Discussion Agenda. Conscious Capitalism. Impact Inves2ng. Market Size, Shape & Feel. What s it all Mean. Change in Approach: Why not What

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1 Discussion Agenda Conscious Capitalism Impact Inves2ng Market Size, Shape & Feel What s it all Mean Change in Approach: Why not What 1

2 Some Definitions q Conscious Capitalism Companies that exist for a purpose greater than just creating shareholder value and succeed by operating to benefit all stakeholders including shareholders q Impact Investing Investing for both social and financial returns A desire to make an impact on the world 2

3 Conscious Capitalism Exemplars 3

4 Conscious Capitalism Described 4

5 Firms of Endearment Public Company Study 5

6 A Conclusion: Stakeholder Engagement Matters 700 Firms of Endearment 15-Year Performance Index vs. S&P 500 (Monthly) Index Value (based on Price) FOE Outperformance as of 2/2014: +125% S&P 500 Index Firms of Endearment Index 6

7 Impact Investing Known by Many Names q Investing with the Intent to Profit and Benefit the World Impact Investing Double Bottom Line (Profit and Social Impact) Triple Bottom Line (Profit People Planet) Slow Money (Food Movement) Conscious Capital Collaborative Capitalism & Blended Value (Jed Emerson) Socially Responsible Investing (SRI) Corporate Social Responsibility (CSR) Environmental Social and Governance (ESG) The Purpose Economy (Aaron Hurst) 7

8 Impact Investing Origins & Development q Quakers in 1600s aligned investments and purchases with values q Shakers in 1800s businesses aligned with and funded social values q Apartheid boycotts of the 1960s q Actions to lessen social consequences - Clean Water Act 1972 q Improved corporate governance - Foreign Corrupt Practices Act 1977 q Organic foods movement: Whole Foods founded 1980 ($17 Billion) q 1990s foundations started blending return and mission objectives q 2000 NYU Stern School led the conversation about the non-financial effects of corporate production q 2007 the term Impact Investing was coined by the Rockefeller Foundation for intentionally investing for financial and social returns Committed $35 million to study impact investing and develop an infrastructure 8

9 Impact Investors: A Growing Number Of the 125 impact investors surveyed, roughly half have been in the market 10 Years 9

10 Impact Investing Stage and Security Private Equity Private Debt Mature, private Growth stage 10

11 Market Size is Hard to Pinpoint q Size of market is fuzzy and depends on the definition or perspective Conscious Capitalism - Firms of Endearment 20 companies have $1.6 trillion in market cap SRI Funds: $3.7 Trillion invested in the US alone B (Benefit) Corps. 1,257 companies and adding companies this year Many are small; lots of them are middle market and growing Global Impact Investing Network (GIIN)/JP Morgan 2014 Study 2010: $1.1 Billion 2011: $2.2 Billion 2012: $8.0 Billion 2013: $10.6 Billion 2014E: $12.7 Billion North America: 46% of the investors, 22% of the assets Direct company investments 78% Mean investment $85 million; median investment $13 million 2020: $400 Billion to $1 Trillion Perspective: PE market (all classes) AUM of $2 Trillion with $250 Billion invested annually; all financial assets worldwide: $220 Trillion 11

12 Market Stage of Development Marketplace Building q Development of market per Rockefeller Foundation Report July

13 Market Shape: What do CC, Impact Investing & B Corps Share? q q A Belief that Organizations best succeed when focused on the societal (market) need and not solely on the owners desires (shareholder value) Life on this planet is interconnected and not a zero-sum game I cannot win at your expense for long A higher purpose unites all stakeholders in a common cause, mission or deeply held belief that when combined with an intent to benefit all stakeholders becomes the invisible hand that prospers all We are entering a new EPOCH of economic development the purpose economy that will build on the accomplishments of the agrarian, industrial and information economies Where Why and How we do our business is more important than the What we do as that is quickly becoming a commodity in virtually all sectors These beliefs change the way business is done at these entities The goal is not to do business with everybody who needs what you have. The goal is to do business with people who believe what you believe. Simon Sinek 13

14 What Does it all Mean? q B Corps coming to Ohio probably in 2015 q Relationships are back they mean something to these people q Transactions and financings: who and why are important; it s not just how much Buyer questionnaire - culture assessments - shared values q Sustainability Accounting Standards Board Reporting for filing companies today; private companies eventually q Behavioral qualification standards (think UL, SAE for corporate conduct) B Lab, GIIN, IRIS, GIIRS, GRI q Conflict minerals reporting today; greater transparency to the whole supply chain tomorrow q Cultural and strategic assessments used by buyers and sellers in M&A transactions q Bad for litigators maybe q New corporate-like entities in social enterprises doing capital market financings 14

15 Mergers & Acquisitions: Who is as Important as What All Vigor companies share common goals: providing world-class maritime and industrial services to build the products customers need, to build the family-wage career opportunities craftspeople deserve, and to build the communities where Vigor employees live and work. 15

Impact Investing 101. Catherine Godschalk, Calvert Foundation Catherine.Godschalk@calvertfoundation.org

Impact Investing 101. Catherine Godschalk, Calvert Foundation Catherine.Godschalk@calvertfoundation.org Impact Investing 101 Catherine Godschalk, Calvert Foundation Catherine.Godschalk@calvertfoundation.org Investment philosophies focused on social impact have many names Socially Responsible Investing Sustainable