how we can do it (together): breaking the impact investing space open - slides
TRANSCRIPT
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Agenda
Topic Time Lead
Introduction & Logistics (lunch)
12:00 – 12:15 Sara / Tim
Context setting 12:15 – 12:30 Jordan
Pathway to a much bigger market
12:30 – 1:10 Bill
Break 1:10 – 1:25 All
A liquid (or more liquid) impact fund
1:25 – 2:05 Sucheta
Community investing and FIs 2:05 – 2:45 Andrea
Sum up / Next steps 2:45 – 3:00 Jordan / Sara
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Social Finance DiscussionContext
May 7, 2015
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1/2. Bloombergs’ Snapshot of the Canadian Charity Sector 2012 2. 2012 figure
$223B1
$3.5T2
Charitablesector
Capitalmarkets
Access to even a small portion of capital markets represents a large opportunity to
address social issues
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Responsible Investment
Responsible investment (RI) is the integration of environmental, social and governance factors (ESG) into the selection and management of investments.1
Two important streams of investing with purpose
Impact InvestmentImpact investing (or social finance) is an investment approach with the explicit intention of solving social or environmental challenges and generating financial returns. This includes investments producing a return of principal to offering market-rate or even market-beating financial returns.2
Must include:
1.Investor intention
2.Investee intention
3.Impact measurement1. Responsible Investment Association 2. Modified from State of the Nation: Impact Investing in Canada
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Responsible Investment
•Negative screening
•Positive screening
•Shareholder engagement
– E.g., Say on pay
Multiple examples exist within each stream
Impact Investment•Impact fund investment
•Green bonds
•Community bonds
•Direct (social enterprise / social venture) investing
– Debt, Equity, Revenue-based
•Crowdfunding
•Social Impact Bonds (SIBs)
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• Assets under management by UNPRI signatories now stands at more than $45 trillion with 1,300 signatories– Up from $4 trillion at the PRI’s launch in 20061
• A 2014 survey of 124 global impact investors showed that they managed $46B up from $10.6B deployed in 20132
• More than $51-billion (U.S.) in green bonds outstanding3
• Intergenerational wealth transfer, estimated at USD $41 trillion by 2050 with nearly USD $6 trillion of that expected to be directed towards social issues4
• Driving social impact is important to 92% of High Net Worth Individuals5
Where we are today globally
1. (UNPRI 2015) 2. Spotlight on the Market: The Impact Investor Survey 3. Climate Bonds Initiative (2014) 4. The Promise of Impact Investing, Harvard Business School, 2011 5. World Wealth Report 2014
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• Canadian responsible investment (RI) market sized at ~$1T1
– 31% of Canadian investment industry
– 68% increase compared to two years earlier
• Green bond market grew from $0 to $1.2B in 2014
• Impact Investing market size estimated at $2.2B in 20122
• 92% of Canadians say that it's important to choose investments that are aligned with their values3
• 60% of investment industry expects moderate or high levels of RI growth over the next two years3
Where we are today in Canada
1. 2015 Canadian RI Trends Report 2. MaRS State of the Nation report 2013 – supply-side estimate (excluding pension funds and HNW individuals) 3. NEI Investments, 2014 4. CRA, 2013
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Canadian Impact Investing market size expected to get to $3.2B by
2017
Baseline size of Canada’s impact investment market estimated at $2.2B in 2012Source: MaRS State of the Nation report 2013 – supply-side estimate (excluding pension funds and HNW individuals)
Estimated Canadian Annual Impact Investment
(2017 range)
Estimated Canadian Impact Investment AUM
(2017 range)
10% of Canadian private and public foundations assets represents a $5.6B4
opportunity
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Key players
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developed a “Solar Bond” as an impact investment product available to retail investors in Ontario allowing them to align their social and environmental goals with their financial objectives.
based in Ottawa, has made investments in Ontario non- ‐profits, including a First Nations housing project.
Many interesting examples exist
an organisations dedicated to making a positive social impact, started an issuing platform for charities to raise between £10 and £50 million of unsecured loan finance through bond listings on the London Stock Exchange.
manages $300M in private equity investments in emerging markets. They deliver top-quartile returns by investing capital in private equity funds and companies that benefit local communities and the environment.
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Precedent of foundations and investment managers working
together exists
Green Beta strategy Foundation investment Additional products
• Developed carbon efficiency investment strategy
• Underweights companies with higher carbon intensity, but maintains exposure to sectors by overweighting companies taking more proactive approaches to reducing carbon emissions
• Showing positive results
• $100 million of funding from McKnight Foundation
• Part of $300 commitment toward impact investing to support the transition to a low-carbon
State Street•SPDR MSCI ACWI Low Carbon ETF (LOWC)•Include companies with low carbon emissions relative to sales and market cap.
Blackrock•MSCI ACWI Low Carbon Target ETF•81% less carbon emissions1
1. Relative to the All Country World Index
Balance between fiduciary duty and
decarbonized portfolio
Foundation commitment provided incentive to produce
new product
Led to other market leaders developing
similar products and growing overall
market
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• Lack of capacity (and resources) to dedicate to mission investing
• Lack of investment opportunities with tight mission alignment
• Focus on creating impact only in their community
• Investment committees and wealth advisors have limited interest and/or capability
• Regulatory barriers (e.g., LP regulation)
• Impact measurement a challenge
Key challenges - Foundations
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• Lack of investable options
• Demand for impact products unclear
• Investment risk (mainly due to quality of investments)
• Lack of liquidity with many impact options
• More complicated / onerous to execute
Key challenges – Wealth advisory / Asset managers
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End of session
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Date: September 28th to October 2nd, 2015
Location: Toronto, ON
Objectives:•Develop your ability to drive social impact and financial returns•Provide and overview of responsible, sustainable, and impact investing opportunities as well as understanding of where the field is going•Support you to gain practical skills and knowledge in an important and emerging sector•Network and learn from expert faculty and selected participants, and become a part of growing global community of professionals in the field of social finance
Instructors•Dr. Tina Dacin, Ph.D | Director, Centre for Social Impact | Queen’s School of Business•Joanna Reynolds, M.Ed | Associate Director, MaRS Centre for Impact Investing
If interested, contact Joanna at [email protected]
Social Impact Academy
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Date: September 28th to October 2nd, 2015
Location: Toronto, ON
Objectives:•Develop your ability to drive social impact and financial returns•Provide and overview of responsible, sustainable, and impact investing opportunities as well as understanding of where the field is going•Support you to gain practical skills and knowledge in an important and emerging sector•Network and learn from expert faculty and selected participants, and become a part of growing global community of professionals in the field of social finance
Instructors•Dr. Tina Dacin, Ph.D | Director, Centre for Social Impact | Queen’s School of Business•Joanna Reynolds, M.Ed | Associate Director, MaRS Centre for Impact Investing
If interested, contact Joanna at [email protected]
Social Impact Academy
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ImpactOntario
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