In July 2017, the International Committee of the Red Cross (ICRC) launched the world's first Humanitarian Impact Bond. This innovative finance pilot was an experiment by the ICRC to engage the private sector differently and diversify funding - critical given the widening humanitarian aid gap. It was a massive undertaking. The HIB, which had a maximum potential deal size of CHF 26 million, took over four years to plan and multiple stakeholders, including governments, foundations, investors and lawyers, to put together. How did the ICRC pull this off and what possibilities does innovative finance offer the humanitarian and private sectors? Drawing on a series of proprietary interviews with key characters, various internal documents shared by the ICRC, and secondary sources such as news reports, press releases and reports by third-party organizations, this abridged case delves into the ICRC's motivations for entering innovative finance, why it chose the HIB instrument, what it was, the hurdles and challenges of designing and setting up this complex instrument, and what the ICRC did to get the project off the ground. Participants interested in innovative finance, the humanitarian and/or development sectors, cross-sectoral/industry collaboration, and social innovation will find the case particularly interesting.

Angaza's story is not a typical solar light story, but the story of a female social entrepreneur with a for-profit Silicon Valley mindset transforming a social enterprise from a hardware to a software business model. It is about pivots, changing value propositions, and new products and business models as Angaza evolves to escalate social impact while still making money. Angaza began as a solar-light company founded in 2010 by Stanford graduate Lesley Silverthorn Marincola to address energy poverty in rural off-grid communities. In her quest to address affordability, Lesley realized that the main problem confronting rural off-grid communities was not the price of solar lights per se, but finding a way to spread payments over time. In 2012, Angaza pivoted from being a solar-light producer to a software provider offering pay-as-you-go (PAYG) metering and monitoring technology to players in the solar-light ecosystem - manufacturers, distributors and mobile network operators. The PAYG technology allowed end consumers to buy solar-light products by paying small amounts over time, until they eventually owned them outright. At the end of the case, students are confronted with a very real dilemma facing the founder and leadership team of many start-ups, including Angaza - what are the next opportunities for the company? Is it further scaling (if so, scaling up or deep), a pivot (into data), or an exit (sell the business)?

In a short span of five or six years, CHANEL embraced CSR (corporate social responsibility) and ESG (environmental, social, governance) initiatives that stretched far beyond its established comfort zone of artistic direction and creative output. The progression of these initiatives culminated in March 2020, when the company launched CHANEL Mission 1.5°, a strategy for embarking on a decarbonization journey across the business as well as the value chain. In keeping with the timeframe of the United Nations Sustainable Development Goals (SDGs), the "1.5°" represented the commitment to help limit average global mean temperature increases to 1.5 degrees Celsius above pre-industrial levels. Entering the 2020s, Global CFO Philippe Blondiaux felt confident that CHANEL was primed to execute on its vision and usher in a "decade of delivery" in sustainability. The Group was about to transform every aspect of its business; help its partners do the same; innovate at every point in the value chain; and support change beyond its own operational footprint. Yet a host of challenges loomed on the road ahead: (1) Could an industrial group that was highly decentralized continue to spearhead initiatives and shape an integrated sustainability strategy? (2) In addition to creating a cultural glue and a shared sense of inspiration and purpose, could accountability trickle all the way down the organization with a worldwide workforce of nearly 28,000? (3) In the long term, was the company in a position to live up to the commitments it had encapsulated in the CHANEL Mission 1.5° document, and was there sufficient clarity on what the sustainability push would mean in the long run for CHANEL, as a luxury brand, as we know it?

At luxury fashion house Maison Chloé, minds were focused on the first collection of new Creative Director, Gabriela Hearst, which was just hitting the stores. Chloé's CEO, Riccardo Bellini, had recruited Gabriela, known for her commitment to sustainability through her own brand, to epitomize the Maison's new responsible purpose. Riccardo, along with Sustainability Director Aude Vergne, had been swift to accelerate Chloé's purpose-led transformation in an industry that materially contributed to the planet's environmental and social problems. They had focused particularly on the social aspects of ESG in order to impact the environmental ones. But the "S" was definitely harder than the "E." The case explores the transformation steps put in place across Chloé's supply chain, design, governance of the sustainability transformation, and B Corp certification application. Transforming in less than two years was a sprint, and the stress had taken its toll. The case closes asking whether the transformation would make a difference: Would lower impact products be welcomed by consumers, and was Chloé doing enough to ensure the continuing desirability of luxury in rapidly changing times? For luxury-focused classes, the case emphasis can be on discovering what it takes to become a purposeful luxury brand.

