While impact investing has existed in various forms for a while now, the idea as we know it today is working its way from the fringes of the investing world and into the mainstream. People are becoming more open to the idea that financial and social returns on investments can be achieved at the same time without necessarily sacrificing one or the other. With the conversations surrounding impact investing being heard by the general public, it’s probably not a surprise that the academic world is picking up on them as well—specifically, the elite among business schools, including Harvard and Columbia.
More business schools across the United States are starting to teach impact investing. Whether they’re developing entirely new courses on the subject or teaching a few weeks of it as part of another unit, the courses are becoming popular among MBA students. Many universities are vying to be leaders in the field, and as a result of their increased attention, students who had been considering a more mainstream path to their degrees are trying impact investing. Falcons Rock Impact Investments loves the idea of the business leaders of tomorrow getting educated on the changes that they can make today, so here is more of a look at higher education and social responsibility in investments.
History and Investing
Impact investing is becoming part of a much bigger conversation about human rights issues, so the fact that it has become a popular conversation among business schools isn’t a surprise. Among MBA programs, however, there haven’t been significant resources dedicated to curricula or extra-curricular activities focused on impact investing in particular. There are still discussions to be had about the exact nature of “impact” and what it means for the future of the business world.
Impact investing itself, no matter what the precise definition, has existed in some form for decades when sustainable, responsible, and impact investing (SRI) was first conceived of. It became increasingly popular, especially when there was a great deal of social and political upheaval and changes to the status quo. Later, the use of environmental, social, and governance (ESG) criteria in the investment process came forward. Increased popularity, and in many schools awareness of a mission to improve the world, has led to impact investing evolving into its current form—and promises further evolution in the future.
Opportunities at Universities
Even if schools don’t have dedicated impact-investment curricula within their more traditional courses, there are still opportunities for MBA students to try something a little different. Some schools offer social venture clubs to try enticing traditional business students to at least try impact investments. Even if these students don’t stick with social ventures, they have at least had the education to take back with them to traditional finance, and the fact that they were curious about it is an encouraging sign. Other university programs offer students the opportunity to make impact investments and manage funds, giving these students the skills to consult and make investments in companies they might not have known about or considered otherwise to help leave a positive impact on the world. The Chartered Financial Analyst (CFA) Institute has recognized the merits of ESG integration and sustainable investing and has added these elements to its curriculum. Some university programs strive to become CFA-approved and therefore are incented to add sustainable investing to their coursework.
In addition, the MBA Impact Investing and Training Network (MIINT), which is made up of 25 of the world’s strongest business schools, hosts a competition for MBA students. Their job is to develop an investment pitch for a startup that they choose, and their work gets judged by partners from Bridges Ventures as well as representatives from Bank of America, Merrill Lynch, and Goldman Sachs. It’s a popular competition that saw more than 600 students compete in 2017: that’s hundreds of talented individuals invested in the future and in their field that will leave an impact on the investment discipline.
Changes on the Way
Big financial companies are getting in on the impact investment movement. Goldman Sachs and BlackRock are among these companies and their involvement will likely push other organizations to take similar steps. As more money comes into the impactful spaces, data is getting gathered on the value of these stocks. Within business school communities, there’s been a significant increase in interest among students, faculty, and alumni, whether it involves people pursuing internships, conducting research, or getting involved in other ways. It’s entirely possible that the field of business could evolve as a result of impact investing: we could see the development of tools that measure risk, return, and impact.
There are also power shifts within the business community and who is in charge. More women and millennials are getting involved in MBA programs, and these are the demographics that are most interested in having social returns as well as financial returns. As a result of these communities finding homes at business schools, these institutions are offering more programs to cater to their desires. Wealth and leadership shifts are happening now; we could see significant changes to the business field and the societal world within our lifetime.
Learn and Grow with Falcons Rock Impact Investments
You don’t have to have an MBA to take advantage of investment opportunities, and you definitely don’t need one to make a difference in the world. Falcons Rock Impact Investments is here to help you learn more about impact investing and the kind of good that you can do in the world. We research and screen our assets to make sure that they fit our criteria for having an impact, and we match these portfolios to fit your financial objectives. There’s a great deal of growing for the industry to do, but growth starts with us. To learn more about our process or to get started, click here.