Sustainable Goals and Social Impact: Do You Have What you need to succeed?

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By Maximpact

Sustainable Goals and Social Impact: 

Do You Have What you need to succeed?

At the nexus of change Maximpact.com is a work space for projects, businesses, ideas and endless opportunities.  A global marketplace of qualified consultants, experts and services.

Maximpact.com today announced the launch of their consulting and advisory services to support the development of projects, businesses and funds in the circular, impact and sustainability sectors. Aligned with the UN Sustainable Development Goals, Maximpact offers over 185 services to 20 different sectors including agriculture, assessment, community, environment, forestry, fisheries, water, waste management, renewable energy, women empowerment and more…

Existing customers have welcomed the diversity of the rich suite of services and it’s ease of use saving them both time and money. 

Customers at Maximpact can choose from both packaged or tailored support development and support services to assist their project or business at any stage of development. With access to pre-selected resources, an extensive network, knowledge and skills from around the world customers are well equipped in a rapidly changing world.

With hundreds of pre-qualified experts, project mangers and thousands of NGOs with experience in many thousands of projects worldwide, sourcing hard-to-find consultants, services and partners has never been easier than through Maximpact’s one-stop-shop.

By streamlining and simplifying the process of project and business development Maximpact has helped its clients save up to 65% in time and money, that is a welcome change to any one’s bottom line.

Difficult searches for good resources is now a thing of the past as users benefit from a unique Project Search Map allowing them to find experts quickly based upon project, geography, sector, language and expertize. Maximpact has once again made  complex tasks easy.

After finding the right expert, clients can book a call with the expert of their choice, receive a phone recording of their call and if they wish can proceed to hire the expert for their project online.

Services Offered

The new support and development services provided by Maximpact are designed for all projects, businesses and funds.

Project Services

Project services deliver resources and solutions to support, develop and improve projects at any stage of their development and cycle. Maximpact will tailor consulting and project services to find the right solution for the most complex challenges. Services cover different stages of project cycles such as: 

  • Consultation
  • Project initiation and planning
  • Assessment
  • Implementation
  • Capacity building
  • Visibility, communication and networking

Business Services

Tailored advisory services addresses the challenges businesses face in a rapidly changing marketplace. Maximpact offers a wide range of business services and solutions to suit the unique needs of each client. Assisting to plan, solve problems, mitigate risk, fund and source market opportunities through Maximpact’s global network.

Services cover different stages of business cycles such as: 

  • Consultation
  • Corporate Finance
  • Assessment
  • Strategy
  • Capacity Building
  • Operations and Supply chain

Investment Ready Services include packaged business services to suit the budget of all businesses.

Services cover different stages of business cycles such as:

  • Business plans and financials
  • Business valuations
  • Due diligence

Fund Services

Unique investment fund services have been designed to streamline processes and help improve the funds’ efficiency and competitiveness. By offering expert advice in 20 sectors we are able to deliver tailored services to the needs of each fund.

Services offered to funds such as:

  • Sector specific advice and market study
  • Investment sourcing 
  • Investment filtering 
  • Financial due diligence / auditing 
  • Investment analysis and reports
  • Acceleration of market-ready investments

Leveraging our unique global network and services Maximpact  delivers expertise, improved efficiency, real-time market knowledge and decision-making capabilities.


Tom_Holland_imageTom Holland, Founder and CEO of Maximpact.com comments:

Since Maximpact’s inception years ago we are dedicated and continue to focus on building our vision. Bringing together those working in silos of activity and to group together like-minded communities wishing to create good impact and a more sustainable future for us all. In doing so our community of over 90,000 includes hundreds of qualified experts, consultants and services in over 173 countries. Our expert community is expected to grow to 1,000 by year end.  New project and business activity continues to increase and will grow further as we welcome the thousands of project managers and NGOs who will become active in our network.

