oikos Finance Academy: the future of finance research, made present

Finance is changing rapidly. A growing number of investors, companies and policy-makers worldwide are slowly, but steadily, recognising the deep mutual interconnections between finance and sustainability. The COP21 agreement of last December and the growing adoption of responsible investment strategies are just examples of this more general trend. We may have finally embarked on the journey towards a financial system more respectful of people, the planet and the future generations.

We are, nevertheless, sailing on sight. Academic research serves as an important navigation system. However, many of the existing financial and economic models are not made for this journey, the outcome of which is still in the dark. The scope and complexity of the sustainability challenges ahead call for a new generation of finance scholars with highly creative, analytical and critical thinking. They will have to question the validity of the current systems and design new compasses made for the future. And this needs to happen now.

The challenge is huge, but there are reasons not to despair. From September 11 to 15 2016, fourteen young scholars gathered in Reading (UK) to discuss their research in the field of finance and sustainability. The occasion was the 6th oikos Young Scholars Finance Academy, co-organized by oikos and the Henley Business School. The aim of the Finance Academy platform is to support young researchers in finance and sustainability to advance their works and expand their international research network. The 2016 edition saw the engagement and support of an outstanding Faculty composed by Professor Jill Atkins (University of Sheffield, UK), Professor Michael Barnett (Rutgers Business School, USA) and Professor Sébastien Pouget (Toulouse School of Economics, France).

The young scholars received constructive feedback on their working papers from both the Faculty and other participants. The discussion topics ranged from the financing challenges for social businesses, to the integration of sustainability criteria in bank lending, to the relevance of low-carbon indices to tackle climate change, to name but a few.

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The learning experience was further enriched by faculty workshops dedicated to important methodological, empirical and practical aspects of academic research. Throughout the Academy, the exchange of suggestions and ideas on sustainable finance continued: casually over dinner; surrounded by a stunning English countryside; or rolling on the Thames during a river cruise.

On September 15, the group finally moved to City of London to join a larger audience of faculty members, practitioners and young scholars at the oikos Roundtable “Academic Research and Sustainable Investing. Seizing the Synergies. The roundtable, co-organized by oikos and the Henley Business School and hosted by UBS, presented a further occasion to identify the main barriers for sustainable investing and explore next steps to strengthen the interactions between academia and practice. As it turned out, the need to further integrate sustainability into finance research – a clear priority on the oikos agenda – resonated strongly with all attendees.

In the tradition of previous academies, the overall event was extremely well-perceived by all the participants and faculty members. “The oikos Finance Academy was one of the best experiences in my PhD so far. I highly recommend it for sustainable finance scholars” said, for instance, Helen Toxopeus from the Erasmus School of Economics (Netherlands). Of the same opinion is also Anna Geddes, from ETH Zürich (Switzerland): “The academy was the perfect forum to gain valuable and constructive feedbacks on my PhD work”. Most importantly, the Finance Academy certainly facilitated the meeting of some extraordinary researchers committed to making a positive impact in the way finance is understood, taught and practiced. And considering the quality of their works, they are already making it.

by Stefano Ramelli, oikos PhD fellow


esg-trading-simulationFinance Academy 2016oikos-roundtable

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oikos International

posted September 30, 2016

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Evaluating the launch of a first Social Impact Bond in Switzerland

Investments are the key driving forces for the progress of our society. A new trend is being developed with impact investments, ensuring the societal value creation of the financial capital invested. Within this context, this paper introduces and critically characterizes a new product called Social Impact Bond (SIB). Reviewing the mechanism in the first part, the research raises the question about further practical implementation and benefits of this financial mechanism in the centre of continental Europe, specifically in Switzerland. This feasibility study raises the questions if (1) an interest for such mechanism exists in Geneva and (2) if a launch in 2015 could be taken into consideration. Examining the question in depth with a SIB expert, a local government officer and two heads of State as well as additional stakeholders, a real interest for this conceptual approach could be confirmed. Additionally, further steps for a launch of SIB are conceptualised providing specific points of contact to develop the mechanism in 2015

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posted July 21, 2016

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Academic Research and Sustainable Investing. Seizing the Synergies

oikos Roundtable.
Co-organized with the Henley Business School and hosted by UBS.
Thursday, 15 September 2016, 9.30am – 1.30pm.
By invitation

Goal

The momentum for sustainable investing is fueled by a myriad of actors from both academia and practice. While some bridges between them are well established, many synergies among researchers and investors remain unseized. Pressure to perform in volatile markets on the one side, and to publish in leading academic journals on the other, are among the factors that turn engagement across these bridges into a challenge.

