Bowing to concerns from some of their big investors, 13 of the largest private equity firms on Tuesday will agree to a United Nations initiative for socially responsible investing, according to an industry trade group.
The private equity industry has come under increased criticism in recent years from labor unions and the governments of several countries over its members’ management practices.
Investors like the California Public Employees’ Retirement System and the California State Teachers’ Retirement System urged the council in 2007 to adopt a version of the United Nations’ Principles for Responsible Investing, which encourages big investors to use environmental, labor and governance principles into their investing guidelines, The New York Times’s Michael J. de la Merced reported.
I’ve been meaning to reblog this for a while:
The question of creative capitalism is whether there is some role for institutions that falls between traditional profit-making and nonprofit firms. Is the world being well served with these two clearly distinguished types of entities, one of which serves only shareholders and the other of which has some other goal? Does it make sense to consider hybrid organizations that have an obligation to earn financial returns, for some of their investors, and social returns for others? In a sense, the world has long had such hybrids in the form of profit-making subsidiaries of philanthropies and companies, like Ikea, that are owned by foundations.
Such hybrids will always be messy and may end up being unworkable. Perhaps the Friedman-Posner-Summers distaste for them is correct.
Marketing, Mr. Lavoie says, can help One Laptop Per Child move toward its original goal of a $100 laptop, which is possible only with the economies of high-volume manufacturing. “To get there, they need to sell a lot of computers,” he said.
Cause-related marketing can increase sales as much as 74 percent in certain consumer-goods categories, and consumers spend twice as long looking at cause-related ads than generic corporate ones, according to a study by Cone and Duke University’s Fuqua School of Business, MarketingCharts reports.
The 2008 Cone/Duke University Behavioral Cause Study finds a strong link between cause-related marketing and consumer choice.
Jim Schorr, who lectures on social entrepreneurship at UC Berkeley’s Haas School of Business, says he can’t imagine “a higher calling for the next generation of tech entrepreneurs.”
“The opportunity to focus technology and tech entrepreneurs on the unaddressed, underserved segments of society is enormous,” Schorr said. “Developing and extending technologies with limited profit potential, using market-driven approaches, can deliver both social and financial impact and sustainability.”
The Portfolio Data Management System (PDMS) will focus on so-called social entrepreneurs, or groups trying to bring about social change while also functioning like a business—in some cases even trying to make money. Some social enterprises are nonprofits, while others seek a return on investment.
The PDMS is to be unveiled at the Clinton Global Initiative Summit. Link
First, they confused charity with commerce: that is, they uncritically applied the language of outcome-oriented investment to efforts to change human behavior in social settings. Humans, alas, don’t operate neatly according to market logic, though incentives can shift behavior.
Second, donors seem reluctant to talk about their own self interest. Instead of admitting their personal desires, they speak of selfless charity. Of course, donors can do whatever they want with their money, but this attitude doesn’t help them grow.
The three donors asked for my help in crafting a strategy for alleviating urban poverty. I agreed to work with them for one year, but with conditions. Most important, they had to arrive at a “loss figure” — a sum of money that they would give away (to actual causes), but which would be entirely devoted to their own learning.
From Business Week:
The qualities that make a product good for the developing world—sturdy, cheap, adaptable, modular, energy-efficient, environmentally sound, computer platform-neutral, and bandwidth-savvy—make it a good product, period. Suddenly “less is more” goes from abstract design ideal to the only viable option. This is why some of the most innovative ideas today are coming from efforts to address the needs of those most in need.
If you’re in this space, you know it’s talent that’s the bottleneck, not ideas. Link
Check out Creative Capitalism blog:
Creative Capitalism: A Conversation is a web experiment designed to produce a book — a collection of essays and commentary on capitalism, philanthropy and global development — to be edited by us and published by Simon and Schuster in the fall of 2008. The book takes as its starting point a speech Bill Gates delivered this January at the World Economic Forum in Davos. In it, he said that many of the world’s problems are too big for philanthropy–even on the scale of the Gates Foundation. And he said that the free-market capitalist system itself would have to solve them.
Charities are generally unwilling to cut prices for benefits, even when things get grim. “We don’t like to put the events on sale,” said Stephanie Astic, whose Stephanie Astic Productions organizes fund-raisers that are largely dependent on corporate giving. “But I think everybody is starting to freak out. At the end of the day, you have to throw the net out to a wider group of people.”