Visit us and find our out more about www.Maximpact.com


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China Plans World’s Largest Carbon Market to Curb Climate Change

ChinaUSPressConf

By Sunny Lewis

BEIJING, China, October 7, 2015 (Maximpact News) – Within two years China will open a national market-based cap-and-trade system to limit greenhouse gas emissions from some of its largest industrial sectors, President Xi Jinping announced late last month during his visit to the United States.

Carbon emission levels will be capped and companies will have to pay for the right to emit carbon dioxide, the most abundant climate-warming greenhouse gas.

China is the world’s top emitter of greenhouse gases, is the top oil importer after the United States and is struggling with a public health crisis caused by severe air pollution in its largest cities.

China’s new carbon emissions trading system will cover key industry sectors such as iron and steel, power generation, chemicals, building materials, paper-making and nonferrous metals.

The carbon market – similar to the European Union’s and also similar to two regional markets in the United States – is part of an effort to help China meet its climate targets and move toward energy supplies based on nuclear power plants and renewables.

President Xi said China will implement a “green dispatch” system to favor low-carbon sources in the electric grid.

ChinaSolar

In a U.S.-China Joint Presidential Statement on Climate Change issued on September 25, the two nations describe a common vision for a new global climate agreement to be concluded in Paris this December. It is scheduled to take effect from 2020.

President Xi said, “We have decided to continue to work together to tackle global challenges and provide more public good for the international community. We, again, issued a joint announcement on climate change. We have agreed to expand bilateral practical cooperation, strengthen coordination in multilateral negotiation, and work together to push the Paris climate change conference to produce important progress.”

President Obama said, “When the world’s two largest economies, energy consumers and carbon emitters come together like this, then there’s no reason for other countries – whether developed or developing – to not do so as well. And so this is another major step towards the global agreement the world needs to reach in two months’ time.”

The Joint Statement builds on last November’s historic announcement by President Obama and President Xi of ambitious post-2020 climate targets.

In their Joint Statement, the two leaders expressed a concrete set of shared understandings for the Paris agreement. On mitigating the impact of climate change, they agreed on three elements of a package to strengthen the ambition of the Paris outcome.

First, they recognized that the emissions targets and policies that nations have put forward are crucial steps in a longer-range effort to transition to low-carbon economies. They agreed that those policies should ramp up over time in the direction of greater ambition.

Second, the two presidents underscored the importance of countries developing and making available mid-century strategies for the transition to low-carbon economies, mindful of the goal that world leaders agreed at the UN’s 2009 climate conference in Copenhagen to keep the global temperature rise below 2 degrees Celsius as compared to pre-industrial levels.

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Third, they emphasized the need for the low-carbon transformation of the global economy this century.

These announcements complement the recent finalization of the U.S. Clean Power Plan, which will reduce emissions in the U.S. power sector by 32 percent by 2030.

Both countries are developing new heavy-duty vehicle fuel efficiency standards, to be finalized in 2016 and implemented in 2019.

Both countries are also stepping up their work to phase down super-polluting hydrofluorocarbons (HFCs) used as refrigerants. Besides destroying the stratospheric ozone layer, HCFCs are greenhouse gases many times more powerful than carbon dioxide.

China’s government has been planning to implement a carbon trading market for years.

The cap-and-trade system will expand on seven regional pilot carbon trade programs that China began in 2011.

Rachel Kyte, World Bank Group Vice President and special envoy for climate change, has been working closely with China in providing technical support to the pilots.

“As China began to pilot through different ways of creating emissions trading systems or emissions reductions systems, we have, through what is called a partnership for market readiness, provided a mutual platform for techno-crafts from different economies in the world to share their experiences of introducing emissions trading systems so that we can all learn from each other,” she said in an interview with China’s state news agency Xinhua on September 30.

“An emissions trading system has existed in Europe for some time. Now we have an auction in California. We have pilots in China. We have a trading system in Korea. Some countries are putting carbon taxes in place,” Kyte said. “We provide a mutual technical platform to let these experiences be exchanged.”

“China is ready to learn from those pilots and move to a national system,” Kyte said, “This will immediately create the largest carbon market in the world. Other carbon markets in the world will want to link with China. This does put China in a leadership position in helping the global economy move to low-carbon growth.”