Nonetheless, seizing the synergies between academia and practice is critical for the development of sustainable financial markets. Leveraging academic research as a source of ESG insights, while using the input from practitioners to make research both more rigorous and relevant, and supporting finance students to foster sustainability talent in the next generation of investors and asset managers are cases in point.

Against this background, the roundtable shall convene faculty, practitioners and young scholars to identify synergies for sustainable investing, define interventions for further ESG integration into finance research, and explore next steps to strengthen platforms for interaction between academia and practice.

Guiding Questions

  • What are current ‘hot topics’ on which practitioners would welcome academic input, and on which academics would look for insights from practitioners?
  • How do finance practitioners and academic researchers interact today? What are best practices for these interactions? What are pitfalls?
  • Where is potential and what are impediments for further collaborations?

oikos Young Scholars Finance Academy

The roundtable takes place on the last day of the sixth oikos Young Scholars Finance Academy co-organized by oikos and Henley Business School from 11-15 September 2016. The academy provides a unique platform for exceptional PhD and post-doctoral researchers in the field of finance and sustainability to advance their research and expand their international research relations. Selected participants will present their research in the break of the roundtable. Faculty at the academy include Professor Jill Atkins, Professor Mike Barnett and Professor Sébastien Pouget. The full programme of the academy is available at www.oikos-international.org/financeacademy.

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posted July 19, 2016

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Catalyzing a Shared Sustainable Future: Responsible Banking at Yes Bank

Abstract

As a leader in sustainable finance in India, Yes Bank reached the milestone of mainstreaming sustainability within its core business principles with a vision of evolving as the ‘Best Quality Bank of the World in India by 2020’. The sustainable corporate performance of the bank focussed on the triple bottom-line ethos, wherein the three interlinked measurement elements — people, planet, and profit — were interwoven with its business strategy. According to Yes Bank, its sustainable finance initiatives not only assisted it in creating value for stakeholders but also had a long-term positive impact on the community as a whole. The sustainable finance guidelines of the bank enabled it to integrate social, economic, and environmental policies into its business framework, and this attracted investments from Foreign Institutional Investors (FII) and Foreign Portfolio Investors (FPI) for building a clean and green India. The bank’s active presence in areas like development banking, micro finance, financial inclusion, agriculture, and investment in sustainable ventures created an enabling environment for the most disadvantaged stakeholders in society to aspire for a sustainable future and also enabled the bank to come up with some innovative products and services. As a sustainability leader for India, the bank’s sustainable finance approach distinguished it from its rivals and helped it emerge as a leading bank in the country despite its being a late entrant into the market. However, the bank admitted difficulties in communicating its sustainable objectives to its stakeholders.

This case is designed to enable students to: 1) Understand the concept of sustainable finance and understand why new age banks like Yes Bank were focusing on the triple bottom line ethos; 2) Study and analyze the sustainable finance principles and practices of Yes Bank; 3) Discuss and debate whether the sustainability initiatives of the bank delivered tangible results in terms of having a social, economic, and environmental impact on the community in the long run; 4) Understand the key concern for Yes Bank — communicating its sustainability initiatives to stakeholders — and explore the ways in which it can address the issue.

AuthorsDebapratim Purkayastha, Benudhar Sahu and Trilochan Tripathy
InstitutionIBS Hyderabad, IFHE University, India
Competition Year2016
PlaceRunner-up
TrackSustainable Finance
Key WordsSustainable finance, Responsible banking, Socially responsible investment, Climate change, ESG dimensions, Environmental Management Systems, Natural capital considerations, Green bonds, Microfinance, Financial inclusion, Bottom-of–the Pyramid customers, Sustainability Reporting, Stakeholder tension, Stakeholder engagement and dialogue, Communicating sustainability
CoursesFinance, Corporate Social Responsibility, Corporate Sustainability
Target AudienceMBA
Permission rightsThis case will be published at the Case Centre shortly. You can download an inspection copy below.
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oikos International

posted June 27, 2016

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Bandhan: Advancing Financial Inclusion in India

Abstract

Established in 2001 by Chandra Shekhar Ghosh to address the dual objective of poverty alleviation and empowerment of women, Bandhan was the largest microfinance institution (MFI) in India and the largest non-deposit taking MFI in the world. By 2013, it had grown to 2,016 branches across 22 states and union territories within India. With over 5 million borrowers and total outstanding loans of INR 57 billion (~US$1 billion), it had zero non-performing loans.

