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Impact Investing Goes Mainstream in Canada (Update)

Editor’s Note/Update: More than two years ago, Adam Spence wrote this piece to herald the mainstreaming of impact investing in Canada. Since then, a lot has happened. The Government of Ontario & TD Bank both dipped into green bonds. The first Canadian SIB was announced (suffice it to say that more are coming). Canada eclipsed 100 B Corps.  ImpactOntario brought world-changing Ontario ventures together with world-leading investors and intermediaries. And the list goes on from there. Bumping this post to the top of SF.ca is an opportunity to reflect, celebrate and look forward!

Mark January 24, 2012 in your calendar as the date when impact investing went mainstream in Canada.

Today RBC, the largest of Canada’s Big Five (banks), has joined the growing ranks of major global institutions like Deutsche Bank, and national leaders like Vancity and le Chantier de l’économie sociale in demonstrating real leadership in impact investing.

The bank has just announced a $20 million commitment in an impact investing strategy that will include the creation of a new $10 million RBC Impact Fund and the allocation of $10 million from RBC Foundation’s assets into socially responsible investment (SRI) funds. It is the first initiative of its kind announced by a major financial institution in Canada.

When combined with the tremendous contributions of talent and financial resources from the TMX Group Inc., we have now fully engaged Canada’s largest financial institution and Canada’s largest exchange group to help drive the growth of impact investing in Canada.

What does this mean?

1. There has been a seismic shift of interest in impact investing in Canada.

Even two years ago, the work of impact investing or social finance in Canada was limited to trailblazers in the wilderness trying to do good work while convincing others of the potential of this approach.

After years of effort from a dedicated team at RBC, and many more years of field-building by the team at Social Innovation Generation (SiG), SiG@MaRS, the Canadian Task Force on Social Finance, the MaRS Centre for Impact Investing and others, we have taken impact investing from an interesting cocktail conversation to the top of the business agenda in the main boardroom of RBC Centre.

This move reflects a significant seismic shift, with major players clearly speaking the language of this emerging sector. Today, Gordon Nixon, President and CEO of RBC, made the announcement:

We have been waiting for the right moment to launch a program of this nature, and the moment is now. We are confident that our initial investment of $10 million in the RBC Impact Fund will not only spark entrepreneurship and innovation in Canada, but also catalyze similar investments from others in the business community. We are also proud to put our money where our values are by investing an additional $10 million of our own funds through the RBC Foundation in socially and environmentally screened funds.

Gordon Nixon has just taken Gordon Gekko out to the woodshed.

We expect the tremor of the announcement to be felt all along Wellington, King and Bay Streets in Toronto. Look for others to follow suit in the months and year ahead.

2. There is an increase in the number of real investment dollars dedicated toward local, impact ventures in Canada.

We are now seeing real money flow into impact investing in Canada. In 2011, $284 million in debt and equity financing was raised for impact investing. Today’s $20 million investment gets 2012 off to a great start. Local entrepreneurs should be very excited about a new source of impact capital. The fund will finance impact ventures, including those that promote environmental sustainability, advance water resource management or provide opportunities for youth and newcomers to Canada.

3. Canada is getting ready for its leapfrog moment.

Antony Bugg-Levine, CEO of the US-based Nonprofit Finance Fund (NFF), and Jonathan Jenkins, CEO of the UK-based The Social Investment Business, have both spoken about Canada’s potential to leapfrog other countries in impact investing with a concerted effort. We can be global leaders in the movement to mobilize private capital towards solving our most pressing social and environmental problems.

Canada has seen leadership from the community sector, and through major foundations and respected institutions. Today, RBC is leading the way for mainstream finance to participate. Over the coming months, we will look to various levels of government and other corporate leaders to help lead this agenda.

It is going to be a big year. Kudos to RBC for their commitment to driving change.

Photo credit: http://www.flickr.com/photos/imuttoo/4115844729/

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