The case is about a sustainable investor firm, Nia Impact Capital (Nia) (Oakland, California), and its founder and CEO, Kristin Hull. Hull aims to invest in gender and racial justice and to make money with meaning and purpose. She brings the logic of impact investing to public markets, exercising active ownership, and engaging with portfolio companies, including Tesla, IBM, and Apple. Hull has a crusade for social justice and against mandatory arbitration. For that purpose, she filled shareholders resolutions and has had proxy votes in the 2020 and 2021 proxy seasons. The case focuses on Nia's engagement with Tesla and the 2021 proxy season. Tesla is a leader across the renewable energy sector but is in the news for sexual harassment and racial discrimination. In 2020, Nia submitted a shareholder resolution on Tesla's mandatory employee arbitration to the US Securities and Exchange Commission (SEC). In her speech during the Tesla's shareholders in September 2020, Hull made her case against the company's forced arbitration for employee sexual harassment and racial discrimination claims. Tesla disputed the proposal, and Nia didn't get a shareholder's winning vote. Hull's crusade in 2020 towards Tesla received extensive media coverage and showed her strategy as an activist investor. In her words, "it was a win because it was an important move in a much larger and longer campaign." As part of her battle, Hull decided to raise her voice and fill again in October 2021. She thought that Nia's advocacy at Tesla was advocacy for the entire US. Nia's resolution on Tesla's proxy ballot was crucial to her strategy for "connecting the dots about forced arbitration." At the end of the case, Hull must prepare a proposal to the SEC and a speech to Tesla's Board. She thought about the impact on Nia's future strategy if they didn't get 50% of the shareholders' vote in Tesla's board meeting on 7 October 2021.

The case features Sara Razmpa, head of responsible investment, and Fiona Frick, CEO of Unigestion, at a critical juncture in the Geneva-based asset management firm's ESG journey: the decision to launch an equities fund that specifically tackles climate change. While Unigestion had launched product families that integrated ESG in the past, this would be a new and more challenging undertaking. The case opens with the two debating between whether to launch a Climate Transition Fund or the more ambitious Paris-aligned Fund. Both methods aligned with the Paris Agreement by placing the portfolio on a 1.5ºC trajectory, with no or limited overshoot, and heading towards net-zero by 2050. However, they differed in their starting points and stringency. Students are placed in the shoes of Razmpa and Frick and need to decide which portfolio to launch - while balancing climate impact, commercial considerations and fund performance. The selection of climate funds is not straightforward. The decision touches on key debate points in sustainable finance: a financial investor's fiduciary duty, whether to exclude or engage with high emitters and what would be most effective in tackling climate change. Finally, the case includes a practical application exercise where students can construct their own climate-focused portfolio. This is a timely case. There is a growing spotlight on climate change, especially with COP 26 in late 2021. Despite country pledges for net-zero emissions, a UN study found that current fossil fuel production plans set forth by governments worldwide for 2030 is double the level required to limit global warming to 1.5ºC. The financial sector, as a key allocator of capital, has a key role to play. This case can help students better understand the role financial institutions can play in the transformation towards a 1.5ºC world, the nuances of building climate positive portfolios and how to critically analyze different climate strategies and their implications.

