This post is part of a series covering the Social Capital Markets 2008 Conference, which 3P is excited to be a part of.
Napoleon Wallace — Remember when doing “good” came at the cost of doing “well”? This longstanding rule of thumb has been a fundamental investment policy for decades, and consequently, it has created a paradigm of misalignment between social impact and investment capital. Unfortunately, there has been no market to marry this disparity. However, as more alpha-focused investors begin to realize that there are financial consequences to social misalignment, cracks in the previous paradigm have begun to show.
With these flaws now visible to the naked eye, the leakage of capital into socially-conscious investment vehicles is striking. In 2007, 1 in every 9 professionally-managed dollars (PDF Link) was invested with socially-responsible considerations, representing aggregate dollar growth of 324% since 1995.
This growth is striking, and it is also indicative of a growing investor sentiment: “there IS value in values”. This is not said to make any distinction between value systems, but instead to illustrate that the previous model of externality-unconscious investing is functionally obsolescent… to announce that all impacts (social, environmental and financial) are a fundamental component of even basic investment decision making.
This sentiment and this movement – the ‘Social Capital’ movement – is the next natural step in the evolution of how we look at risk and returns. Further, it underpins a coming wave of social innovation in the capital markets that may finally marry the historical mispricing of social impact and its financial value.
In trader speak, SoCap08 is “making the market”, and giving us our first look at this emerging space.
The conference will feature an assembly of market- and knowledge- leaders in the social capital space, including entrepreneurs, foundations, development and aid agencies, and for-profit but mission-focused social investors. We are all fortunate to be aware…here…now, and through SoCap08, each attendee will get a first-hand view of the possibilities contained within this revolutionary market, and more, a first-hand opportunity to impact what this amazing space will eventually become.
Napoleon Wallace is a member of UNC Kenan-Flagler’s MBA Class of 2010. Napoleon spent the 4 years prior to business school as an investment banker and sell-side energy analyst, and he’s currently engaged in two sustainability-focused projects within UNC’s Center for Sustainable Enterprise and 4th Sector Bank.