This survey captures data and market perspectives from 146 impact investors. As in previous years, J.P. Morgan and GIIN focused on investing organizations from foundations to financial institutions and did not include individual investors. To ensure that survey participants have meaningful experience in making and managing impact investments, we set a criterion for participation such that only respondents that either manage USD 10mm or more in impact assets and/or have committed capital to at least five different impact transactions are included. The Global Impact Investing Network (GIIN) collected and collated the data, making the data set anonymous before sending to J.P. Morgan for analysis.
More than 400 institutions and 2,000 individuals representing $2.6 trillion in assets have committed to divest from fossil fuel companies. The divestment movement has grown exponentially since Climate Week last year, when Arabella Advisors reported that 181 institutions and 656 individuals representing over $50 billion in assets had committed to divest. At that time, divestment advocates pledged to triple these numbers by the December 2015 Paris UN climate negotiations. Three months before the negotiations, we have already witnessed a fifty-fold increase in the total assets of those committed to divest from fossil fuels!
Congratulations to SVN member Ellen Dorsey from Wallace Global Fund and everyone involved with the Divest-Invest movement! Click here to read about the Divest-Invest press conference with Ellen Dorsey, Rev. Lennox Yearwood, Tom Van Dyck, and Leonardo DiCaprio held this morning.
Join the fastest growing divestment movement in history, and help speed the transition to a clean energy economy. Sign the Divest-Invest personal pledge today.
I also hope you’ll join us for our 2015 Fall Conference in Baltimore, November 5-8, to learn more about Divest-Invest and get connected to an amazing community of change-makers, mission-driven entrepreneurs and impact investors.
Thank you for your support!
Social Venture Network
Cambridge Associates and the Global Impact Investing Network have collaborated to launch the Impact Investing Benchmark, the first comprehensive analysis of the financial performance of market rate private equity and venture capital impact investing funds. While the impact investing industry is in an early stage of development, it is poised for growth. One of the chief barriers to industry advancement remains a paucity of robust research on financial performance. Credible data on risk and return can help both existing and future impact investors better identify strategies that best suit their desired social, environmental, and financial criteria.
At launch, the Impact Investing Benchmark comprises 51 private investment funds. Funds in the benchmark pursue a range of social impact objectives, operate across geographies and sectors, and were launched in vintage years 1998 to 2010.
Seed stage investing is one of the most important phases of the capital aggregation cycle, but it is also one of the most misunderstood phases of funding a business. It is widely regarded as the riskiest investment stage, but also the one offering potentially high returns, along with the huge emotional connection sought by many investors. While it is arguably the investment stage where the most innovation is occurring, it is also the area seeing the least amount of capital inflows. This podcast examines the high-level concepts related to this broad topic.
There have been many articles and books written about the challenges for women in business and work-life balance – from Sheryl Sandberg’s “Lean In” to Anne Marie Slaughter’s “Why women still can’t have it all.”
On the other hand, there is little written specifically about the intersection of women and their leadership roles as socially-responsible investors. We define impact investing as investing financial capital into financial products which aim for return and social or environmental positive impact. As an investor community, we wanted to explore our role as women in the sector, either as professionals or as asset owners…
What do women uniquely contribute to the movement of impact investing?
In March 2015, twenty five women and two men gathered together in Scotland at an event organized by Toniic, an impact investing membership-based organization, to discuss the role of women and impact investing. It was an exceptional group of women dedicated to using investments to build a better future.
Following from the inspirational conversations generated at this gathering we, as women working in the impact investing sector, were inspired to write this blog to share some of our reflections.
Over the next 40 years, $41 trillion of wealth transfer is expected around the world. Morgan Stanley stated that by 2025, women will control or manage roughly 2/3rds of US private wealth. This is a significant shift and drives home the importance of engaging and acknowledging the powerful force that the women who will be inheriting this wealth can play in changing the face of investing.
At Toniic, one of our goals is to inspire conversations to take place around the world so that women feel as though they have strong support structures to become active impact investors. A number of the women participating in the gathering in Scotland have been working in the impact investing space for a number of years and were open and vulnerable about some of the challenges they were facing, such as balancing their work and family life or facing gender bias. Although this is socially-minded sector, and in appearance egalitarian, we realized that many of the biases of the mainstream financial or corporate sectors also exist within the sector of impact investing. And most of the decision-makers in family offices, impact investing funds or firms were men, despite a few organizations such as Acumen. If we are not self-aware, we could replicate the status-quo. It was further highlighted how rare it was for women, even as investors in a company, to be board directors and particularly chairwomen of boards. And of course, many stories came about as to the lack of support of women towards women. In many cases, we came to realize our own biases against women as entrepreneurs, managers or investors. As a group, we committed to become alert to these biases and commit to changing these dynamics.
