As we continue to explore the socially responsible business space by meeting and talking with some of the leading thinkers, we will see how certain themes keep surfacing. One obstacle to the development of large values led business is the issue of growth capital. Over the past 2-3 decades, few investors have been willing to apparently lower their expected financial returns for the perceived risk of investing in triple bottom line (that's people, planet, profit) companies.
The number of investors willing to be "patient" with their investees is growing but remains very small relative the broader community. My estimate is less than a $1 billion over the past 10 years has been deployed toward triple-bottom-line businesses. This has had two obvious effects. The virtuous companies have been starved of capital, which has limited their growth and impact. This has pushed many of them, including Ben and Jerry's, to sell to larger companies—Unilever, in the case of Ben and Jerry's. An interesting Harvard working paper on all this is titled "Can the virtuous mouse and the wealthy elephant live happily ever after?" (No. 09-047, James E. Austin and Herman B. Leonard).
Terry Mollner, chair of the board Calvert Foundation, has been involved in developing capital sources that are indeed in harmony with values led businesses and recognize that the highest priority for those businesses is the good of all. I talked with him about this perplexing issue and he discusses an organization that is at the leading edge of this issue. What do you think? What else could we develop? How do we make sure our newest ethical enterprises find a way to become global players with their values and practices intact. How else can we change the world for the better?
(Image: Annualized Total Returns After Fees via HIP Investor)
Pierre Ferrari is an investor, director and VP of Marketing for Guayakí Yerba Mate, a company that combines scaled reforestation in South America, the reparation of many small communities and the marketing of Guayakí Yerba Mate. From 1995 on, Pierre focused his energies on a variety of social issues ranging from International Relief and Development, Conscientious Commerce, and Emerging Markets. He is president of "Hot Fudge" social venture capital fund, a community development venture capital fund whose purpose is to use venture capital to create jobs, entrepreneurial capacity and wealth that advance the livelihoods and wealth opportunities of low-income people and the economies of distressed communities.
Pierre holds a Masters degree in Economics from The University of Cambridge and a MBA from Harvard Business School. He has two sons, married to Kimberly, in awe of two stepdaughters, reads voraciously, and enjoys golf.