The Rapid Globalization of Impact Investing PowerPoint Presentation

The Rapid Globalization of Impact Investing PowerPoint Presentation

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Ted Jackson. School of Public Policy and Administration. Carleton Centre for Community Innovation. Presented to the Research Works Luncheon Session,. Senate Room, Carleton University, November 1, 2012. ID: 322321

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Slide1

The Rapid Globalization of Impact Investing

Ted Jackson

School of Public Policy and Administration

Carleton Centre for Community Innovation

Presented to the Research Works Luncheon Session,

Senate Room, Carleton University, November 1, 2012

Slide2

2

Core Issue

Impact Investing is growing across the globe, but so far this growth has been driven mostly by investors from the Global North. How to effectively engage investors from the fast-growing new economic powers, and the low-income countries, is a challenge that this new field must meet directly, with energy and creativity.

Slide3

Current Context

Slow economic growth globallyHigh unemployment and growing inequalityPressure to reduce western aid budgetsContinued ascendance of new economic powers: China, India, Brazil, South Korea, IndonesiaIncreased importance of G-20 in global governanceIncreased development assistance and trade on the part of the new powersNeed and opportunity to lever private sector capital to address pressing social issues

3

Slide4

Investments intended to create positive impact beyond financial return

Provide

capitalTransactions currently tend to be private debt or equity investmentsWe expect more publicly traded investment opportunities will emerge as the market matures

Businesses designed with intentThe business (fund manager of company) into which the investment is made should be designed with intent to make a positive impactThis differentiates impact investments from investments that have unintentional positive social or environmental consequences

… to generate positive social and/or environmental benefitPositive social and/or environmental impact should be part of the stated business strategy and should be measured as part of the success of the investment

Expect financial returnsThe investment should be expected to return at least nominal principalDonations are excludedMarket-rate or market-beating returns are within scope

Source: JP Morgan, Rockefeller Foundation and GIIN, 2010

4

Slide5

5

Impact Investing: Mapping ReturnsSource: Adapted from Monitor Institute 2009, via Rockefeller Foundation , 2011

Impact

First

Low Impact

and

Low Financial Returns

Philanthropy

Social Returns

Financial

Returns

i

Financial

First

Low

High

High

Subsidized Investments

Grants

Below

Market

Market

Related

Traditional

Investments

SRI (“Do No Harm”)

Impact

Investments

Slide6

Actors in the Impact Investing Industry

6

Slide7

Examples of Impact Investments

7

USA

INDIA

TANZANIA

 

 

 

 

 

Investee

:

M’tanga

Farms

Investors

:

Calvert Foundation, Lion’s Head Global Partners

Investee:Investors: and

Investee:

Investors

:

CHILE

 

 

Investee

:

LGBT Enterprises in Latin America

Investors:

and

supported by

NESsT.org

Slide8

Mapping the Impact Investing Industry

8

USA

 

CHINA (HONG KONG)

NETHERLANDS

 

 

 

 

UK

INDIA

BRAZIL

 

SOUTH AFRICA

 

KENYA

 

 

MEXICO

 

 

 

 

 

 

 

GERMANY

 

 

 

SINGAPORE

AUSTRALIA

 

The Sterling Group

 

 

 

 

Slide9

Capital Growth

9

Slide10

Value of Reported Investments, by Region, 2011

10

Source:

Saltuk

,

Bouri

and Leung,

“Insight

into the Impact Investment Market

,” 2011

Slide11

What Impact Investing is Not

Not a silver bullet / panaceaNot implying that every social issue can be solved through market-based approachesNot replacing the important role of philanthropyNot an excuse for governments to ignore their obligations to marginalized populations or their obligations to redistribute wealth

11

Slide12

The Potential of Impact Investing

The ability to unlock new types of capital to address a range of social issues, and to combine capital in creative waysAn opportunity to address the limitations of traditional investment approaches that narrowly focus on financial returnsA desire by some wealthy investors to generate both financial and social returns

12

Slide13

13

Slide14

14

Slide15

What Should/Could Carleton Do? (I)

Ottawa/Eastern OntarioEngage Canadian impact investors to finance LTW and other Carleton-affiliated enterprises that can generate social or environmental benefitsAccelerate efforts to commercialize and scale social-purpose technology in priority sectors: health, the environment, sustainable energy, etc.Integrate impact investing strategies and actors into promotion of regional economic developmentBecome an impact investor in affordable housing and social infrastructure, through partners and intermediaries (e.g., CMHC)

15

Slide16

What Should/Could Carleton Do? (II)

GlobalUse evaluation to hold impact investors to account for their declared intentionsConduct independent, critical research on effectiveness of models and tools in impact investing in various sitesDesign/facilitate “triangle” interventions involving a western country, a new economic power and a low-income countryConsider hosting professional training in impact investing at Carleton (e.g., “IPDET for impact investing”)

16

Slide17

Resources

Bugg-Levine, A. and J. Emerson. Impact Investing: Transforming How We Make Money While Making a Difference, 2011.Gates, B. “Innovation with Impact: Financing 21st Century Development,” Report to the G-20 Leaders, Cannes, 2011.Global Impact Investing Network: thegiin.orgHarji, K. and E.T. Jackson. “Accelerating Impact: Achievements, Challenges and What’s Next in Building the Impact Investing Industry,” Rockefeller Foundation, 2012.J.P. Morgan, GIIN, Rockefeller Foundation. “Impact Investments: An Emerging Asset Class,” 2010.Monitor and the Acumen Fund. “From Blueprint to Scale: The Case for Philanthropy in Impact Investing,” 2012. Monitor Institute, “Investing for Social and Environmental Impact: A Design For Catalyzing An Emerging Industry,” 2009. SVT Group. “Catalog of Approaches to Impact Measurement,” 2008.United National Development Program “Innovative Financing for Development: A New Model for Development Finance,” 2011.

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