Social Responsible Investment: The Concept Of Social Responsible Investment

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Impact Investing is part of a trend of concepts that aimed to review the way people were investing their money. The idea of harnessing the power of the market in alignment with investor values dates back to the 19th century, when religious institutions sought to avoid investing in "sin" stocks, such as tobacco or alcohol industries. In the modern times, we can see the environmental and anti-apartheid movements in the 70’s as the return of these values. It was also in the 70’s that the concept of Social Responsible Investment (SRI) emerged. SRI was the inclusion of social and environmental variables besides financial return in the investment decisions. The idea was to avoid companies that could harm the environment or that could behave in unethical …show more content…

This new concept does not compete with the previous concepts listed because Impact Investing is one step further. Impact Investing aims to do more than doing no harm, it wants to use investment as a positive tool to support companies that have the potential to solve social challenges, but that also produce financial returns. In this spectrum line of concepts, Impact Investing sits in middle, while SRI is on one side and Venture Philanthropy is on the other. It was not only the term impact investing that was coined in 2007. It was also the creation of global network of individuals and institutions that shared the same idea of growth, known as Global Impact Investing Network. (Rodin & Brandenburg, …show more content…

This is considered the most innovative model of impact investing. It included many other areas into the game, like nonprofits organizations, foundations and governments. The most common pay for performance model is the Social Impact Bond (SIB). Social Finance (“Social Impact Bonds,” n.d.) was the first institution to implement a SIB and defines it as “a financial mechanism in which investors pay for a set of interventions to improve a social outcome that is of social and/or financial interest to a government commissioner”. It means that a private investor – commonly played by private foundations – funds the social intervention. If the social provider – usually played by nonprofit organizations – perform successfully, the government pays back the investor according to the performance. SIB proposes a new alternative to charitable private investment that is usually limited to donations and philanthropy (Cohen,

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