Category Archives: impact investments

Peace Investing, one of the new frontiers in impact investing?

Leave a reply

I had the pleasure to meet recently Liam Foran, CEO and co-founder of the Peace Dividend Initiatives.

The Peace Dividend Initiative (PDI) is a peace-dividend accelerator dedicated to harnessing market forces for peace. PDI bridges the gap between peace mediation and economic actors through dialogue, incubation, and investment. Headquartered in Geneva, PDI is connected to peacemakers, international organizations, governments, investors, and entrepreneurs.

https://www.peacedividends.org/

So PDI has been cultivating peace-supporting economic opportunities in fragile and at-risk countries. In other words, incubating enterprises in places that have signed cease-fire agreements or in conflicts. What has been missing in these places are opportunities and funding to be able to kickstart economic activities/opportunities for the people. For example, ex-soldiers might go back to the militias/terrorists if they have no other alternative to earn a living. In Colombia, PDI has supported the incubation of a premium cacao company as well as a coffee company.

There are currently 40 countries in the World Bank’s “Fragile and Conflict affected Situations” list or in short the FCS list. There is a dire need for peace-making in the world so that all countries can continue to survive, thrive and prosper.

An exciting development is that PDI is joining forces with Symbiotics to launch a Peace Venture Fund. This can allow a blended finance opportunity for governments as well as private sector and philanhtropists to invest in achieving PEACE.

What’s new? Impact-Linked Finance: better terms, better impact

Leave a reply
  • source: Impact Linked Finance Fund

In the past few weeks, I came across several exciting new trends and innovations in the area of impact investment and blended finance. These include; the emerging social impact markets, trading social outcomes, and Impact-Linked Finance.

Impact-Linked Finance is a form of funding that directly links financial rewards to the achievement of positive outcomes. It incorporates financial incentives for enterprises that achieve exceptional (agreed upon and verifiable) positive outcomes. That means that a social enterprise will enjoy better financing terms (ie lower interest rates or a grant alongside a loan) if they meet specific impact outcomes.

“These outcomes can come in many shapes and forms – for example increased incomes for the poor, more gender equality, reduced plastic waste, or improved learning outcomes for children. The more social or environmental value a company creates, the lower its cost of capital will be. This value-creation could have a powerful effect. The best companies in the world – in terms of positive impact – would suddenly be able to raise large amounts of low-cost capital to scale. And even more importantly, they could further optimize their impact. As a result, resources would flow to what matters most to society, and this has mutually reinforcing effects” (Bjoern Struewer, Roots of Impact)

To learn more ILF and Roots of Impact

GenderSmart Investing Summit: Traction to Transformation

Leave a reply
Suzanne Biegel Co-founder, GenderSmart with Kshama Fernandes Chairperson, Northern Arc Investments

The 2022 GenderSmart Investing Summit took place in London on Oct 18-19. Although I could not attend physically, I could feel the enthusiasm, power, and passion through reading and watching the takeaways, highlights, and videos. This powerful movement to mainstream and integrate gender across the whole capital spectrum and all value chains is accelerating.

GenderSmart’s merger with 2XCollaborative into 2XGlobal (as of Jan 2023) was announced at the Summit. 2XGlobal‘s mission is “to equip and engage the full spectrum of investors, intermediaries, and innovators capable of transforming systems of finance through the gender-smart deployment of capital across asset classes and markets.”

Also during the Summit, the GenderSmart State of the Field 2022 the most extensive and qualitative survey capturing the broadest and most in-depth spectrum of insight and experience across the gender-smart investing field to date was released.

Kudos to the GenderSmart community and especially to Suzanne Biegel for her leadership and contagious passion for advancing this field forward.

Global impact investment market exceeds $1tn

Leave a reply

The global impact investment market exceeded $1tn according to the latest study of Global Impact Investment Network (GIIN). Amit Bouri, CEO of GIIN announced this figure and unveiled the latest report Sizing the Impact Investment Market 2022 at GIIN Investor Forum in Hague (Oct 12-13).

“In recent times, the climate crisis, the drive for transparency around impact performance reporting, and global sustainability reporting standards have brought renewed attention towards the importance of implementing impact investing strategies throughout the investment process. The Core Characteristics of Impact Investing require a clearly stated impact intention, as well as measurement and management of impact performance throughout the investment cycle, to ensure that investments achieve positive impact results relative to the previously defined impact intentions” (from this report).

Other significant impact investment topics on the rise: Gender lens investment, Climate justice finance, and financial inclusion for refugees.

The Impact Management Platform has been launched!

Leave a reply

The Impact Management Platform (Platform) is a collaboration between Partner organizations, all of whom are leading providers of sustainability standards and guidance to coordinate efforts and mainstream the practice of impact management.

