COMM 386L - Impact Investing: Social Finance in the 21st Century
Impact investing has emerged over the last decade as a new sector at the interface between philanthropy and investment. The sector currently represents $9-12bn of investment capital. This course provides an introduction to the impact investment sector and the related responsible investing sector, describes the evolution of impact investment, the growth of new asset classes, and the opportunities and challenges faced by investors seeking meaningful impact investment vehicles.
According to the Global Impact Investing Network (GIIN), impact investing is defined as “investments made into companies, organizations and funds with the intention to generate measurable social and environmental impact alongside a financial return”. Impact investing, has emerged over the past decade as one of the most talked about strategies for tackling social and environmental problems. With the goal of creating measurable impact in addition to financial returns, impact investing selects ventures working towards positive social or environmental outcomes. The concepts of impact investing and social enterprise emerged out of a recognition that the private sector could also contribute to the development of social agendas, while gaining a financial return. Rather than focusing solely on a risk-return nexus, impact investing broadens to the “triple bottom line” to include financial, social, and environmental gains.
Related but distinct from impact investing, is the field of responsible investing (RI). According to the Responsible Investment Association of Canada (RIA), RI is refers to the incorporation of environmental, social and governance factors (ESG) into the selection and management of investments. RI focuses on public market investing, in both retail and institutional contexts, and encompasses a variety of portfolio construction and stewardship strategies, including proxy voting, filing shareholder resolutions and shareholder engagement.
Through a combination of readings, discussions, guest lectures, research, a pitch competition and a portfolio allocation project, students will gain deep insight into the different perspectives brought by the impact investor who is concerned with stimulating social and environmental impact while generating financial return.
Business students will complete the course having obtained a strong understanding of the positive impacts financial tools can have economically, socially, and environmentally. Students will also acquire practical knowledge of the tools and methodologies brought to impact investment decisions and assessments.
Upon completion of this course, students will be able to:
- Describe the history of impact investing, how it has grown, and its current status alongside socially responsible investing and ESG screening.
- Discuss how responsible investing fit in to the spectrum of sustainable finance opportunities.
- Describe major environmental, social, and governance (ESG) issues that responsible investors are concerned with.
- Analyze and compare different responsible investment strategies, including negative screening, corporate dialogue, proxy voting, and ESG integration. Evaluate impact investing in the Canadian context and be able to compare Canada to the UK and US in terms of legal structure, public policy, and future potential.
- Identify metrics used in evaluating social ventures, as well as where to find metrics resources and their relative strengths and weaknesses.
- Describe why measuring impact is important and understanding the challenges faced by social ventures in attempting to measure their own impact.
- Have a deep understanding of multiple sector-specific issues relevant to impact investing.
- Apply tools to analyze social venture performance at both early stage and growth stage for possible funding.
- Compare and contrast traditional portfolio management with new approaches such as Environmental, Social, and Governance criteria.
- Analyse and compare different forms of impact investing (e.g. Venture Capital/Private Equity (VC/PE), Social Impact Bonds (SIBs), and Demand Dividends).
- Create portfolio strategies specific to impact investing and be able to apply these strategies to real-life situations.
- Apply the tools and tactics learned in the course to evaluate impact investing opportunities.