In a corporate setting, the goal of most firms is to maximize shareholder’s value; in other words, firms want to drive up the return on investment (ROI) as much as possible. In the world of social finance, ROI does not stop there. Social finance takes an additional step and adds value from the “social dividends” the company receives.
I am a huge geek when it comes to finance. Analyzing numbers and making decisions has always been my forte. Thus, starting from about the time I had to decide on a university, I chose Western University purely based on the fact that the Ivey Business School at the university had a high employment rate when it came to the financial services sector; it seemed like an easy pathway into the life of a Goldman Sachs investment banker. Show up to work, deal with a merger or two, call it a day, and make money ̶ that’s the life I wanted to live. I knew I wanted to do this but I never knew why.
Why did I want to deal with mergers? It definitely wasn’t to see the thousands of employees get laid off because of me. I wanted to see economic growth, a cause I truly believed in. However, I also believed in other causes such as environmental sustainability and, in my mind, those two seemed to be opposing forces that would never be positively correlated. It wasn’t until I was listening to a guest speaker discussing social finance that I realized the concept of sustainability could really be applied to any aspect of finance, including investment banking.
It’s not a new concept, although it seems to have received a lot more attention following the recovery from the 2008 economic downturn. The wheel is in motion, from the first merger & acquisition deals that infused an energy company with a more efficient and environmentally friendly system, to companies like Kiva that organize micro-loans to connect people to entrepreneurs that lack the resources to grow. Synergies are built while UN Millennium Development Goals are conquered. Even looking at it from a smaller scale, private investors or “community investors” can incorporate social finance into their business models by looking at companies that have a strong return both financially and socially.
Social finance truly is a field that has inspired me and even helped me come up with my long-term career goal to one day start up a venture capital fund focusing on environmental issues. My advice is to go out there and research more about the opportunities available in social finance. The opportunities are endless, so find a cause that you are passionate about. Make your wallet and your world a better place.
This article was contributed by Ahnaf Ahmed