To ensure a successful carbon trading system, Kyte emphasized the importance of setting the right prices.

“The prices must be set in such a way that the prices reflect the ambition, that the emissions are reduced, that the poor people are treated fairly, that they are transparent and that they can be understood by the consumer,” she said.

China says it will set an absolute cap on its carbon dioxide emissions when its next five-year plan comes into force in 2016.


 

Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Featured image: China’s President Xi Jinping and U.S. President Barack Obama at the White House, September 25, 2015 (Photo by Huang Jingwen courtesy Xinhua)
Image 01:Chinese President Xi Jinping (L) and U.S. President Barack Obama meet with the press after their talks in Washington, DC, September 25, 2015. (Photo by Huang Jingwen courtesy Xinhua)
Image 02: This parabolic solar-thermal power plant is adjacent to a large-scale wind farms in China’s north central Shanxi Province. It came online in 2011. (Photo courtesy Shanxi International Electricity Group Co Ltd.)
Image 03: The Fangchenggang nuclear power plant is under construction in China’s Guangxi Province. Operated by China General Nuclear Power Group Co Ltd., it is expected to come online in 2016. (Photo courtesy China General Nuclear Power Group Co Ltd.)

Social Investors vs. Social Businesses: Who will win the struggle for the future of SRI investing?

little box boxer knocks out dad boxerBy Marta Maretich @maximpactdotcom

We all like to talk about how the social, responsible and impact (SRI) investing sector is growing—and current research indicates that it is flourishing, with more capital and a wider range of investors now entering the field.

All that is good—and it’s what we’ve all be working for. Yet if there’s one thing experience has taught us about deploying the new market approaches to generating social and environmental benefit, it’s that the detail matters at least as much as the big picture.

A closer look at the way the sector has developed in recent years reveals more than just growth: There’s been an important shift in the story we’re telling ourselves about SRI investing. A movement that began with an emphasis on social entrepreneurs and social businesses serving the needs of beneficiaries has become preoccupied with investors and the mechanisms of the marketplace. What caused this shift to happen? And is it necessarily a bad thing for SRI investing?

Changing the subject

As we’ve tracked the growing body of research documenting the exponential growth of the SRI marketplace, we’ve noticed something strange:

Once most of the literature in the field came from social investors, like Root Capital, and accelerators, like the Skoll Foundation, who were actively engaged in developing socially beneficial businesses.

Today the focus has shifted away from social businesses and their beneficiaries. Instead, sector bodies, like the WEF, the G8 Social Impact Investment Taskforce, UK SIF and USSIF, as well as big financial advisory firms (EY, Deloitte, Citi to name just a few), are turning their analytical lenses on investors and markets in an effort to demonstrate (and, in some cases, capitalize on) the potential of the new SRI investment approaches.

In a sector that has its deepest roots in social entrepreneurship, microfinance and microlending, this change may seem surprising, even worrying. Why has it happened?

1. Investors demand attention

First, investors are driving the market for SRI investing and this has lead financial firms and other analysts to study them, and their investment habits, more intensively.

As one example, a USSIF trend report for 2014 tells us that: “Money managers increasingly are incorporating ESG factors into their investment analysis and portfolio construction, driven by the demand for ESG investing products from institutional and individual investors and by the mission and values of their management firms. Of the managers that responded to an information request about reasons for incorporating ESG, the highest percentage, 80%, cited client demand as their motivation.”

This is one more piece in a growing body of evidence that shows personnel in financial firms finally waking up to the fact that their clients are interested in SRI investing. At the same time, they’re realizing that the ability to use these approaches is likely to be an important selling point for their businesses in the future.

This realization comes rather late in a sector that saw small, socially concerned family offices, like Omidyar, pioneering the practice of impact investing back in 2007. But with a new generation of private investors, led by wealthy young millennials and women, now asking for SRI investment options, the message is finally getting through. Mainstream financial firms are focussing more of their attention on socially-motivated investors and promoting SRI offerings to attract what they now realize is a growing client base.