Case A sets up the need for and significance of financial inclusion, and the role of microfinance in the Indian context. It highlights Bandhan’s operational model and the various elements that explain its unique stature in the microfinance space. This case is poised at a junction when Ghosh is looking back with humility at Bandhan’s extraordinary achievements and contemplating plans to extend Bandhan’s reach by foraying into payment banking.

Case B is set at a time when Bandhan was about to embark on an organizational transformation that would convert it into a mainstream bank. In July 2013, supported by a Geneva-based investor, Bandhan had applied for a banking license to expand its operations by leveraging its network. And in May 2014, the Reserve Bank of India (RBI) had granted the license to Bandhan, making it the first MFI in the country to win a bank license, and also the youngest entity to be allowed to enter the banking space in India.

Ghosh had ambitious growth plans focused on the rural sector. Bandhan seemed to have built the right capabilities to be successful as an MFI. The cases allow for a rich discussion about the new capabilities that Bandhan would require as it shifted from being a pure MFI to a banking entity and how it should go about acquiring those capabilities. Was it preparing well to deal with the challenge of entering, surviving and growing in the banking industry while continuing to serve and grow in the MFI space? Could Bandhan develop a unique and innovative model to help it straddle both worlds?

With this license, Bandhan had been offered an opportunity to re-create the entire banking edifice in India. Participants have the opportunity to analyze the key issues in the cases and attempt to answer the question playing on everyone’s mind – how would Bandhan deliver on the goals of financial inclusion and sustainable banking?

AuthorsCharles Dhanaraj and Geetika Shah
InstitutionInternational Institute for Management Development, Switzerland and Indian School of Business, India
Competition Year2016
PlaceRunner-up
TrackSustainable Finance
Key WordsSustainable finance, Microfinance, Organizational transformation, Entrepreneurship, CSR
CoursesSocial entrepreneurship, General management, Strategy, Banking, Microfinance, Organizational transformation
Target AudienceMBAs, Executive education
Permission rightsThis case will be published at the Case Centre shortly. You can download an inspection copy below.
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oikos International

posted June 27, 2016

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Socially Responsible Investing: Data-Driven Decision Making

Abstract

Socially responsible investing (SRI) is an investment process that screens investment opportunities based on ethical, social, corporate governance, or environmental. SRI has been growing rapidly; total U.S.-domiciled SRI-managed assets increased from $3.74 trillion in 2012 to $6.57 trillion in 2014. The growth of SRI puts it in a position to encourage sustainability as such firms have better access to capital markets. Unfortunately, while financial performance indicators have become standardized, social and environmental performance ratings have not. As the prominence of SRI grows, so does the number of metrics available to evaluate corporate social performance: there were 21 ratings in 2000 and that number grew to 108 by 2012.

The complexity of environmental and social performance contributes to the proliferation of rating metrics. Different aspects of environmental performance might be important to different rating schemes. For instance, one rating could place emphasis on greenhouse gas emissions, while another rating could focus on water usage. The heterogeneity of such ratings creates a situation in which the results of an assessment of environmental performance can differ based on which criteria are used. This case examines this phenomenon.

This case examines 13 publicly traded chemical companies in order to understand the various measures and dimensions of corporate environmental performance. Students are presented with real-world data on corporate environmental performance (including pollutants released and third-party corporate social responsibility ratings) and asked to incorporate environmental and social performance into investing decisions available for download at http://www.environment.ucla.edu/ccep/sri. This case highlights the challenges of evaluating corporate environmental performance, including the positive correlation between environmental strengths and concerns.