The Platform represents the next phase of the collaboration that, until now, was facilitated by the Impact Management Project (IMP), a timebound consensus-building forum that ran from 2016 to 2021. Through the Platform, initiatives will continue to work together to identify opportunities to consolidate existing sustainability resources, collectively address gaps, and coordinate with policymakers and regulators to support the mainstreaming of impact management. This web tool is the first product of the platform.

The Platform will be overseen by a Steering Committee comprised of the IFC, OECD, UNDP, UNEP FI and UNGC

source: About the Impact Management Platform

This is a great platform to not only learn but to design and implement impact management. It is designed for a very broad audience from novice to professionals, from startups to large organizations, for investors and for impact organizations. The website contains an overview of the actions of impact management and it is an amazing resource center for standards and guidance. It is an interactive and rich platform.

This year we have seen a convergence/merger of the leading sustainability disclosure standard setters (corporate reporting framewords). In June the two giants, The International Integrated Reporting Council (IIRC) merged with the Sustainability Accounting Standards Board (SASB) into what is today the Value Reporting Foundation to provide investors and corporates with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards to drive global sustainability performance. This was followed in Nov at the COP26 in Glasgow the IFRS Foundation announcing the formation of the International Sustainability Standards Board (ISSB) by consolidating the Climate Disclosure STandards Board (CDSB) and the Value Reporting Foundation (which houses the Integrated Reporting Framework and the SASB Standards) by June 2022.

The Platform encompasses all these actors above and all the industry leaders in impact and sustainability like GIIN, B-Lab, UN Global Compact, OECD, PRI, UN, GRI and more. It is a very needed and welcome move towards simplification and in creating a robust global standards for sustainability and impact management.

Thoughts on The Great Reset: COVID-19

Leave a reply

IMG_6400In some ways quickly and in others in slow motion, the world has changed in front of our eyes and screens. We, everyone in the world, have been impacted by the same cause, almost at the same time. This turmoil caused by the Covid-19 pandemic underlines how we are interconnected and it is a wakeup call for us to realize what truly matters and what not. Needless to say, there is a big difference in the challenges posed depending on where you are and the degree of how privileged or not privileged you are. As to this reality of inequality what comes to mind is one of my profound beliefs;

“From those to whom much is given, much is expected”

So, what kind of mindset is needed and what can we do in this period of colossal transformation?

  • Stay fit physically, emotionally and spiritually
  • Be adaptable, positive, creative, courageous, empathetic and mindful of others
  • Connect, communicate and share your ideas and feelings to your loved ones, your colleagues and your community.
  • Offer help and encouragement to those in need

It is “The Great Reset”. I saw this expression first after the financial crisis of 2008 but I believe this time it is even more the case as it is impacting and transforming everyone’s lives in a massive way. How can we prepare for the future?

  • Stay positive.
  • Deal with what is needed today and tomorrow but think and plan for long term.
  • Master remote working, redefine how you work effectively and build trust with your team, suppliers, customers and investors using the necessary tools.
  • Discover or learn new skills that you were not aware you would be interested in. (webinars, Coursera, masterclasses)
  • Search for new opportunities that are surfacing.
  • Adapt, listen, learn, be empathetic.

We have a great opportunity (The Great Reset) to make our world better and more resilient by reinventing, redefining and improving on ourselves, our businesses and our planet.

Recommended reads:

Paradigm shift? From shareholder primacy towards commitment to all stakeholders

Leave a reply

1080x360_BcorpOn August 19th, 2019 the Business Roundtable (the association of CEOs of America’s leading companies) released a new Statement on the Purpose of a Corporation. This new statement was signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders-customers, employees, suppliers, communities and stakeholders. This is a significant move away from their stance since 1978 as principles issued until now endorsed shareholder primacy (that corporations exist principally to serve shareholders).
The long-awaited paradigm shift! Or shall we be sceptical that these changes will be implemented?
In the days following this announcement, we have seen debates shaping and many cautionary but constructive articles being published. There was an immediate critical response announced by the Council of Institutional Investors raising outdated concerns that the statement undercuts notions of managerial accountability to shareholders. The B Corporation movement founders, who have been in the forefront of redefining the role of businesses into one that delivers value to all stakeholders, published an excellent article “Don’t Believe the Business Roundtable has changed until the CEOs’ action match their words” This title sounds a bit harsh but it is important to hold the CEOs accountable and a full-page ad “Let’s get to work” was posted in the Sunday New York Times urging them to get to work (together).
In addition to the B Corporation movement, there has been in the past few years some signs of this impending paradigm shift as witnessed by the letters to the CEOs written by Larry Fink, CEO of BlackRock “linking purpose and profits”. Another powerful movement that is growing is lead by Singularity University which is shaping leaders and organizations by using exponential technologies to tackle the world’s biggest challenges and build a better future for all. This latest statement by the Business Roundtable is a gigantic step forward and although it might take some time until their action matches their words, slowly but surely we are getting aligned and moving in the right direction. No turning back.

