Week 5 - Social impact reporting

Question 1

Difference between ESG and Impact investing

Answer 1

ESG investing - focuses on mitigation of ESG related risk (e.g., carbon related, human rights, board effectiveness) for the benefit of investors

Impact investing - prioritises pro-environmental or pro-social activities
(e.g., investments in clean energy or education while still aiming to
earn “blended returns”).

Question 2

Who reports impact

Answer 2

• Social investment funds (investors seeking blended returns for pro E&S activities) and foundations
• Venture philanthropists
• Nonprofits/social enterprises

Question 3

What is impact reporting

Answer 3

Measures long-term social benefit of an organization’s social activities on its stakeholders.

Question 4

How can impact reporting be reported?

Answer 4

• Narrative of effects on society or the community
• Quantitative
• Financialised value

Question 5

Summarise Danone case - embedding impact in business - required reading

Answer 5

Emmanuel Faber, CEO of Danone, emphasized the need for the food industry to take responsibility for negative impacts such as the spread of diabetes and obesity, and the depletion of resources.

Faber called for a redefinition of the purpose of business, stating that the ultimate goal of the market economy should be social justice.

He acknowledged the disconnect between consumers and their food, highlighting the industry’s focus on unhealthy, commoditized products.

Question 6

What is a Social Impact Bond (SIB)

Answer 6

A SIB is a contract with the public sector or governing authority, whereby it pays for better social outcomes in certain areas and passes on part of the savings achieved to investors.

Question 7

What are attribution and deadweight issues of social impact reporting

Answer 7

Attribution: The challenge of determining how much of a specific social or environmental outcome is directly caused by a company’s actions. It’s hard to isolate the company’s impact from other factors.

Deadweight: The portion of a positive social or environmental outcome that would have happened anyway, even without the company’s intervention. This challenges the additional value a company actually creates.