AuthorsMagali A. Delmas and Jinghui Lim
InstitutionUniversity of California, US
Competition Year2016
PlaceThird Prize
TrackSustainable Finance
Key WordsCSR, Socially Responsible Investing, Environmental Performance, Social Performance
CoursesStrategic Management, Finance, Business Sustainability, Business and Society, or Environmental Entrepreneurship
Target AudienceMBAs, Undergraduates
Permission rightsThis case is part of the oikos free case collection. Download a free online copy below. If you are a faculty member and you are interested in teaching this case, you can request a free teaching note by sending us an email to freecase@oikos-international.org.
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posted June 27, 2016

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IFC Funding of Dinant Project: Call for Overhaul of Risk Assessment for Sustainable Finance

Abstract

The case study is based on a dilemma faced by IFC, one of the financing arms of the World Bank Group, on whether it should release its next round of funding to Corporación Dinant (Dinant), a Hondurus-based vertically-integrated palm oil and food company, to enable it to develop young palm oil plantations. IFC, which proposed to invest US$30million of the total estimated project cost of US$75million, had disbursed US$15 million in November 2009.

Civil society groups had alleged that Dinant had been involved in gross human rights violations and accused it of forced eviction of farmers and inappropriate use of private and public security. The civil liberty groups alleged that IFC had not exercised due diligence in its review of the social risks attached to the project and that it had not responded adequately to the context of intensifying social and political conflict surrounding the project after its commitment to it. The World Bank’s own watchdog Compliance Adviser/Ombudsman (CAO) in its report found multiple failures by IFC in the handling of the Dinant project.

Having faced a backlash from civil liberties groups and having admitted to lapses, IFC now has to decide on whether to go ahead with its next round of US$15 million financing to Dinant. IFC is engaging with Dinant actively but the decision on funding the next round has to be taken. Backtracking on the funding would be seen as a serious blow to sustainable financing while releasing the next round of financing could only happen after Dinant gives a series of commitments to work closely with the community. All in all, the case study will definitely raise issues and call for discussion on appropriately assessing, forecasting, and pricing risks of sustainable finance projects, especially in conflict prone countries in the future.

AuthorsD. Satish and Manish Agarwal
InstitutionIBS Hyderabad, IFHE University, India
Competition Year2016
PlaceSecond Prize
TrackSustainable Finance
Key WordsSustainable finance framework, IFC, Honduras, Dinant, World Bank Group EHS guideline, Oxfam, ESAP Conditions, Compliance Advisor Ombudsman, Bajo Aguán, Stakeholders engagement, community development, Environmental social management
CoursesCorporate Sustainability, Business Ethics
Target AudienceGraduate level students
Permission rightsThis case will be published at the Case Centre shortly. You find an inspection copy for download below.
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oikos International

posted June 27, 2016

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The Case for Divestment: Rockefellers’ Fortune?

Abstract

Founded in 1940, the Rockefeller Brothers Fund (RBF) is a private charitable foundation endowed with John D. Rockefeller’s heritage made in the fossil fuel sector from so called “Big Oil” companies. While it is RBF’s mission to advance social change and to contribute to a more just, sustainable, and peaceful world, in 2014 the fund was still invested in fossil fuels – implying a disconnect between the fund’s investment strategy and the commitment to tackling climate change. Due to this disconnection and the recent emergence of the fossil fuel divestment movement in society, RBF considered withdrawing all funds from fossil fuel investments.

Today, Stephen Heintz, president of RBF, set up a board meeting with all officers and trustees of RBF to discuss and decide whether the fund should fully divest from the fossil fuel industry. Given the (historic) importance of fossil fuel to the Rockefeller fortune, he was faced with a symbolic as well as fateful decision for RBF. This decision process represented a complex and multifaceted challenge: RBF’s moral obligation of preventing climate change and the economic duty as an institutional investor to preserve and increase endowment required balance. Stephen Heintz knew that in order to make a decision he would have to not only use solid financial calculations but also engage in extensive dialogue with all RBF relevant stakeholders.

Working on this case, students will be challenged to analyze investment performance from a financial as well as sustainability perspective, bring together arguments for and against divestment, and align conflicting interests through stakeholder dialogue.

