li>Investors (e.g. foundations, pension funds) may track through internal targeted investing programs </li></ul><ul><li>© 2007 Hagerman </li></ul>
  8. 8. Challenges <ul><li>Time is money – balance feasibility in measuring data and credibility of data </li></ul><ul><li>Quality of outcomes - health insurance, living wage </li></ul><ul><li>No benchmarks aside from comparing against state standards (social) and ISO, LEED, EPA (green) </li></ul><ul><li>Lack of resources and varying levels of detail </li></ul><ul><li>Often no 3rd party regulator </li></ul><ul><li>Balance tensions - investor type and reporting requests </li></ul>© 2007 Hagerman
  9. 9. Looking ahead <ul><li>Manage what you measure - tracking ensures social and environmental returns happening </li></ul><ul><li>Saves money and increases profits to investors </li></ul><ul><li>How to simplify the process and standardize? </li></ul><ul><li>Engage investors in the process? </li></ul><ul><li>Research: http://urban.ouce.ox.ac.uk </li></ul>© 2007 Hagerman

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