The Aggregate Confusion Project at MIT has done a great job of analysing why there is a tremendous divergence between different sources of impact data (sustainability data). They conclude that the biggest contributing factor is that different people fundamentally measure impact in different ways. Furthermore, people organise the various attributes according to different scopes, and assign different weights to each attribute. These three categories of measurement, scope, and weights provide a good starting point for fixing the problem.Read More »
Mega-trending towards zero – what next?
Three long-term economic trends all point towards zero: 1- official interest rates (5,000 years); 2- dividends from stock markets as a proportion of total returns (70 years); and 3- economic growth rates (2,000 years). What are the potential consequences for our economic model if these mega-trends are correct and if they persist – what next?
I wrote this text in 2018 as a thought experiment. It was never published at the time because I was not sure how such a heretical narrative might be beneficial… but now, as the COVID-19 pandemic triggers a global financial calamity, I hope people find it useful as they navigate the crisis and contemplate the systemic changes that may be necessary.Read More »
What is a market-rate of return on our data?
To find the answer, we need to go back to the origin of the word “data”. ‘Etymology can give a startling new perspective on many of the phrases we frequently toss around in business’, says Gillian Tett in her FT column Language matters: the real meaning of Big Data. The word “data” comes from the Latin verb “to give”, and could therefore be translated to mean “a gift”. If the original meaning of words is important, then we should be careful how we use them or risk distorting the effects they have, without even realising it.Read More »
Triple Entry Bookkeeping & Sumptuous Accounting Principles
Introducing “Triple Entry Bookkeeping” – an accounting methodology that incorporates the non-financial #impact of commercial transactions. It is a way to factor in #externalities, positive or negative, within market prices and asset valuations.
It sets out rules for #ProgrammableMoney that can account for impact (+ & -) and adjusts purchasing power accordingly, for both buyers and sellers i.e. creates market based incentives for doing good.
It offers an arithmetic framework that could support proposals by @YanisVaroufakis for the #Kosmos (a synthetic digital currency modelled on the #Bancor by John Maynard Keynes, originally proposed as a unit of account to track international flows of assets and liabilities).
Read the full paper at www.sumptuousaccounting.org
EngagedX – new website 2016
Dear friends and colleagues*
We have launched our new website for 2016 …
Truth or dare – transparency by vanguard social investors reveals risks and returns in a maturing market
A landmark study released today via the Government’s open data portal reveals for the first time historic performance of UK social investment activity.
The total financial performance (comparing all capital draw downs with all capital, interest and fee payments) over the 12 year period was negative 9.25% (-0.77% annualised)*. Counterintuitively, this is remarkably good given that pricing of capital was driven by affordability and not risk adjusted. Moreover, most of these social investments were made after the investees had been refused finance from High Street institutions. They would therefore be classified as high risk deals.Read More »
Coining the terms ‘HEAVYreturns’ and ‘Enumeme’
Money, finance and capital markets are social constructs that have ostensibly evolved for societal purpose. Yet paradoxically finance and enterprises that intentionally target social returns need to be prefixed with the word ‘social’ (sometimes ‘impact’, sometimes ‘social impact’) to make it clear that they have an explicit social purpose. Measuring social impact, and by extension environmental impact, is an attempt at quantifying the societal relevance of all this activity – and shining a light on what might be otherwise described by economists as positive or negative externalities. But measuring social impact directly is arguably one of the most difficult ways of universally assessing social usefulness. This is because not everything that is important can be easily measured, and not everything that can be measured can be easily compared with other important things because they often often get measured in different ways.
‘X’ Capitalism…fixing capitalism with capitalism
Below are the slides of the keynote address that I gave at the 9th Annual Social Responsibility Forum, IE Business School (Madrid, Spain). If the presentation does not load, you can find the original here.
Social Investing – from Hype to Impact?
Impact investment is blossoming. What started as a fad for idealists is gradually becoming a mainstream concept often discussed by fund management hotshots and company executives. The concept itself is certainly appealing. Investors are realising that they have the possibility to help solve some of the world’s most pressing social problems and make a profit at the same time.
In the aftermath of the financial crisis, the old debate of whether financial markets can become a force for social good has been rekindled. For all of the buzz around it… read more >
Much is happening in the UK and in other countries. This article focuses on the European context where the EU has set as a priority social entrepreneurship and social investment. This is building of a long tradition associated with the social economy. Steps are being taken to ease cross border social investment. Originally published by Philanthropy Impact Magazine: 6 – SUMMER / AUTUMN 2014, authored by Stephen J. Barnett, Beatriz Jambrina Canseco and Karl Richter (Euclid Network)
DATA UNLOCKS CAPITAL – WHY SOCIAL INVESTMENT AND IMPACT INVESTING NEED DATA AND WHY IT IS A PRIORITY
Great article by my co-founder Rupert Evenett explaining why we’re passionate about creating EngagedX.
Normative Capital - On Social Investment, Finance for Social Purpose and the Role of the City
Data unlocks capital.
Data sets the risk and return expectations for providers of capital and thus provides the basis on which the provision of capital for social investment and impact investing can be scaled. Data gives a baseline for social investment and enables pricing for risk and return. Data shows how social investment and impact investing fits into modern portfolio construction compared with other investments and investment classes. Data signposts to front line organisations what sort of capital investments are available and on what terms. Data benchmarks success and investment readiness in social investment and impact investing – providing case studies and the aggregated investment characteristics of success. This helps new and existing investors to understand the drivers of social investment performance. Data identifies social investment gaps and opportunities – making the market more efficient and maximising public benefit. Data maps social investment. Data supports local as well as national…
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