AuthorsKatrin Gödker, Josua Oll, Franziska Sump and Julia Frech
InstitutionUniversity of Hamburg, Germany
Competition Year2016
PlaceFirst Prize
TrackSustainable Finance
Key WordsSustainable finance, divestment, climate change, portfolio management, stakeholder dialogue
CoursesFinance
Target AudienceMBAs, Undergrads
Permission rightsThis case will be published at the Case Centre shortly. You find an inspection copy for download below.
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oikos International

posted June 27, 2016

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Social Franchising to Attain Scale and Sustainability: The Kibera Project in Kenya

Abstract

This case presents the history and development of a Water, Sanitation, and Hygiene (WASH) project in the Kibera slums of Nairobi, Kenya, that was initiated by Rotarians and funded initially, in large part, by the Rotary International Foundation. It discusses the numerous operational and strategic challenges faced by those working on this Kibera Project and the Rotary Project leader, Kim Larson, whose persistent dedication and business perspective helped to shape much of the project after initial construction of eight water and sanitation kiosks, putting these WASH facilities on a path to sustainable operations. The case issues include Creating Shared Value (CSV), Total Quality Management (TQM) tracking processes, and community engagement that lead to measurable, sustainable operations in the water and sanitation sector.  The case also addresses how to create behavioral change in challenging circumstances like urban slums and how to use hygiene training as a marketing tool to drive usage of WASH facilities. Students will also learn how careful monitoring and analysis of health and financial data demonstrates the 3 Ps of sustainability of an operation (People, Planet, Profits) which, in turn, lay the foundation for replication and expansion in the form of social franchising.

AuthorsKaren Loeb and Vijaya Narapareddy
InstitutionDaniels College of Business, University of Denver, US
Competition Year2016
PlaceRunner-up
TrackSocial Entrepreneurship
Key WordsSocial Franchising, Scale and Sustainability, WASH facilities, Kenya
CoursesSocial Entrepreneurship
Target AudienceMBAs and Executive MBAs
Permission rightsAn inspection copy of this case and more information regarding publication will be posted shortly.
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oikos International

posted June 27, 2016

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Friends of the Children: Strategies for Scaling Impact

Abstract

Friends of the Children, a nonprofit organization in Portland, Oregon, was founded in 1993 by retired entrepreneur Duncan Campbell to serve youth at the highest risk of teen parenting, incarceration, or dropping out of school. Each youth client was matched with a paid mentor from first grade through the end of high school. The costs of this intervention were high, but the outcomes were extremely impressive in each of the three risk areas. The total benefits to society of Friends of the Children’s intervention was estimated at $7 for every $1 spent on the program.

In the United States alone, 2.25 million children under the age of five lived in extreme poverty, one of the key markers of Friends of the Children’s target clients. The organization had written an award-winning business plan to scale their impact nationwide, but needed $25 million to fully fund the new strategy. Key elements of the plan included launching new chapters, hiring more development staff, separating the roles of local chapters from that of the national organization, engaging with additional affiliate partners, and more effectively sharing their model and impact with other organizations, policymakers, and the public.

As Friends of the Children embarked on this ambitious funding campaign and scaling strategy, national President Terri Sorensen faced a series of challenges and potential tradeoffs unique to leading a rapidly-growing nonprofit with social enterprise characteristics. In this case, students are tasked with analyzing a scaling strategy and contrasting the effectiveness of alternative approaches, evaluating the suitability of different funding models (including social impact bonds) for the selected strategy, and performing a simple social return on investment analysis to measure impact.

AuthorsJacen Greene, Nicki Yechin Lee and Eric Nelsen
InstitutionPortland State University, US
Competition Year2016
PlaceSecond Prize
TrackSocial Entrepreneurship
Key WordsImpact measurement, social entrepreneurship, nonprofit strategy, SROI, social impact bond, pay for success, business plan, scaling strategy, funding strategy
CoursesNonprofit management, social enterprise strategy, impact investing, impact measurement, development and fundraising
Target AudienceMBAs, MPAs, advanced undergrads
Permission rightsThis case is part of the oikos free case collection. Download a free online copy below. If you are a faculty member and you are interested in teaching this case, you can request a free teaching note by sending us an email to freecase@oikos-international.org.
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oikos International

posted June 27, 2016

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