Thomas Bishop, Two-year MBA '16

Apr 20 2016

Socially Responsible Investing Goes Mainstream

Thomas Bishop, Two-year MBA '16

I had the opportunity to intern with Calvert Investments, a socially responsible investment firm, last summer. I chose to pursue an MBA at Johnson to study innovative ways to finance social impact so I selected the Sustainable Global Enterprise (SGE) immersion. During the program we went on a career trek to Washington, DC which was instrumental in connecting me to companies within my field of interest including Calvert Investments, Calvert Foundation, and MicroVest).

I spent the summer with Calvert as a sustainability research intern, writing research briefs on a variety of pressing issues in corporate social responsibility and their impact on investment decisions. It was an excellent introduction to the quickly growing field of socially responsible investing.

The industry has evolved from the avoidance of “sin stocks,” such as alcohol or firearms companies, to a more complex methodology of rating companies on environmental, social, and governance (ESG) factors, and excluded poorly rated companies from investment funds. Socially responsible investing has resulted in social movements such as divestment from South African companies to pressure an end to apartheid policies, and more recently, divestment from fossil fuels to combat climate change.

In practice, there are a variety of strategies that socially responsible investment firms offer, and Calvert is leading edge with its comprehensive rating system based on ESG factors specifically relevant to each industry and company it analyzes. For example, human rights issues in supply chains would be critical to an electronics company using earth minerals in its products, whereas appropriate governance structures and compensation practices are essential to the banking industry. These factors not only promote social impact, but are crucial to a financially sound business. In this sense, socially responsible investing can also be seen as an effective way to manage risk in an investment portfolio, rather than purely for altruistic purposes.

As our generation of millennials becomes the next target market for financial institutions, social impact investing will soon be going mainstream. Goldman Sachs’ recent purchase of Imprint Capital Advisors LLC, a leading boutique impact investment firm, is a prime example. It is crucial that investors are informed as to how an institution determines what qualifies as an impact investment, so that the “impact” aspect isn’t lost in the race to meet rapidly growing consumer demand.

The internship allowed me to see how socially responsible investing works in practice, and it also gave me the freedom to research and write on topics that were of particular interest to me. I was also able to contribute to a series of research papers on the evolving role of corporations in society that Calvert is publishing with George Serafeim, Jakurski Family Associate Professor of Business Administration, Harvard University. Much of the research covered in the SGE immersion boot camp was echoed in the series. Having a strong background in this area allowed me to add value to an important piece of work for Calvert. The internship also offered several opportunities to network with others in the social impact investing space and attend events on Capitol Hill. Not to mention that happy hour in DC in the summer is tough to beat.

In terms of making a career transition to social impact and finance, my internship at Calvert was a valuable first step. The SGE career trek allowed me to make this connection, and the immersion expanded my research and writing skillset, as well as knowledge of sustainability in business, allowing for a meaningful contribution to Calvert’s work.

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