"ROI vs. ROI: The Grupo Baobá Family Office", a case co-authored by Gao Hao, Director of the Global Family Business Research Center and Deputy Director of the Center for Green Finance Research, Lauren Cohen, L.E. Simmons' Chair Professor of Harvard Business School, Grace Headinger, a Research Fellow of Harvard Business School, and Ye Jiawei, Lead of Direct Funding & Philanthropic Organizations, World Economic Forum, was included in the case library of Harvard Business School (Accession No.: Harvard Business School Case 223-018).
Webpage at the Case Library of Harvard Business School
Impact investing refers to investments that generate measurable social and environmental benefits and have positive financial returns. While its origins can be traced back centuries, its modern version can be credited to the publication of the UN Principles for Responsible Investment (UN PRI) and the advocacy of the Rockefeller Foundation. Impact investing is a new paradigm in global financial investment and philanthropy. It seeks to provide capital support to address the world's most pressing challenges - sustainable agriculture, clean energy, nature conservation, inclusive finance, affordable housing/healthcare/education, and many other areas. In recent years, various global investment institutions such as national sovereign wealth funds, developmental financial institutions, philanthropic foundations, family offices, and private equity funds were engaged in impact investing and have become major forces in building a greener and better world.
One of the features of impact investing is the balance between social and financial returns. It has always been a major challenge for investment organizations, which have historically been oriented toward financial goals, to initiate and advance impact investing. As investment institutions are not charities per se, various stakeholders often question whether they are achieving social returns at the expense of the financial returns they should be making. Investment institutions have a fiduciary responsibility to their beneficiaries on the one hand, and their own social and environmental responsibilities on the other. This is especially true for investment institutions in emerging markets, which are often not subject to the equivalent external pressures of social and environmental responsibility as developed markets, and therefore face more difficulty in this regard. In addition to balancing social and financial returns, another challenge for impact investors is how to measure impact through credible non-financial indexes (i.e., social and environmental benefits).
The case looks at the exploration and practice of a third-generation member of a Brazilian family office who initiated and advanced impact investing. It presents possible internal challenges and external obstacles in advancing impact investing, and how to balance financial and social returns in strategy, technique and execution, win the support of various stakeholders and push financial institutions to make improvements, and realign their portfolios with various types of assets, including primary market equity, secondary market securities, and real assets, to achieve sustainable impact investing.
The case is designed for case study in Masters in Finance, MBA, EMBA, and executive training programs, incorporating knowledge of frontier areas including asset allocation, wealth management, green finance, and carbon neutrality. It helps students to gain an in-depth understanding of how institutional investors in emerging markets design and execute impact investing programs, as well as the concept, key challenges, and operational models of impact investing. The students can also engage in heuristic thinking on cutting-edge issues such as how to promote the impact investing of investment institutions in emerging markets.
The Harvard Case Library is the world's most authoritative case bank for research and teaching in business management. The case inclusion in the Harvard Case Library shows the research center’s new progress in case development, and in dedication to the building of China's financial case base and international academic exchange and research cooperation.