2. Mainstreaming forces a market focus

The second reason for the focus on investors and markets has to do with the recent raft of mainstreaming initiatives for social investing.

In an effort to draw larger investors into the SRI marketplace, these initiatives sought to gather sector information, such as existed, into reports aimed at larger investors. The reports were designed to demonstrate that social investing is, in fact, a real market.  They presented their case in the language of the mainstream and included statistical data, graphs, tables and pie charts—the works. Everything about them was engineered to convince the heavy hitters that SRI investing was something they could engage in securely, responsibly and even profitably.

Several of the most important reports in this vein have been produced by the WEF as part of a series aimed at large institutional investors, including insurance firms and pension funds. The G8 Social Impact Investment Taskforce and its various working groups also produced material aimed at the largest investors including national governments thinking of entering the SRI market.

All this is a world away from the early literature on social investing, which emphasized its impact on social entrepreneurs and beneficiaries, often people in emerging economies and those at the bottom of the pyramid.

Yet the motives behind the mainstreaming push were good. They reflected the commitment of a few far-seeing financiers, like Sir Ronald Cohen, who realized the potential for scaling social and environmental benefit through using the powerful mechanisms of global finance. And, to judge from the buzz around ESG at Davos this year, the approach has been successful in getting mainstream finance to take SRI more seriously.

Aren’t we forgetting something?

This suggests that the shift of focus to markets and investors was needed to get bigger financial players to engage with social benefit. Yet in other ways the rush to mainstream may have been a distraction from some of the most important challenges still facing our sector.

These include fundamental questions about the role of business in society and the role capital plays in supporting the development of companies.

The mainstreaming of SRI investing, though it may be beneficial, doesn’t challenge the status quo behind the international capital markets. Rather, it works with the prevailing forces of global finance in an attempt to turn at least some of them in a more favorable direction. This approach is pragmatic—and its unthreatening nature partly accounts for its popularity at places like Davos—but for some in our sector it doesn’t go far enough toward bringing about a permanent change to the way we do business.

On a more down-to-earth level, the recent focus on investors and markets leaves out what many think is the most important element of all in this equation: Socially beneficial businesses.

We have a lot of experience in operating for-profit businesses and non-profit organizations that deliver social benefit, but socially beneficial businesses are still a relatively new kind of animal to us. Despite progress in the sector, we still have a lot to learn about how to operate companies that are financially sustainable and able to deliver extra-financial benefits at the same time.

What really matters

The commitment to pursue benefit alongside profit, when genuine, touches every aspect of a business. Leadership, governance, operations, compliance and reporting (among other things) are all affected and we need to understand much more about how this works in practice. The influence of investors, especially those that take an active role in governance, is yet another factor, still little studied or understood, in the development of social businesses.

With so much still to learn about how to “do” socially beneficial business, the recent emphasis on investors and mainstreaming markets can seem misplaced. However, it makes sense in one important way: Only by doing more socially beneficial business will we ever have a chance to find out what really works and develop effective models. And only by attracting sufficient capital will we have the opportunity to do more socially beneficial business.

Time to re-focus—again

So, should the story of our sector be one of global financial markets and canny investors, or should it be one of heroic social entrepreneurs and white-hat social businesses?

The answer is: It needs to be both.

But now that the larger markets and a more ample pool of investors are showing interest, it’s time for the sector to shift its focus back to actually making socially beneficial businesses work across a range of global contexts.

It’s emerging that one of the dangers of mainstreaming is that social businesses can find themselves forced back into the mold of regular companies with no social benefit goals. To avoid this, they need clearer roadmaps for how to manage and develop their companies, especially as they grow to scale. Investors and markets also need to find better ways to engage with socially beneficial businesses in order for the partnership to work successfully.

More research in both these areas is needed. The question is: Who will do this work and so help write the next chapter in the ongoing story of socially beneficial business? Could it be you?

