Giving Compass' Take:

• Harvard Business School discusses the MBA program's first elective course on impact investing and how it challenged students to think beyond binary solutions in the space.

• This is a good jumping off point to see how we're training the next generation of social entrepreneurs and business leaders in sustainable investment practices. The most important thing is to get the conversation started.

• With impact investing at a crossroads, we can ask the question: Where do we go from here?

“Anyone who will want to enter the field of finance or investment must be conversant in investing for impact. We believe this is the case, even if you are not yet convinced or don’t plan a career focused on this practice of investing.”

This is the proposition faculty members Shawn Cole and Vikram S. Gandhi made to the approximately 50 students in the inaugural “Investing for Impact” course launched this past semester in the MBA elective curriculum.

And the data supports it. An increasing share of assets globally are subject to non-traditional (environmental, social, and governance [“ESG”] and impact) criteria, including over 25% of all professionally managed assets worldwide (ca. $23 trillion). This approach is growing, and moving from niche into the mainstream dialogue. In 2018, Larry Fink, CEO of BlackRock, the world’s largest asset management firm, wrote in a public letter: “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 captures the increasingly broad-based sentiment that asset owners should include not just ESG, but also impact criteria in their investment process. Most large asset managers (e.g., Goldman Sachs, Bain Capital, TPG, BlackRock, State Street) are establishing sustainability, ESG, or impact investment practices, and developing products to meet the demands of capital owners, including pension funds, endowments, and family offices.

Through 20+ new cases covering public markets and private markets; start-ups and incumbents; market-returns and concessionary approaches, the Investing for Impact course provided an opportunity for students to critically examine the logical and market case for this wide range of models.

Read the full article about reflection on the investing for impact course by Caitlin Reimers Brumme at hbs.edu.