At the top, women often feel as though they have to act as men in order to thrive in male-driven environments. Rather than women feeling the need to conform to the prevailing culture, it is important that women recognize the unique skills that make them strong impact investors. Some of these attributes include empathy, collaboration and being intrinsically socially minded. Also, if EQ is higher in women than men, this should bode well for women as early-stage impact investors, which at its core is about evaluating people and management teams.
We discussed different ways in which we could support each other, including recommending each other for speaking positions, mentoring female millennials, coaching women on negotiating skills and supporting women to ‘own their own power.’
Ingrid Stange who has been at the forefront of the impact investing sector in Norway argues that “women own half the sky and therefore we should make sure that women own half the world.” By supporting one another, we believe this can become our new reality.
Gender Lens investing, or investing capital in women-run companies, is also a key component in empowering women as business owners. There are numerous initiatives, such as the Girl Effect, that help to unlock greater capital for women and girls. There is also a need for an increasing number of platforms and products to support gender lens investing.
None of this deflects from the essential role that men play in impact investing. It is furthermore essential that men engage women more proactively in this sphere and also tale part in this conversation.
A large part of the vision at Toniic is that anyone can be an impact investor. Women, no matter in what wealth bracket, can play a critical role in directing investments towards socially-minded causes. And better yet, we are convinced that this sector cannot take off and become mainstream if women, as asset owners, do not get increasingly involved.
So how can more women be actively engaged in impact investing? What can we do to unlock more capital into women-run companies? What new products could be created to help support women impact investors?
We are very interested to hear your perspectives on this. Please write your comments below. And join our movement now! @Toniic
We also invite you to view the video from this retreat, entitled Toniic Women of Impact.
by Jenna Nicholas, Stephanie Cohn Rupp
What if I told you that you’re more powerful than you think, and that you likely have an untapped powerful resource to create social impact?
India is looking to raise these low-cost and long-term funds to help finance its plan to quadruple its renewable energy production and to make it economically viable.
Foundation leaders see their main fiduciary responsibility as maximizing financial returns
During the last week of February, I was fortunate to attend the fifth Latin American Investment Forum (it goes by “FLII”, its Spanish Acronym). Over the past five years, this annual gathering in Merida, Yucatan has grown into a premier event in Latin America that seeks to strengthen the ecosystem for social entrepreneurship and impact investing.
This year, more than 300 organizations gathered in Merida, Yucatan representing social entrepreneurs, investors, government entities, development banks, financial institutions, corporations and academics – to exchange knowledge and build the region’s community active in the field of impact investment and entrepreneurship.
It was my first time at the FLII and what immediately struck me was the variety of different players it attracted. On the first day of the conference, the panel representing the Government of Yucatán, National Institute of the Entrepreneur, New Ventures, HSBC and CEMEX welcomed the participants. This sent a strong message on the need for cross-country and cross-sectorial strategies required to address social issues in the region.
The conference has three overarching objectives: 1) mainstreaming impact investing in Latin America; 2) promoting ideas, trends and innovation in the impact investing eco-system and 3) fostering social entrepreneurship as a critical driver for growth in the emerging economies. The busy agenda spans three days of back-to-back sessions: speed pitches by the impact businesses, inspiring speed talks, roundtable panels with specialists, interactive workshop sessions and networking lunches. This whirlwind of a program is meant to inspire and encourage participation to ensure the conference results in collaboration opportunities and lasting connections.
FLII is organized by New Ventures Mexico, a leading platform that catalyzes social and environmental entrepreneurs and fosters development of the region’s ecosystem that supports them. New Ventures Mexico is a Toniic member. New Ventures provides innovative impact businesses with financing, technical assistance and networking opportunities such as FLII. The acceleration program provides innovative businesses with strategic support to strengthen their business models and scale impact.
The financing is provided through Adobe Capital Social Mezzanine Fund. Rodrigo Villar is the Managing Director at New Ventures Mexico and Partner at Adobe Capital as well as a Toniic member. The fund provides capital ranging from $100,000 to $3 million in debt, mezzanine and capital options, with flexible terms. What is unique about this arrangement is the technical assistance component – through taking board seats, supporting GIIRS certification, one-on-one mentoring sessions, and strategic networking.
Such combination of the accelerator support, investment and conference outreach creates an effective and powerful platform to support social entrepreneurs and ensure successful outcomes.
