NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, October 29, 2014

A host of business school graduates are turning to impact investing, as social impact continues to gain ground with MBA students and the world’s largest businesses look to expand their investment portfolios to support innovation and entrepreneurship in developing countries.

Companies are under pressure to do more to create a positive social impact in the aftermath of the Great Recession and have been ramping up the amount spent on corporate social responsibility (CSR), with the total spend last year reaching $15 billion, according to EPG, the economic consulting firm.

Many companies have launched social impact venture capital funds, which pool capital into social enterprises. Unlike normal corporate funds, impact investments only pay out if measurable social benefits have been achieved, such as improving children’s reading or reducing criminal reoffending rates.

Business schools such as Oxford and ESADE of Europe and Wharton in the US have begun supporting social entrepreneurs to complete MBA degrees with funding and other measures.

But a growing number of students from corporate backgrounds want to drive social change from within companies, and are instead joining these social venture funds at some of the biggest global conglomerates.