Has Capital Acquired a Conscience?

Ever the pessimist when it comes to money and power, in my heart, I hope so.

Living within unbridled capitalist markets might not be the answer to financial success after all. At least this seems to be the opinion of the SOCAP (social capital) conference. With the recession a consideration on the global level, people are asking questions about whether socially responsible investing might be the way forward as more traditional capital markets have made cuts, lost professionals and simply disgusted others. While the idea of developing a combination of social impact and capital markets is not new, the interest in it as a valid form of capital gains is and seems to be growing. SOCAP claims to be the intersection between money and meaning as an organization seeking to inspire economic change thorugh raising the validity and influence of measuring success in ways that extend beyond profit margins.

“Belief in profit-driven motives as the sole metrics of performance has been fundamentally shaken. Our perceptions of risk have been forever altered. And our economy is shifting toward a new foundation.” Says the website for this year’s conference.

As economic pinches are felt all over the globe a new concern for the social awareness has arisen and it is driving the focus towards avoiding future recessions and expanding capital markets with more socially responsible choices so that less money is fueled towards anti-social companies such as cigarette companies, and refueling funds towards companies with environmentally sustainable plans for business as well as plans that have social development in their business plans.

These organizations are moving forward with solid records showing strong returns and gains in the midst of recession in various areas of the market. For example one company is providing debt-finance for low income housing which has a larger positive social impact comparable to the success rate of micro-loans in third world countries.

There is even talk of the generation of a social stock exchange and what might be exchanged by whom in such a market. While there is definitely room for excitement over ethical considerations being made popular by the idea of profits, might this be misleading? Who measures the social good and what sort of impact is determined as definite social good?

The SOCAP conference last year unveiled a system the Global Impact Investing Rating System (GIIRS) which should be able to provide a triple bottom line, measuring environmental as well as social impact with financial return as well. Speakers included Andrew Wolk of Root Cause (a non profit seeking to support social innovators and educate socially conscious investors) Gary White of Water.org (an organization that prescreens partners for ethical resource use while bringing water to the world’s poor) and Steve Newcomb (CEO of Virgance), a company seeking to build companies geared at changing the world, just to name a few. The list is extensive and includes UN members, and other socially conscious companies from around the world. The unveiling of the GIIRS sstem happens sometime during the conference which begins today, September 2nd and should be a cause for some cheers amid doubts about the future of the market. While some ideas in the social investment market’s development will no doubt flounder as with any market, others will be solid leads that provide great alternatives to more anti-social capital markets.

Expanding investing into the sector of social aid could be the future of finance as the GIIRS system develops. The Obama administration is around for another three years, if the system proves accurate and successful it may become part of the standard for business practice in the developed world among rich companies, with incentives for poorer countries. This might also be the break that Ben Bernanke needs to solidify the market in the coming years with new incentives for spending towards social capital by bigger companies. Just like emissions trading on the global scale is being conducted, the market might in a few years move towards investment based businesses having a triple bottom line, with social and environmental impact being part of the way a company’s success is measured and reported in all markets. Or it might simply become something that the companies of the future will want to volunteer to incite socially conscious investors. Should this happen it might be the way forward for a world growing more concerned with global well being. GIIRs is not the end all, but it’s a step that allows people to build a bridge that is investments with social responsibility.

Of course the danger here is philanthrocapitalism selling the experience of social activism while retaining a ruthless profit based bottom line. All systems of money are based in greed, acquisition and power, and that’s not about to change. I recognize the dangers that this system presents, but I still think the triple bottom line is a way forward which will need mediation, more creativity and people open to truly caring about more than rising numbers in the profit margin. Sometimes these companies will be ruthless in selling the experience of caring for the environment and doing real good in the world. But that’s on us as investors to research and determine.

Get more information on GIIRS here and here.

For Further Information on Social Capital and the SOCAP conference see:

http://www.socialcapitalmarkets.net/

http://www.virgance.com/

http://water.org/about

http://www.rootcause.org/

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2 thoughts on “Has Capital Acquired a Conscience?

  1. Good points about socially responsible investing.

    I believe that when we invest in a company, or many companies in the case of a unit trust/mutual fund, we share in the responsibility for the activities of those companies as well as participate in the outcomes of their corporate activities. So, anyone valuing their personal or spiritual growth has to take these things into account when investing.

    Also, if everyone invests according to their personal values, then, since so many of our core values are alike — and are supportive of higher ideals — that in the long run, only companies employing these higher values will truly prosper. And there is real evidence of this now.

    I advocate, teach and write on the subject of ethical investing — and have a popular website that has unique information which might interest you. It includes the latest global green and socially responsible investing news and research. My site is at http://investingforthesoul.com/

    Best wishes, Ron Robins

    • Rob, thank you so much for your reply. I’ll be sure to check out your site on a semi-regular basis.

      I agree with your points about responsible investing.

      However, I don’t feel that this will undo companies running on corrupt values. I think that the problem with social investing is that it can easily become a sort of going through the motions of social activism without causing real change. Though, I suppose I must admit that I am always skeptical of money and power.

      I’ve checked out your website, and I thank you for reading and investing the time in writing a response.

      Cheers,
      Eli

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