This year, the conference featured ten finalists of “I3 LATAM: Impact Fostering Innovation in Latin America”, a joint initiative of the Swiss Agency for Development and Cooperation (SDC), Hystra, Ashoka and New Ventures Mexico. The program identifies and catalyzes top ten entrepreneurs in the region who are then given an opportunity to pitch and connect with potential partners and investors at the FLII. The acceleration program includes a trip to San Francisco and Silicon Valley to meet with leaders in entrepreneurship, innovation and impact investing. The participating companies are also assigned a mentor in their home country to develop a strategic plan. These ten cases of success serve as inspiration for the region’s new generation of entrepreneurs.
I was impressed by the innovative ideas entrepreneurs presented at the conference. One of the companies, Ecofiltro, produces and distributes water filters for rural communities in Guatemala employing people from local communities. Another company, Carbon roots, aims to replace wood charcoal by converting agricultural waste into a cleaner cooking fuel to combat deforestation in Haiti. These are just some examples of the many outstanding entrepreneurs who participated in the conference.
The plethora of talented entrepreneurs and active engagement of the local private and public players encourages Toniic to continue supporting FLII. Stephanie Cohn Rupp, CEO of Toniic, introduced the goals and scope of the conference together with Toniic board member, John Kohler of Santa Clara University. She also led the workshop on due diligence. I was privileged to participate on the “Green Initiatives: Climate Change” panel and share the work of Divest-Invest Philanthropy.
For me, the conference was a unique opportunity to learn about the vibrant and growing impact investing sector in Latin America and meet the key players. At Toniic, we are excited to see the region’s impact investing community grow and an increasing number of innovative ideas successfully implemented and scaled.
by Jenna Nicholas, Toniic Fellow
February 2, 2015
One of Toniic’s newest members, BNP Paribas recently launched the first World Bank Green Bond linked to an equity index. For the Toniic members who are looking at how to create impact across asset classes, having fixed income socially responsible products such as green bonds is extremely valuable. Toniic co-founders, Charly and Lisa Kleissner are also the recent recipients of the BNP Paribas Philanthropy award.
A Green Bond, is a debt instrument issued to raise financial capital for the exclusive support of projects with specific environmental benefits. A relatively new asset class, the Green Bond originated to satisfy demand from Scandinavian pension funds looking to incorporate fixed- income climate change products to their investment portfolios. Responding to the demand of institutional investors, the first Green Bond was issued in 2008 by the International Bank for Reconstruction and Development (IBRD), one of five institutions that comprise the World Bank Group. The first issue was originally worth 2.325 billion SEK ($USD 3.53 million). Its proceeds were earmarked for select IBRD environmental projects tackling global carbon emissions or climate change resilience.
Green bonds are tied to a very specific climate-related or otherwise environmentally beneficial purpose or technology, and are explicitly labeled as “green” at the time of issuance. They are also the first investment grade “plain vanilla” security whose proceeds are earmarked and used to finance climate projects; issuers borrow for a defined period of three to 25 years at a fixed interest rate (Gustke, 2013). Unlike green stocks or green equity-indexed bonds, Green Bonds do not usually expose investors to the risks of the specific green projects funded by the proceeds, as they are often backed by large development banks or companies (Gustke, 2013).
Once limited to issuers from large international financial institutions, the total value of outstanding Green Bonds doubled in 2013 as the type of issuers broadened and investors warmed to the green market. According to the Climate Bonds Initiative (CBI), an investor-focused non-profit, around $USD 7.8 billion-worth of explicitly advertised Green Bonds were issued by the end of 2012, mostly by the World Bank and other multilateral lenders; $USD 6.4 billion of which is still outstanding. In February 2013, the IFC issued a $USD 1 billion Green Bond, over 20 new Green Bonds followed, with most new bonds worth over $USD 250 million. That same year, in a watershed event that significantly broadened the scope of issuers, the first corporate labelled Green Bonds were issued by Électricité de France, Vasakronan and Bank of America Merrill Lynch. By the end of 2013 the market stood at approximately $USD 15 billion in outstanding bonds. (Kidney, 2014) As of 2014, more than $USD 19.9 billion in Green Bonds were issued worldwide and are projected by the CBI to reach $USD 40 billion by years end (Gustke, Quarterly Investment Guide, 2014).
It is exciting to see the growth of the green bond market and expect this growth to continue as more investors are thinking about the alignment of their values and their investments.
One of the important issues related to green bonds is the question of what counts as green? Please check out this link for more of an exploration of this question: Setting Standards in a Booming Market: What Makes Green Bonds Green?
One example of a green bond project issued by the World Bank’s IBRD is this project in China. For more project examples, please see, World Bank Green Bonds
by Jenna Nicholas, Toniic Fellow