SRI: Past, Present and Future

In the 1980’s social investment was synonymous with government subsidized funds started to spur development and soft the blows of adjustment policies. These were surprisingly effective mechanisms for channeling flows of external finance, ensuring that they create results based projects that have the largest impact where it counts, at the bottom of the pyramid. They allowed large international development firms to focus on stimulating incubators and improving microfinance tools rather than monitoring the use of philanthropic donations. The majority of funds flowing through Latin America have created opportunities for the poor through temporary or permanent job creation through the execution of projects that improve economic and social infrastructure, as well as fulfill basic needs. A smaller proportion of the financing has been invested in direct production activities, usually through non-governmental organizations. Today, private sector investors, hedge fund managers and even multinationals are getting in on the action and seeing positive financial, environmental, and social returns from social investment funds (SIFs)

Hewlett Packard is one multinational that has held itself to higher standards of integrity, contribution, and accountability through its social investment grants. HP’s social investment programs have helped the technology giant connect with local enterprises and educate students about the benefits of technological innovation, as well as brand itself as a community leader in emerging economies. In the past two years, HP has donated more than $2 million in equipment and cash to school in Latin America, helping more than 10,000 students across the region.

investment space. Starbucks has invested over $9 million in Root Capital, a non-profit organization that provides capital, delivers financial training, and strengthens market connections to small and growing businesses, such as farmer cooperatives, that build sustainable livelihoods and transform rural communities in environmentally vulnerable locations. Through short-term harvest loans and long-term capital loans, farmers are able to sell their crops at the right time to get the best prices and to make capital investments. Starbucks has proven its commitment to its suppliers by providing the thousands of farmers that grow its coffee with access to finance. The partnership is part of the Starbucks “Shared Planet” Initiative, which aims to source 100% of its coffee from responsible producers and ethical traders by 2015.

Companies like Starbucks and HP are showing that the private sector can take the lead in creating responsible standards in ways that are efficient and profitable. These strategies also allow enterprises to stay ahead of the competition, foster support from government and civil society, protect the company from risk exposure, and increase brand equity. It seems that companies not making social investments must be falling behind the curve.