Moving Ahead Together: Implications of Blended Value For the Future of Our Work

Transcription

1 Moving Ahead Together: Implications of Blended Value For the Future of Our Work Jed Emerson, Copyright 2004

2 Parts of a Common Journey Sustainable Development Traditional For-Profit Companies Social Enterprise Value Maximization Corporate Social Responsibility Philanthropy (Venture Philanthropy, Strategic Philanthropy, etc.) Social Investing

3 A Zero-Sum Dissonance: The Traditional Value Proposition Quad A Financial Investments & Numeric Returns Economic Value +1 Quad B Social Value Social Capital Investments & Social Returns Quad C -1 Quad D

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5 Michael Porter: In this corporate competitive context, the company s social initiatives or its philanthropy can have great impact. Not only for the company, but also for the local society I used to see this area of corporate social performance as the last thing on my agenda ten years ago, but now I agree that social and economic issues are intertwined --European Business Forum, Issue 15, Autumn, 2003

6 Internal driving forces Social Environmental Values & Systems Economic A strong commitment to Business Principles and SD Shell Report GHG targets Brent Spar Re-used Shell Foundation $250m Child Labour Award ISO Cert. K11 Community developme nt in Nigeria C.Chair Diversity Target Venting Target Diversity target Flaring Target External driving forces Renewable Business $0.5b Carbon costing H2 Texaco Business Wind Malampaya Solar growth DJSI Financial roadmap

7 Implications For How We Think About: The Nature of The Firm Capital Investment (Market-rate, Concessionary, Philanthropic) Tracking Performance Development and Dissemination of IC How We Organize Our Work and Field(s)

8 The Nature of The Firm From Value Creation perspective, there is no difference between FP + NP. Currently, NPs under-perform economically; FPs under-perform socially/environmentally. Focus must be upon form, function and leveraged relationships that maximize total value not issues of corporate structure.

9 Capital Investment (Market-rate, Concessionary, Philanthropic) Objective economic capital market process viewed as lodged within social and environmental context. Capital Markets will seek highest and best use of capital But in pursuit of full, blended value. Diverse Investors take complimentary positions in pursuit of multiple returns and generation of full, blended value.

10 Core Elements of Foundation Asset Management 1. Asset Alignment 2. Strategic Grantmaking Practice 3. Engagement, Transparency, Accountability to Relevant Stakeholders 4. Development/Dissemination of IC 5. Active Education, Policy Development and Advocacy 6. Leverage of Environmental Value

11 A Unified Investment Portfolio Available Capital Unified Investment Strategy Capital Allocation FROI Risk Boundary Risk Free Rate Grant (Program) Recoverable Grants + PRIs SROI Risk Boundary Grant (Infrastructure) Treasury Note 6% FROI Traditional Diversified Investment portfolio Grant (Research and Development, Seed Funding) Equity Linked Zero Coupon Bond With SRI Index Options Private Equity Investing VC Fund Or Angel Investing Socially Responsible Angel and Social Venture Capital Fund Investing

12 Tracking Performance Financial return analysis, evaluation of nonprofit social impacts, and double/triple bottom-line frameworks are all needed to explore various components of capital performance and value creation but there is one bottom-line, a bottom-line reflecting a single, non-divisible blended value proposition.

13 Tracking Performance Documentation of non-financial performance will migrate from external reporting to internal, integrated MIS. Organizations (whether firms or investor groups) that are built to last view New Metrics as critical to firm management and maximizing value of both the venture itself and strategic partnerships.

14 Development and Dissemination of IC Future Knowledge will emerge from between the silos and not within. Knowledge will develop based out of practice informed by reflection and history. Academic institutions will increasingly cultivate Intellectual Capital driven by a commitment to intellectual curiosity and academic inquiry not donor development.

15 How We Organize Our Work and Field(s) The emergence of Value Networks will drive the organization of our work and structure our fields of practice. These Networks will be both spontaneous and facilitated but they will be driven by mutual pursuit of common challenges in structuring capital, advancing New Metrics and leveraging diverse resources to assure maximum impact.

16 Blended Value Process Overview of Blended Value Map Practitioners (CEO s, Managers, Social Entrepreneurs,) Corporate Social Responsibility (CSR) Social Enterprise Investors Areas to Explore Topics Resources (Books, Articles, Websites) Resource Organizations Cross-Cutting Issues Capital Questions Measurement and Metrics (Non-profits & CSR) Implications Infrastructure Strategic/Effective Philanthropy Social Investing Socially Responsible Investing (SRI) Social Investing Community & Double Bottom Line Investing Initiatives Leadership Examples Issues Under Discussion Organizational Capacity Regulatory, Policy and Tax Code Sustainable Development Creation of Value Networks to Leverage Cross-Silo Collaboration

17 Blended Value Process Theory of Change Overview Value networking across the silos of: Corporate Social Responsibility Social Enterprise Social Investing Strategic/Effective Philanthropy Sustainable Development Around the crosscutting issues of: Capital Metrics Leadership & Organizational Capacity Government Policy/Regulation/ Tax Code More Efficient Social Capital Markets Supporting Government Policy/Regulation/Tax Code Evolution and Application of More Effective New Metrics Improved Leadership and Organization al Development Increased Capital into Blended Value Organizations and Increased Effectiveness of that Capital Emerging Blended Value Practices Lead to: Increased economic return and social/ environmental impacts far beyond the potential of incremental efforts of existing organizations.

18 Interim Points Toward the Future An Expanded Vision Grounded in Pursuit of Total, Blended Value for Both Individual Investor and Shared Community Benefit A Commitment to Working Together Through Value Networks That Build Connections and Leverage Total Assets A Dynamic Platform of Support for the Development of The Field as a Whole

19 A Final Thought "Every company has a diagram of the universe in which they're the center. That's never true. We're all a node in a mesh." Douglas Busch, CIO of Intel Corp

20 And Two Final Perspectives on The Way Ahead

21 For more information Please see The Blended Value Map: Tracking the Intersects and Opportunities of Economic, Social and Environmental Value Creation as well as the supporting annotated bibliography and other documents available at

22 Graphic credits The graphic of a fractal is taken from a web site maintained by Uwe Krueger: and I would like to thank him for posting it for public use. Fractals may be thought of as graphic representations of mathematical formulas which have high degrees of self-similarity. They are finite areas bounded by infinite lines For more on this, please see: The graphic of a photo taken from the Hubble Space Telescope is from the NASA web site. Other graphics in this presentation are from reports, articles and presentations made by Jed Emerson and the staff of the Blended Value Map Process.