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8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 1/15
Impact Investing:
Building an industryImpact Forum
10 January, 2011Dhaka, BangladeshMargot Brandenburg
Associate DirectorThe Rockefeller Foundation
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 2/15
© Global Impact Investing Network, 2009
What is Impact Investing?
Investments intended to create positive social impact beyond financialreturn
Provide capital
Transactions currently tendto be private debt or equityinvestments
We expect more publiclytraded investmentopportunities will emerge asthe market matures
Expect financial returns
The investment should beexpected to return at leastnominal principal
Grants and donationsshould be excluded
Market-rate returns inscope
Business designed withintent …
The investment should bedesigned with intent to makea positive impact
This differentiates impactinvestments frominvestments that haveunintentional positive socialconsequences
… to generate positive socialand/or environmental impact
Positive social and/orenvironmental impact shouldbe part of the stated businessstrategy and should bemeasured as part of thesuccess of the investment
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 3/15
© Global Impact Investing Network, 2009
Why Impact Investing?
Government andcharity scale solutions
20 th century
Private charitysubstantial funder of social innovation
Need to harness creativityand reach of private sector
Not enough charity andgovernment subsidy to address
global challenges
Now
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
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© Global Impact Investing Network, 2009
A convergence of forces
Investors and consumersincreasingly values driven
Eagerness to adopt new tools
Growing inequity and environmentalcrisis
Track record of early success
Talent pushing new careers
Impactinvestingnow“locked in”
Can ittakeoff?
Openings for policy change
4
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
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© Global Impact Investing Network, 2009
Who are impact investors?
A heterogeneous group:FoundationsFamily officesDFIsBanksPension fundsHigh Net Worths (HNW)Social Investment Funds
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
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© Global Impact Investing Network, 2009
What is industry potential?
6
Potential profit and invested capital to fund selected BoP businessesover the next 10 years
Sector Potential investedcapital req’ed , USD bn
Potential profitopportunity, USD bn
Housing: Affordable urbanhousing
$214 - $786 $177 - $648
Water: Clean water for ruralcommunities
$5.4 - $13 $2.9 - $7
Health: Maternal health $0.4 - $2 $0.1 - $1
Education: Primaryeducation
$4.8 - $10 $2.6 - $11
Financial Services:Microfinance
$176 Not measured
Source: JPM Morgan Global Research/Rockefeller Foundation
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 7/15© Global Impact Investing Network, 2009
Phases of industry evolution
7
Unlock Latent Supply ofCapital by Building
Efficient Intermediation
Build EnablingInfrastructure for the
Industry
Evolution of social and environmental impact investing
UncoordinatedInnovation
MarketplaceBuilding
Capturing theValue of theMarketplace
Maturity
Increase Transparency and Credibility in Impact
Investing
Benefits of a common language of metrics and definitions 1946 ----- Venture Capital ---------
Present1900s ----- Community Development Finance ---------
1970s ----- Clean Tech Finance ---------
Impact investing is positioned along a trajectory of industry evolution that mirrors what we have seen in other, related industries
----- Microfinance ---------1970s
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 8/15© Global Impact Investing Network, 2009
Status of impact investingindustry
8
Launching a marketplace requires both public goods and hybrid public/private infrastructure. This infrastructure requires significant philanthropy and patient investment capital.
Building EfficientIntermediation
Build EnablingInfrastructure for the
Industry
Evolution of social and environmental impact investing
UncoordinatedInnovation
MarketplaceBuilding
Capturing theValue of theMarketplace
Maturity
Build a cr and Credibility in Impact
Investing
Future StateEarly State Current State
BuildDevelop Industry
Infrastructure
BuildPromote throughresearch, outreach,
enabling policies
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
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What will it take to capture thepotential value of impact investing?
IRIS
Facilitateleadership
Buildinfrastructure
Researchand
advocate
Catalyzeintermediation
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
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What will it take to capture thepotential value of impact investing?
Build infrastructure
standard language and framework for tracking andperformanceA shared vocabulary for describing the performance of impact investments
Repositories of comparable data used to produceanonymous performance benchmarks
Regulated exchanges and other mechanisms for reducingtransaction costs and improving liquidity
Ratings systems that assesses the social and environmentalperformance of companies and funds seeking investmentcapital from impact investors
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
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What will it take to capture thepotential value of impact investing?
Catalyze intermediation
standard language and framework for tracking andperformance
Funds that can mobilize institutional-scale capital
Exchanges that to raise appropriate capital for SEs, provideon-ramp for individual investors, improve liquidity
Databases, subscription facilities that facilitate dealsourcing, reduce transaction costs
Investment clubs that reduce transaction costs, share dd
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 12/15© Global Impact Investing Network, 2009
Why Impact Investment Exchange Asia(IIX)?
Why an exchange?Enables social enterprises to attract capital without compromisingmission
Drives adoption of standard social and environmental reporting andmeasurement
On-ramp for individual investors (HNW and retail)
Reduce transaction costs for enterprises and investors (search and
market-clearing)Improve liquidity for investors
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 13/15© Global Impact Investing Network, 2009
Why Impact Investment Exchange Asia(IIX)?
Why an Asia regional exchange?Regional nuance and presence matters
Leading role of enterprises in region, esp. Bangladesh
Opportunity for regional application of global social andenvironmental reporting and measurement
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
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What else does an exchange need tobe successful ?
Parallel investments are required toBuild capacity of social enterprises to list, use capital to scale, report
Engage national, regional policymakers on enabling regulations
Build awareness among private banks, ‘gatekeepers’ for HNWs
Improve offerings of relevant service providers (accountants, auditors,legal services, etc.)
Promote and refine standardized social and environmental reportingmetrics
8/6/2019 Impact Investing: Building an Industry - Rockefeller Foundation
http://slidepdf.com/reader/full/impact-investing-building-an-industry-rockefeller-foundation 15/15© Global Impact Investing Network, 2009
Thank you
Margot BrandenburgThe Rockefeller Foundation
[email protected]+1 212.852.8464