It’s a good time to be thinking about investing for impact
This evening, the MaRS Centre will host Jed Emerson as part of the “Lived It” lecture series. If you know anything about social finance, you’ll recognize that Jed Emerson is the one person who has indeed ‘lived it’. Less than two weeks ago, the Third Canadian Conference on Social Enterprise played an important role in locating and convening a group of people from across the country who share similar objectives (but who may not all agree on how to get there) around using finance and enterprise creatively to influence social change. And in September, SoCap09 welcomed close to a thousand people through its doors. All together, these events and others provide positive signals for discussions and action around impact investing.
Another notable development in the last year has been the creation of vibrant online discussion spaces. Tactical Philanthropy continues to be at the forefront of many of the trends around social investment, and other bloggers have also joined in – including Nathaniel Whittemore from Change.org and the folks at NextBillion. I’d also throw a couple of Canadian blogs and sites that I follow on a regular basis: SRI Monitor, Mark Blumberg, Tonya Surman, MaRS, Enterprising Non-Profits, Renewal Partners, SHARE, and Charity Village. And of course, the socialfinance.ca blog belongs somewhere amongst these lists – we’re just over a year old, and delighted with the amount of interest and growth we’ve seen in this area.
There have also been several excellent reference publications this year, which now incorporate an appropriate blend of theory and practice as opposed to simply advocating for the potential merits of social finance. The report by the Monitor Institute set the tone for much of these discussions, and the Global Impact Investing Network (GIIN) has also taken off. Recently, Tony Wang has begun an excellent series titled “What Capital When”, which will focus on the various forms of capital available in social capital markets. In the second post in the series, Tony presents a literature review of the major publications around impact investing complete with links to all each reference. As well as being an impressive start to the conversation, you won’t find a more relevant list than this if you’re new to the social finance space.
I’d like to highlight a new publication by Rockefeller Philanthropy Advisors titled Solutions for Impact Investors: From Strategy to Implementation, which builds on their earlier report Philanthropy’s New Passing Gear: Mission-Related Investing. For the former, its objective is to “increase the rigor with which impact investors frame their investment decisions and demonstrate the integration of impact investing across asset classes.” And if you read it, you’ll understand why, in my opinion, this is one of the most important contributions to the social finance conversation today. It retains the perspective of the social investor, and provides critical analysis around investor motivations, ways to act on these according to the investors’ risk/reward/impact preferences, and real-life examples and considerations.
As the introduction notes,
Our intent is threefold: to attract more capital to impact investing; to assist impact investors as they move from organizational change to executing and refining their impact investment decision-making process; and to narrow the gap within foundations between program professionals and investment professionals thereby contributing to a mutual understanding and implementation of a portfolio approach to impact investing. Additionally, we intend to help break down the barriers making it difficult to identify opportunities in impact investing.
There are signs that this momentum will be sustained, despite indications that the economic crisis may persist for some time yet. Internationally, for example, we have not seen much dampening of investment into microfinance. In Canada, the responsible investment community has moved forward significantly in the past year, and I think we are seeing the beginnings of an intersection of the SRI and social finance worlds. The Responsible Investment Pilot Project through the SIO and CFC is one example, and another is the willingness of large institutional investors to consider ESG factors and hopefully become more serious about the S in ESG. The UNPRI held an international conference in Ottawa earlier this year, and several other venues have played host to events related to social finance.
As Canadians tend to do, I remain cautiously optimistic around the potential for social finance to “take off” based on the trends we’ve seen this year. Social finance cannot yet be considered a defined asset class in Canada, though there are a number of emerging opportunities that could catalyze the emergence of an industry dedicated to generating blended value returns. Dr. Tessa Hebb and I have recently completed a paper on investor perspectives on social finance in Canada, and the evidence we have collected leads us to similar conclusions. The paper will be posted on this site shortly, and will map out the trends, challenges and opportunities for social investors in Canada. If you’re interested in a draft version of the paper, please get in touch with me.
What are your thoughts on the state of play in social investment in Canada, and where you see it headed?