Effective Two-Way Engagement: A New Gold Standard for SRI Investing

cartoon of men communicating across a chasmBy Marta Maretich @maximpactdotcom

At its most effective, communication is a two-way process. Developments in engagement practices between companies and social, responsible and impact (SRI) investors are showing us that this idea is now more applicable than ever.

New expectations and standards are growing up around investor/investee engagement in the SRI investing sector. These are driven by a number of factors including calls for more transparency and accountability, the rising power of investors in the boardroom and emerging evidence that attending to extra-financials, like sustainability, has positive effects on financial performance.

In practice, the pressure to engage—and the need to find effective ways to do this through communication—comes from several directions.

Investors want more extra-financial information

The need for engagement is impelled by a increase in socially concious investors, notably wealthy millennials and women, who are demanding detailed ESG performance information about the companies they invest in. Recent research reveals that investors (and their advisors) are relying more heavily on extra-financial disclosure when deciding where to place their capital. Poor performance in ESG areas, or a lack of disclosure about them, will make them say no to an investment.

Companies are responding to this increased scrutiny by improving communications around ESG extra-financials. This may include making performance information more freely available on websites and other media, or training company spokespeople to incorporate extra-financials into their communications.  It may also mean embracing integrated reporting, which delivers performance information in extra-financial areas and provides the content for communication in these areas.

In another trend, the corporate world is seeing increased demand for more up-to-the minute and on-demand performance information. Facilitated by web-based services, real-time financial performance information is already a reality for some companies and it could shortly become a necessity for all. If that happens, companies will need to create systems for delivering extra-financial information this way—and for receiving investor feedback.

Investors expect more influence over companies

Investors are becoming more active in their efforts to influence the companies they invest in.  In a trend for more investor engagement, industry leaders like Blackrock are declaring their intentions to engage with investees on governance matters, strategy and operations, with ESG issues a major focus. Evidence of increased engagement on extra-financials can be seen in the record number of proxy resolutions filed by investors seeking corporate disclosure and action on a range of environmental and social issues, seen here in the Sustainable Investment Institute’s Proxy Preview 2015.

To deal with increased pressure from investors, businesses are establishing direct engagement strategies, and communication is an important part of these. Direct engagement strategies identify investor concerns and priorities, then pro-actively seek to address them before they become an issue. Communications may involve a range of measures including targeted investor roadshows, making more information accessible online and one-to-one communication between investors and senior managers.

Companies need to know more about SRI investors

The burden of communication isn’t solely on the side of companies. Investors, too, need to communicate clearly for effective engagement, especially when they are SRI-focused.

With the increasing influence of investors in the boardroom, it’s more important than ever for companies to seek out investors who will support all parts of their strategy. This is particularly true when it comes to businesses aiming to produce both profit and benefit—blended value, impact and profit-with-purpose businesses—and those for whom ESG goals are a core part of their business model.

For these kinds of organizations, investors who might work against the overall strategy, for example pushing through an unfavorable exit or IPO, should be avoided. To make a good match, companies need adequate information about potential investors before they partner with them, including insight into their goals, priorities, values, governance stance and voting policies.

According to findings by the Conference Board, a US governance think tank, investors should communicate clearly and transparently with potential investees about themselves, providing information on their own engagement policies and track record when voting as members of the board. Information about their stance on extra-financial issues, such as governance and sustainability, should be easily accessible to investees and should form a point of discussion during negotiations. Triodos Bank is one SRI investor that makes such information freely avaliable to investees and the public.

Engagement services for the future

With engagement between investors and investees becoming more important, the question of how best to engage is now taking center stage in SRI investing.

In mainstream financial markets, Broadridge has risen to become “the most important firm on Wall Street that you’ve never heard of” by providing investor engagement services, including proxy and shareholder communications, to companies. However, it’s questionable whether Broadridge’s engagement methods will prove as effective for the SRI sector, where communicating ESG extra-financials and impact metrics will be as important communicating about the traditional bottom line.

This suggests an opportunity for service providers to step up to meet the needs of a growing marketplace of SRI investors and companies. By providing high quality, innovative engagement services that help investors and investees communicate about a broader range of performance criteria, an ESG- and impact-oriented engagement service company could fill the gap and become the next Broadridge in a vibrant new marketplace. Any takers out there?

