Social investment is about investment made for a primarily social purpose, creating a combination of social and financial value. Any investor will be motivated to a greater or lesser extent by each of these factors and will therefore wish to pursue financial or social return and increasingly a combination – or blend – of both. Socially motivated investment may also generate financial returns and financially motivated investment may generate social returns. There is a growing appetite among investors to understand the broader social value that is being created through their investments.
Investment is about deploying capital in order to generate more effective production of goods and delivery of services. When it works, the benefits can accrue to the investor, the investee, to customers and to wider society. Equally, we need to remember that investment can also generate greater social value, which is not necessarily captured in traditional financial flows. This social value may accrue to customers or to beneficiaries, but may also be generated to a sufficient degree so that some of this value can be attributed – or returned – to investors. This is what we mean when we talk about Social Return on Investment (SROI) for investors – helping investors understand the social value they create through their investment activity.
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