The case features Sara Razmpa, head of responsible investment, and Fiona Frick, CEO of Unigestion, at a critical juncture in the Geneva-based asset management firm's ESG journey: the decision to launch an equities fund that specifically tackles climate change. While Unigestion had launched product families that integrated ESG in the past, this would be a new and more challenging undertaking. The case opens with the two debating between whether to launch a Climate Transition Fund or the more ambitious Paris-aligned Fund. Both methods aligned with the Paris Agreement by placing the portfolio on a 1.5ºC trajectory, with no or limited overshoot, and heading towards net-zero by 2050. However, they differed in their starting points and stringency. Students are placed in the shoes of Razmpa and Frick and need to decide which portfolio to launch - while balancing climate impact, commercial considerations and fund performance. The selection of climate funds is not straightforward. The decision touches on key debate points in sustainable finance: a financial investor's fiduciary duty, whether to exclude or engage with high emitters and what would be most effective in tackling climate change. Finally, the case includes a practical application exercise where students can construct their own climate-focused portfolio. This is a timely case. There is a growing spotlight on climate change, especially with COP 26 in late 2021. Despite country pledges for net-zero emissions, a UN study found that current fossil fuel production plans set forth by governments worldwide for 2030 is double the level required to limit global warming to 1.5ºC. The financial sector, as a key allocator of capital, has a key role to play. This case can help students better understand the role financial institutions can play in the transformation towards a 1.5ºC world, the nuances of building climate positive portfolios and how to critically analyze different climate strategies and their implications.

The case features Sara Razmpa, head of responsible investment, and Fiona Frick, CEO of Unigestion, at a critical juncture in the Geneva-based asset management firm's ESG journey: the decision to launch an equities fund that specifically tackles climate change. While Unigestion had launched product families that integrated ESG in the past, this would be a new and more challenging undertaking. The case opens with the two debating between whether to launch a Climate Transition Fund or the more ambitious Paris-aligned Fund. Both methods aligned with the Paris Agreement by placing the portfolio on a 1.5ºC trajectory, with no or limited overshoot, and heading towards net-zero by 2050. However, they differed in their starting points and stringency. Students are placed in the shoes of Razmpa and Frick and need to decide which portfolio to launch - while balancing climate impact, commercial considerations and fund performance. The selection of climate funds is not straightforward. The decision touches on key debate points in sustainable finance: a financial investor's fiduciary duty, whether to exclude or engage with high emitters and what would be most effective in tackling climate change. Finally, the case includes a practical application exercise where students can construct their own climate-focused portfolio. This is a timely case. There is a growing spotlight on climate change, especially with COP 26 in late 2021. Despite country pledges for net-zero emissions, a UN study found that current fossil fuel production plans set forth by governments worldwide for 2030 is double the level required to limit global warming to 1.5ºC. The financial sector, as a key allocator of capital, has a key role to play. This case can help students better understand the role financial institutions can play in the transformation towards a 1.5ºC world, the nuances of building climate positive portfolios and how to critically analyze different climate strategies and their implications.

This case provides the opportunity to perform a real, but simplified, ESG research analysis and portfolio investment decision from the perspective of an impact investor. It was designed using Triodos Investment Management (Triodos) and three well-known (possibly controversial) companies, Yamaha Corporation, Tesla and Philip Morris International (PMI). Students, as candidates for a research analyst position at Triodos, are asked to analyze the three companies, focusing on an ESG assessment following Triodos's investment approach. They need to provide a compelling statement about the companies' value propositions, as well as their positive and negative impact on people and the planet. They must build a comprehensive investment case that explains the rationale for (i) investing with no reservations, (ii) investing and engaging on controversies, or (iii) excluding Tesla, Yamaha and/or PMI and describe why the companies are good, potentially good or not good for the planet and for people. Students must weigh the controversial ESG issues resulting in a decision either to invest with engagement or to exclude the companies from Triodos's portfolio against the innovative products and future potential of the companies. Henk Jonker, Head of Research, Impact Equities & Bonds at Triodos, invites IMD MBA students to apply for a research analyst. He wants entrepreneurial and "out-of-the-box" thinkers who push the limits of traditional financial analysis. The case tests students' affinity with Triodos's mission and vision, their analytical and financial skills, and whether they have a results-oriented, well-organized and problem-solving attitude. It examines their ability to integrate ESG criteria in their recommendation to include the companies in Triodos's fund or exclude them. During an interview, Jonker aims to evaluate the students' insights about their role as sustainable investors and the impact of their decisions on people and the planet.

