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
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 lowincome countries, is a challenge that this new field must
meet directly, with energy and creativity.
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Current Context
• Slow economic growth globally
• High unemployment and growing inequality
• Pressure to reduce western aid budgets
• Continued ascendance of new economic powers: China, India,
Brazil, South Korea, Indonesia
• Increased importance of G-20 in global governance
• Increased development assistance and trade on the part of the
new powers
• Need and opportunity to lever private sector capital to address
pressing social issues
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Investments intended to create positive impact
beyond financial return
Provide capital
• Transactions currently tend to
be private debt or equity
investments
• We expect more publicly
traded investment
opportunities will emerge as
the market matures
Businesses designed with intent
• The business (fund manager of
company) into which the
investment is made should be
designed with intent to make a
positive impact
• This differentiates impact
investments from investments
that have unintentional positive
social or environmental
consequences
Expect financial returns
• The investment should be
expected to return at least
nominal principal
• Donations are excluded
• Market-rate or marketbeating returns are within
scope
… to generate positive social
and/or environmental benefit
• Positive 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
Source: JP Morgan, Rockefeller Foundation and GIIN, 2010
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Impact Investing: Mapping Returns
Source: Adapted from Monitor Institute 2009, via Rockefeller Foundation , 2011
High
Financial
First
i
Market
Related
Impact
Investments
Traditional
Investments
Financial
Returns
Below
Market
•
Impact
First
SRI
(“Do No Harm”)
• Subsidized Investments
Low Impact
and
Low Financial Returns
Philanthropy
• Grants
Low
Social Returns
High
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Actors in the Impact Investing Industry
6
Examples of Impact Investments
Investee:
Investee:
Investors:
Investors:
and
USA
INDIA
TANZANIA
Investee: LGBT Enterprises
in Latin America
Investee: M’tanga Farms
Investors: Calvert
Foundation,
Investors:
and
supported by
CHILE
Lion’s Head Global Partners
NESsT.org
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Mapping the Impact Investing Industry
The Sterling Group
UK
GERMANY
NETHERLANDS
USA
CHINA (HONG KONG)
INDIA
MEXICO
KENYA
SINGAPORE
BRAZIL
SOUTH AFRICA
AUSTRALIA
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Capital Growth
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Value of Reported Investments, by Region, 2011
Source: Saltuk, Bouri and Leung, “Insight into the Impact Investment Market,” 2011
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What Impact Investing is Not
• Not a silver bullet / panacea
• Not implying that every social issue can be solved
through market-based approaches
• Not replacing the important role of philanthropy
• Not an excuse for governments to ignore their
obligations to marginalized populations or their
obligations to redistribute wealth
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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 ways
• An opportunity to address the limitations of traditional
investment approaches that narrowly focus on financial
returns
• A desire by some wealthy investors to generate both
financial and social returns
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13
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What Should/Could Carleton Do? (I)
Ottawa/Eastern Ontario
• Engage Canadian impact investors to finance LTW and other
Carleton-affiliated enterprises that can generate social or
environmental benefits
• Accelerate 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 development
• Become an impact investor in affordable housing and social
infrastructure, through partners and intermediaries (e.g.,
CMHC)
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What Should/Could Carleton Do? (II)
Global
• Use evaluation to hold impact investors to account for their
declared intentions
• Conduct independent, critical research on effectiveness of
models and tools in impact investing in various sites
• Design/facilitate “triangle” interventions involving a
western country, a new economic power and a low-income
country
• Consider hosting professional training in impact investing at
Carleton (e.g., “IPDET for impact investing”)
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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.org
Harji, 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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