"Beyond Charity" – Socially Responsible Investments
New investment vehicles allow investors to tackle poverty as well as major environmental and social issues
Dubai In the current issue of Credit Suisse's "Global Investor", analysts and external experts examine how business practices are increasingly being used for social purposes. The new issue, titled "Beyond Charity," provides an overview of an innovative range of socially responsible investments that combine financial and social returns, and open new opportunities for investors. Microfinance, private-equity financing, and socially responsible funds are enabling investors to add social commitment to their investment strategies. Credit Suisse has in the past already successfully been providing products to socially responsible investors. These include the responsAbility Global Microfinance Fund and Charity Notes, which provide investors with positive returns and support charitable causes
The battle against the economic exclusion of the world's poor is no longer solely the domain of governmental and charitable organizations. Today, a variety of organizations and business models serves the world's lowest income class. For instance, the Latin American ACP Group from Peru is a pioneer in promoting development via a business ethos, building a range of activities to help small entrepreneurs overcome social and economic exclusion. Traditional charitable organizations are also looking more and more at market-based solutions. The global development agency Oxfam for example is taking a more differentiated strategy, combining traditional donation with market-oriented measures to benefit from both approaches. In addition, philanthropists are developing their own distinct models to use their wealth, and are establishing foundations which are run with the same vigor as their business success. The Gatsby Charitable Foundation, established by UK-based Sainsbury retail dynasty, offers loans and technical support to small businesses in Africa to tackle poverty. The businesses must in turn develop sound business strategies.
Investing in the Bottom of the Pyramid through Social Investments
Microfinance has become an established tool in the fight against poverty. Its development over the past decades, through all stages, from donation to investment theme and its own investment category demonstrates that potential lies in the well-balanced interaction of the different players with their various tools. Nowadays, also institutional investors are increasingly investing in microfinance.
Social investors are particularly important for investments at the bottom of the pyramid. Furthermore, financial service providers have become increasingly important as a link between investors and socially relevant initiatives. In this regard, Credit Suisse five years ago, in conjunction with other financial service providers, founded the Zurich-based responsAbility to specialize in social investments. Alongside microfinance, responsAbility covers a wide range of social investment themes such as freedom of the press, fair trade, and promotion of small and medium-sized companies.
Credit Suisse to Launch New "Credit Suisse Social Awareness Index"
Credit Suisse will launch in the coming weeks an index that encompasses social responsibility criteria in addition to strong valuation and performance characteristics. The index will be composed of stocks that rank highly on both social responsibility criteria and financial ratios, the latter being defined by HOLT, Credit Suisse's proprietary financial analysis tool. The index will offer investors exposure to a portfolio of stocks that are screened for strong characteristics in terms of corporate performance, valuation and momentum using HOLT’s proprietary framework. Coupled with a well established method of identifying socially responsible companies, including assessing political, environmental, labor, and human rights issues, the approach used in the systematic screening process has shown in simulations to consistently identify stocks that collectively outperform the market.
Link to the latest issue of Global Investor, "Beyond Charity": www.credit-suisse.com/globalinvestor/en