Schroders acquire majority stake in BlueOrchard Finance

Leave a reply

blueorchard_logo

schroders_logo

A milestone and another example of the mainstreaming of impact investing.
BlueOrchard Finance is a pioneer in microfinance and impact investing. Founded in 2001, the company launched the world’s first commercial microfinance debt investments. As of May 2019, the company had circa USD 3.5bn in assets under management.
From their news release:

Schroders’ partnership with BlueOrchard supports the expansion of its sustainability capabilities. This will help to better serve clients who are increasingly seeking investments which have a beneficial impact on society and the environment, as well as generating positive financial returns. It also accelerates the growth of Schroders in private debt and private equity investments in emerging markets.
Partnering with Schroders enables BlueOrchard to further drive innovation and growth and increase its impact across emerging and frontier markets. Schroders’ stable ownership structure and heritage is aligned with BlueOrchard’s longterm investment philosophy. Sharing values and the desire to generate substantial impact together, Schroders is BlueOrchard’s preferred strategic partner.
There will be no changes to the management team, processes or strategies that BlueOrchard manage

What’s new on Impact Investing

Leave a reply

1. The Global Impact Investing Network’s Sizing the Impact Investing Market report, published on April 1, provides an in-depth analysis of the current size and composition of the impact investing market. The GIIN estimates the current size of the global impact investing market to be $502 billion.
2. In view of the rapid growth of funds in the area of impact investing The GIIN has made “scaling the market with integrity” a key focus and have released a useful sheet titled CORE CHARACTERISTICS OF IMPACT INVESTING which defines 4 tenets/practices of impact investing: 1) Intentionality 2) Use Evidence and Impact Data in Investment Design 3) Manage Impact Performance 4) Contribute to the Growth of the Industry
3. Impact Management Project is a forum for building global consensus on how to measure, report, compare and improve impact performance. IMP convenes a Practitioner Community of over 2,000 organisations to debate and find consensus (norms) on technical topics, as well as share best practices.
4. BlueOrchard publishes it’s Impact Report 2019/2020 on April 1.

Takeaways from The GIIN Forum 2018

Leave a reply

DqqjfV4W4AA26-V
Dqvd0xpWoAArz1N (2)

Over 1300 delegates attended the GIIN Forum 2018 which took place in Paris on Oct 30-31st. A strong opening message from Amit Bouri, Co-founder and CEO of the GIIN;

We need a new financial system that is accountable for its effects on people and the planet. I believe that impact investing presents a real alternative to the status quo….. 3 priorities for impact investments: mobilize more capital, ensure impact integrity and build the movement…..I hope that every one of you views this movement not just as an opportunity but as a responsibility to lead, to change expectations, & to build a just and sustainable world where everyone uses the full power of their investment capital as a force for good!

As the movement grows and starts mainstreaming there are different forces at play. As my colleague quite cleverly pointed out, there are a few camps looking at impact investment from different perspectives: impact fundamentalists, risk mitigators and impact washers. Thanks to GIIN members, and the thought leaders like Jed Emerson and Sir Roland Cohen there is a strong push to ensure impact integrity.

Sir Cohen commented on “the steps to reach the impact tipping point 2020” that
1) we should start seeing by 2020 the equivalent of impact accounts under GAAP (Generally Accepted Accounting Principles) so that companies can publish alongside their financial accounts their impact financial accounts and 2) Measurable means dependable, not 100% accountable… if 20% of companies measure their impact, that’s a paradigm shift and the rest will follow.

“We need to have a conversation about what value we really want to create. We will stay where we are if we just stay focused on making money with money.” were strong words by Jed Emerson who has recently published “The Purpose of Capital” (the book is free to download!), a very important literature that reminds us to stop and reflect as we are thinking and talking too much about the “how” and getting blurred on the “why”.

Dq1ALNEWsAAdjqP (3)Omydiar Network presented the outstanding series “Beyond Trade-offs” covering perspectives of leading investors who have moved beyond the trade-off debate to invest across the returns continuum.
“We need to move beyond the binary debate of commercial returns vs concessionary – in reality, it’s a continuum.” Roopa Kudva, Partner Omydiar Network

A topic which is appearing more is the role of Blockchain in impact. There were two presentations both moderated by Shaun Conway, President of ixoFoundation. ixo is building the Blockchain for Impact, transforming all measurable changes that have an impact into Verified Impact Data with crypto-economic Proof of Impact. A lot of exciting learnings to come from this area!

ixo: The Blockchain for Impact from ixo foundation on Vimeo.