Moving Ahead Together: Implications of Blended Value For the Future of Our Work

Moving Ahead Together:

Implications of Blended Value

For the Future of Our Work

Parts of a Common Journey…

Social Investing Corporate Social Responsibility Value Maximization Traditional For-Profit Companies

+1 -1 +1 -1 Financial Investments & Numeric Returns Social Capital Investments & Social Returns A Zero-Sum Dissonance:

The Traditional Value Proposition

Quad A Quad B

Quad D Quad C

Economic Value

Michael Porter:

In this corporate competitive context, the

company s social initiatives or its

philanthropy can have great impact. Not only

for the company, but also for the local society I used to see this area of corporate social

performance as the last thing on my agenda ten years ago, but now I agree that social and

economic issues are intertwined

Social Environmental Values & Systems Economic External driving forces Internal driving forces

A strong commitment to Business Principles and SD Renewable Business $0.5b Carbon costing H2 Business Texaco Wind Malampaya DJSI Financial roadmap Solar growth Shell Report GHG targets Brent Spar Re-used Child Labour Award Shell Foundation $250m ISO Cert. K11 Community developme nt in Nigeria C.Chair Diversity Target Venting Target Diversity target Flaring Target 1995 2000 2005 2010 +

Implications For How We Think About:

n The Nature of The Firm n Capital Investment

(Market-rate, Concessionary, Philanthropic)

n Tracking Performance

n Development and Dissemination of IC

The Nature of The Firm

n From Value Creation perspective, there is no

difference between FP + NP.

n Currently, NPs under-perform economically;

FPs under-perform socially/environmentally.

n Focus must be upon form, function and

leveraged relationships that maximize total value—not issues of corporate structure.

Capital Investment

(Market-rate, Concessionary, Philanthropic) n “Objective” economic capital market

process viewed as lodged within social and environmental context.

n Capital Markets will seek “highest and

best use” of capital…

n But in pursuit of full, blended value.

n Diverse Investors take complimentary

positions in pursuit of multiple returns and generation of full, blended value.

Core Elements of Foundation Asset Management

1. Asset Alignment

2. Strategic Grantmaking Practice

3. Engagement, Transparency, Accountability

to Relevant Stakeholders

4. Development/Dissemination of IC

5. Active Education, Policy Development and

Advocacy

Unified Investment Strategy Capital Allocation Grant (Program) Available Capital Grant (Infrastructure) Grant (Research and Development, Seed Funding) Recoverable Grants + PRIs

FROI Risk Boundary

Risk Free Rate Treasury Note 6% FROI Traditional Diversified Investment portfolio Equity Linked Zero Coupon Bond With SRI Index Options VC Fund Or Angel Investing Private Equity Investing Socially Responsible Angel and Social Venture Capital Fund Investing

SROI Risk Boundary

Tracking Performance

n Financial return analysis, “evaluation” of

nonprofit social impacts, and double/triple bottom-line frameworks are all needed to explore various components of capital

performance and value creation—

but there is one bottom-line, a bottom-line reflecting a single, non-divisible blended value proposition.

Tracking Performance

n Documentation of non-financial

performance will migrate from “external reporting” to internal, integrated MIS.

n Organizations (whether firms or investor

groups) that are “built to last” view New

Metrics as critical to firm management and maximizing value of both the venture itself and strategic partnerships.

Development and Dissemination of IC

n Future Knowledge will emerge from between the

silos and not within.

n Knowledge will develop based out of practice

informed by reflection and history.

n Academic institutions will increasingly cultivate

Intellectual Capital driven by a commitment to intellectual curiosity and academic inquiry—

How We Organize Our Work and “Field(s)”

n The emergence of Value Networks will drive the

organization of our work and structure our fields of practice.

n These Networks will be both spontaneous and

facilitated—but they will be driven by mutual pursuit of common challenges in structuring

capital, advancing New Metrics and leveraging diverse resources to assure maximum impact.

Blended Value Process

Overview of Blended Value Map

Practitioners (CEO s, Managers, Social Entrepreneurs,) Corporate Social Responsibility (CSR) Social Enterprise Investors Strategic/Effective Philanthropy Social Investing Socially Responsible Investing (SRI) Social Investing Community & Double Bottom Line Investing

Topics Resource Organizations Initiatives Leadership Examples Areas to Explore Organizational Capacity Capital Questions Sustainable Development Regulatory, Policy and Tax

Code Resources (Books, Articles, Websites) Issues Under Discussion Cross-Cutting Issues Measurement and Metrics (Non-profits & CSR) Implications Infrastructure Creation of Value Networks to Leverage Cross-Silo Collaboration

Blended Value Process

Theory of Change Overview Value networking

across the silos of:

Corporate Social Responsibility Social Enterprise Social Investing Strategic/Effective Philanthropy Sustainable Development

Around the cross-cutting issues of:

Capital Metrics Leadership & Organizational Capacity Government Policy/Regulation/ Tax Code Increased economic return and social/ environmental impacts far beyond the potential of incremental efforts of existing organizations. Emerging Blended Value Practices Lead to: Supporting Government Policy/Regulation/Tax Code Improved Leadership and Organization al Development

Increased Capital into Blended Value Organizations and Increased Effectiveness of that Capital Evolution and Application of More Effective New Metrics More Efficient Social

Interim Points Toward the Future…

n An Expanded Vision Grounded in Pursuit

of Total, Blended Value for Both Individual Investor and Shared Community Benefit

n A Commitment to Working Together

Through Value Networks That Build

Connections and Leverage Total Assets

n A Dynamic Platform of Support for the

A Final Thought…

"Every company has a diagram of the

universe in which they're the center. That's never true. We're all a node in a mesh."

And Two Final Perspectives on

The Way Ahead…

For more information…

n Please see The Blended Value Map:

Tracking the Intersects and Opportunities of Economic, Social and Environmental Value Creation as well as the supporting

annotated bibliography and other documents available at

Graphic credits

n The graphic of a fractal is taken from a web site maintained by Uwe

Krueger: http://i30www.ira.uka.de/~ukrueger/fractals/html/b5a.html

and I would like to thank him for posting it for public use.

n _{Fractals may be thought of as graphic representations of}

mathematical formulas which have “high degrees of self-similarity.” They are “finite areas bounded by infinite lines”…For more on this,

please see: http://www.jracademy.com/~jtucek/math/fractals.html

n The graphic of a photo taken from the Hubble Space Telescope is

from the NASA web site.

n _{Other graphics in this presentation are from reports, articles and}

presentations made by Jed Emerson and the staff of the Blended Value Map Process.