In 2020, Triodos Investment Management (Triodos) was a globally active impact investor. It believed the true purpose of investing was to generate social and environmental impact alongside a healthy financial return. Triodos viewed sustainable finance as a driving force in the transition to a more sustainable world. Yamaha Music was a candidate that Triodos was evaluating for inclusion in its investment universe. Henk Jonker, Triodos Investment Management's head of research, decided to pose the challenge to Clarissa Diaz, a Triodos researcher. Yamaha had a positive impact on people (made music, produced musical instruments and provided musical education), but Diaz had to evaluate the company´s supply chain against Triodos's approach to establish if the company's production process was sustainable and contributed to the environment. Diaz had to weigh the controversial ESG issues that merited the exclusion of Yamaha with the company's financial valuation, innovative products and future potential. Students must decide whether Triodos should exclude or invest in Yamaha. If the decision is to invest, they must decide if active engagement is needed on the controversial ESG issues. Students will conduct real ESG research and a portfolio investment analysis. They will also have the opportunity to reflect on the values and leadership implications of a proactive financial sector that drives corporate transformations toward a greener and prosperous society. Investors integrating ESG criteria into their portfolios will find this case useful because they would have to determine whether to exclude or engage with companies that do not fully meet their ESG standards. The case focuses on the nuances of sustainable finance's decision making.

By March 2020, Philip Morris International (PMI) had defined its purpose, "[to] create a smoke-free future and ultimately replace cigarettes with smoke-free products" and had validated PMI's materiality matrix. PMI's statement of purpose (SoP) was first published in the form of a letter from the board of directors to the company's shareholders and was published in its proxy statement of March 2020. PMI's sustainability leadership team (Huub Savelkouls, Chief Sustainability Officer and Jennifer Motles Svigilsky, Director of Social Impact & Sustainability) were working on the company's first ever integrated report (IR) due for publication by June 2020. Connecting a sound sustainability materiality assessment, a concrete SoP and a detailed IR would, they thought, bring together actions and words, and convey exactly how the company's strategy would create value for society and shareholders. They had the difficult task of setting realistic but ambitious targets, with a timeline to achieve them. They knew that targets - or a timeline - that were too ambitious and that the company could not deliver on could cause blowback for the team. At the same time, targets that were too conservative could lead to disengagement and exacerbate stakeholders' mistrust and undo all their hard work since 2015. The case is about a company in one of the so-called sin industries that has committed to phase out cigarettes in favor of a smoke-free future based on reduced-risk products.

In 2020, Triodos Investment Management had approximately EUR 4.9 billion in assets under its management (impact investment). Triodos motto was "Financing for change. Change Finance" and understood sustainable finance as a driving force in the transition to a more inclusive and sustainable world. Triodos took a comprehensive view of the companies following the "4P" approach: Product, People, Process, and Planet. Tesla, a clean energy company that produced electric cars, batteries and renewable energy generation, could be part of Triodos's investment. Henk Jonker, Triodos´s Senior Investment Analyst needed to evaluate Tesla's inclusion in the investment universe. He decided to pose the challenge to Clarissa Diaz, a high potential Triodos' researcher. Having in mind Tesla´s mission, "to accelerate the world's transition to sustainable energy," Diaz had to evaluate Tesla´s impact on people and planet. She must review the ESG data along with a financial analysis of the company. Diaz was aware that Elon Musk was a visionary promising to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy. Still, she was aware that Tesla and Musk were publicly involved in governance, labour, and human rights controversies. Diaz had to weigh the ESG controversial issues that merited the exclusion of Tesla. The case challenges the students to evaluate a company that do not fully meet all ESG standards and to reflect on the responsible leadership role of financial institutions.

The case is about a company in one of the so-called sin industries that has committed to phase out cigarettes - the origin of its sins - in favor of a smoke-free future based on reduced-risk products. In early 2020, Huub Savelkouls, Chief Sustainability Officer at Philip Morris International (PMI) and Jennifer Motles Svigilsky, PMI's Director of Social Impact & Sustainability, were working on the company's first ever integrated report due for publication in June 2020. Motles, perceived skepticism and mistrust about PMI's strategy and, specifically, serious doubts about the health effects of IQOS. In 2017, the UN Environment Programme Finance Initiative, in conjunction with Tobacco Free Portfolios, had called for a Tobacco-Free Finance Pledge. By 2020, the pledge had 141 signatories and 41 supporters. Some environmental, social and governance (ESG) investors still seemed interested in PMI's strategy, but not many were ready to engage publicly. In January 2020, they met with Professor Robert G. Eccles (PMI's advisor on matters regarding sustainability, social impact and investor engagement since May 2019). They were ready to build and validate PMI's materiality matrix and try to align stakeholders' demands with PMI's priorities. They needed to look at PMI's value proposition in more depth in light of the feedback received from stakeholders and the significance of PMI's impact on society and the environment. And they needed to do this in the context of a blanket exclusion of the tobacco industry by ESG investors, mistrust from stakeholders and reputational liabilities. Motles stressed the importance of validating the sustainability materiality matrix because she thought that materiality was a foundational concept in integrated reporting. The case ends with Motles feeling the challenge (a make-or-break moment for her career) and how much was at stake; the sustainability team could not let their stakeholders down and destroy the rapport they were trying to build.

