Greed Gone Good: Creating Social and Financial Value

A great innovative moment has arrived in the financial world as the notion of blended value takes hold. This course is for students who wish to harness the power of financial markets to create a better world. As the gatekeepers to finance, lenders and investors are responsible for allocating scarce capital to the most promising sectors. Traditionally, MBA programs have taught that these promising sectors were those most likely to maximize shareholder value. Other stakeholders, including the government and society, were considered for their nuisance value more than for their intrinsic worth. In the past two decades, however, the notion of blended value investing—investing for both financial and social gain—has gained credence, even among the most cynical of managers. Moreover, it is widely recognized that lenders and investors, as the ultimate financial decision makers, have special responsibilities in this regard. Investing in women through microfinance, gender lens investing, or other instruments also play a special role in this arena. Blended value—which encompasses the social, environmental, and financial performance of a business—only becomes more important in a globalized economy marked by scarce and shrinking resources. In this course, we learn to apply the tools of efficient capital markets—risk/return analysis, cost/benefit analysis, and much more—to produce both financial and social value. We study various instruments that have been designed to achieve these goals and absorb the lessons learned from success and failure of these early instruments. We consider how best to measure social value and how to balance this against the needs of financial investors in order to optimize financial markets to fund the achievement of the United Nation's sustainable development goals (SDGs).