Firm Spotlight: BlackRock, Inc.

by Sofia-Marie Mascia

If there is one man on Wall Street who can demand socially responsible investment, it is Laurence D. Fink, CEO of BlackRock – the world’s largest asset management firm. In an annual letter to his CEO’s, Fink stated,“Society is demanding that companies, both public and private, serve a social purpose.” He boldly asserted that as a fiduciary, BlackRock does have a responsibility to drive long term growth that meets the demand of their client’s growth. His belief is that, “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

This statement comes at a time where faith in governments are low, and influence of stock exchanges are high. BlackRock has set the stage for influencers of Wall Street to account for “governments failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining.” BlackRock is not alone in its participation in this seismic shift: in January alone,Wall Street has also seen Berkshire Hathaway, JP Morgan and Amazon team up to address America’s healthcare epidemic independent health care company for their employees in the United States. Neither initiative is without economic clout – Fink promises asset holders that if a company does not display a sense of purpose or commitment to social responsibility,“it will ultimately lose the license to operate from key stakeholders.” Fifty years ago Milton Friedman posed the question – “What does it mean to say that ‘business’ has responsibilities? Only people can have responsibilities.” To him I say, welcome to 2018.

Impact Investing Gathers Renewed Strength in First Days of Fall

by Mariana Garza

It’s not every day that Impact Investing makes financial headlines. So when it does, you know that the impact, will be of considerable monetary value. Some argue that for it to continue this upward trend, it has to go mainstream.

Although it’s working its way through the millennial ranks, it has yet to become a household name. Though these new renewed efforts do seem to be working towards that goal.

Salesforce, an American cloud computing company, is leveraging its own financial services to invest in companies that use its software to enact innovation in the fields of workplace development, equality, sustainability, and the social sector. How are they doing this? By using their own corporate capital to launch a $50 million Impact Investing Fund. The company has been inching its way to this big step by first starting Pledge 1%, an advisory program that over a thousand companies have adopted to donate 1% of their resources to charity. Then, the company decided that driving social good should be synonymous with driving good returns, the principle on which impact investing rests. The company went carbon neutral, 33 years before schedule, and started Salesforce Ventures, which has backed over 200 enterprise companies including Dropbox. This new impact investment fund is Salesforce Ventures baby, and the genius of it is that as each company they invest in succeeds, Salesforce succeeds along with a targeted part of society or an industry. A company they’ve already invested in, Angaza Design, is a pay-as-you-go platform for renewable energy products like solar lanterns; they largely operate in Africa and South Asia for off-grid costumers by means of mobile micro-payments.

In other news, Bono-backed Rise Fund raised $2billion, one of the largest impact investing funds ever. Similar to Salesforce Ventures, it targets deals that are ESG oriented in a variety of industries such as education, agriculture, energy, and healthcare. Of course, as product of collaboration between TPG Growth, Elevar Equity, and The Bridgespan Group, profits are important, so it’ll be interesting to closely watch their investments (and Salesforce’s) in the year to come.

Recent Natural Disasters: An Impact Investing Wake-up Call

by Mariana Garza

It’s strange to think that something positive can come out of the devastating weather events and natural disasters that have occurred as of late, or that the events themselves are what pushed investors over the edge to move capital somewhere where, yes, profits can still be made, and where positive impact can make a big difference.

Yet, this is exactly what has happened.

Hurricane Harvey and Irma not only left behind environmental destruction, but also massive economic destruction, wiping out nearly $200 billion of economic value. Unfortunately, this highlighted the lack of investment in sustainable infrastructure in the United States. This infrastructure not only needs to be sustainable in terms of longevity, but also in terms of how environmentally friendly these structures will be: will they be worked into the natural environment or will they inhibit habitats, will they add or subtract to the current CO2 levels in the atmosphere, amongst many other questions and concerns.

In response, the Environmental Defense Fund released the “Investment Design Framework”, a framework that will help local and state governments mobilize private investment. This is the first-ever organized written system that outlines how the private sector will fill in critical funding gaps. The report draws methods from already existing financial practices such as how DC Water uses Environmental Impact Bonds and how the New York Green Bank redistributes risk between private investors and public agencies to accelerate clean energy. This is where impact investing steps in, and I, along with the rest of HCIIG, am excited to see where this framework will take the field this coming year.

Stay tuned for updates!