Philip Morris International (PMI) CEO André Calantzopoulos announced in 2016 a radical pivot in the Marlboro cigarette manufacturer's strategy: the company would shift to "smoke-free" products in more than 180 countries around the world. One of these products was IQOS, a new "heat-not-burn" (HNB) device aimed at providing the world's over 1 billion "adult smokers with better options." The innovation of the products which, PMI claimed, were less harmful than cigarettes was welcomed by many investors and PMI. Calantzopoulos and PMI's Board of Directors believed that its sustainability strategy was critical to the company's long-term success. Nevertheless, convincing important stakeholders that a tobacco company could be part of the solution to rid the world of cigarettes by offering better alternatives was a different matter. The United Nations, World Health Organization (WHO), regulators, public health advocates, and some sustainable investors said that there was no safe level of use and no opportunity for effective engagement with tobacco companies. After a two-year wait, the US FDA issued an order authorizing the sale of IQOS in the US market of 40 million smokers. The FDA found that IQOS was "appropriate for the protection of health." PMI organized the 2020 Stakeholder Engagement Meeting in Lausanne, Switzerland to convene key stakeholders to engage with PMI's smoke-free business transformation.

Angaza's story is not a typical solar light story, but the story of a female social entrepreneur with a for-profit Silicon Valley mindset, transforming a social enterprise from a hardware to a software business model. It is about pivots, changing value propositions, new products and business models as Angaza evolves to escalate social impact while still making money. Angaza began as a solar-light company founded in 2010 by Stanford graduate Lesley Silverthorn Marincola to address energy poverty in rural off-grid communities. In her quest to address affordability, Lesley realized that the main problem confronting rural off-grid communities was not the price of solar lights per se, but finding a way to spread payments over time. In 2012, Angaza pivoted from being a solar-light producer to a software provider offering pay-as-you-go (PAYG) metering and monitoring technology to players in the solar-light ecosystem - manufacturers, distributors and mobile network operators. The PAYG technology allowed end consumers to buy solar-light products by paying small amounts over time, eventually owning them outright. At the end of the case, students are confronted with a very real dilemma facing the founder and leadership team of many start-ups, including Angaza - what are the next opportunities for the company? Is it further scaling (if so, scaling up or deep), a pivot (into data), or an exit (sell the business)?

Philip Morris International (PMI) CEO André Calantzopoulos announced in 2016 a radical pivot in the Marlboro cigarette manufacturer's strategy: the company would shift to "smoke-free" products in more than 180 countries around the world. One of these products was IQOS, a new "heat-not-burn" (HNB) device aimed at providing the world's over 1 billion "adult smokers with better options." The innovation of the products which, PMI claimed, were less harmful than cigarettes was welcomed by many investors and PMI. Calantzopoulos and PMI's Board of Directors believed that its sustainability strategy was critical to the company's long-term success. Nevertheless, convincing important stakeholders that a tobacco company could be part of the solution to rid the world of cigarettes by offering better alternatives was a different matter. The United Nations, World Health Organization (WHO), regulators, public health advocates, and some sustainable investors said that there was no safe level of use and no opportunity for effective engagement with tobacco companies. After a two-year wait, the US FDA issued an order authorizing the sale of IQOS in the US market of 40 million smokers. The FDA found that IQOS was "appropriate for the protection of health." PMI organized the 2020 Stakeholder Engagement Meeting in Lausanne, Switzerland to convene key stakeholders to engage with PMI's smoke-free business transformation.