Venture capital is often overlooked as part of SRI, which to date has focused mostly on listed companies and on equity funds. Yet venture capital has a strong claim to be considered in the broad family of SRI opportunities and those with an interest in SRI should seriously consider venture capital as part of that interest. There are several reasons why much venture capital can be considered a form of SRI:
Secondly, venture capital is extremely effective at creating jobs and employment - creating employment is something that must be regarded as close to the core of most ideas of socially responsible investment. One study found that over a 4 year period, employment in companies funded by venture capital increased at 24% per year, compared with 1.3% by industry generally. Finally, venture capital tends to avoid those sectors which are of greatest concern - few venture capital opportunities are in the arms industry, the oil and gas business or other resource extraction. That is not to say that there are no issues of socially responsibility with venture capital investment, but on average they are far less severe. Thus, investors in venture capital can make an easy start by explicitly recongising the SRI potential of there enbture capital investments. For those investors not in venture capital, or considering increasing commitments to venture capital, the SRI potential gives additional reasons for making such investments to the basic financial considerations, such as the strong diversification and good return potential provided by venture capital Sustainable venture capital For those who would like a more strongly socially responsible response to SRI or one with a more directly thematic approach in tune with sustainable development there are some "dark green" or "sustainable" venture capital opportunities. Those funds tend to target sectors which they see as offering good long term growth opportunities and which contribute positively to sustainable development and a just socitey. They include sectors such as: |
Investing in these sectors is not without challenges - sometimes companies in this sector are not well managed or structured, and some of these sectors have had a mixed history, with some high profile failures. However, increasingly there is evidence that such companies can deliver produce results for investors, which has become especially evident as some companies have become listed - companies such as Vestas Power, Ballard Power and Astropower have delivered spectacular growth in recent years.
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