Another new definition for social investing—and why we should pay attention to this one

green shoot with ladybug growing from a sack of coins

By Marta Maretich @maximpactdotcom

Definitions—we are so over them in the social investing sector.

I mean, we wrangled over those darn meanings for years: ethical investing, responsible investing, socially responsible investing, triple- and double-bottom-line investing, green investing, sustainable investing and finally—boom!—impact investing.

We split hairs, we waved banners, we made colorful infographics to settle the matter once and for all—and then, worn out with all the talking, we got on with the work of building the social investing sector and tried to forget about definitions for awhile.

Definitions are to social investing what balance and reaction time are to surfing: You need them, but if you think about them too hard, you just can’t stand up on the board.

On the other hand…
Once in a while a new definition comes along and we really need to pay attention.

That’s the case with the definition for social investing proposed by a new report, After the Gold Rush, from the Alternative Commission on Social Investment (ACSI). Rather than splitting yet more definitional hairs, this report highlights telling developments in the practice of social investing and yields a new, clarifying meaning for the term.

handsome doctor cares for healthy green plant

The patient seems to be doing well—but is it really?

The green shoot is wilting!

Before we get down to what that meaning is, let’s take a look at the source of this report.
The ACSI describes itself as initiative established “to investigate what’s wrong with the UK social investment market and to make practical suggestions for how the market can be made more accessible and relevant to a wider range of charities, social enterprises and citizens working to bring about positive social change”.

One look at this group’s spare website and signature image—a cupped hand, full of dirt, supporting a dead seedling—tells us that the ACSI are working in a very different key to, say, the G8 Social Impact Investment Taskforce. We’re not going to get cheerleading from these people, their branding suggests; they’re going to make us face facts.

The ACSI shuns the international glamor that has recently surrounded social investing. Its focus is national, not global. Its approach is practical, not theoretical or political. ACSI intends to cut through the hype. It wants to know, specifically and categorically, whether the UK social enterprise sector, especially its largest player, state-bankrolled Big Society Capital, has delivered all that it promised for social investing.

Keeping it real

What they demonstrate in this report, with dead plant images on several pages, is that it hasn’t. The reasons behind this failure, which fill out the body of the paper, make sobering reading for anyone who wants to see the practice of social investment flourish for real.

Problems range from basic errors—such as the assumption that social sector organizations don’t have access to finance from mainstream lenders (they do) — to more subtle but potentially damaging issues, such as a mismatch between the support social sector organisations actually need and the kind of finance social investors are currently offering.

Confusion around definitions is part of the trouble. The report rounds up a range of definitions from various authorities including the OECD, the Charity Commission and the UK Cabinet Office—all strikingly different. Then it offers a new one.

Just one more definition, please

The ACSI suggestion is really less of a definition than a set of characteristics that helps us tell whether an investment really counts as “social” or not. A social investment, in their eyes:

•    pursues and accountable social or environmental purpose;
•    is autonomous of the state;
•    has the mission of the investee as the principle beneficiary of any investment;
•    is transparent about measuring and reporting the social value it seeks to create;
•    is structured to create financial value or organisational capacity over time, for example, by helping the investee invest in growth, acquire an asset, strengthen management, generate income and or make savings.

Like all definitions of social investing, this one is up for discussion—it seems we’ll never lose our taste for arguing about terms.

At the same time, a couple of things stand out about this particular definition. One is the statement that a social investment should be “autonomous of the state”, which is to say, not politically motivated or subject to state control.

That’s an interesting stipulation to come out of the UK, whose early leadership in social investing was based on the involvement of a series of governments who saw it, at least in part, as a way of shrinking the state benefits burden. It may also shine a light on why the UK seems now to have lost its position as a leader in social investing.  Perhaps state control and authentic social investing are incompatible?

The second remarkable point about ACSI’s definition is the focus on “the mission of the investee as the principle beneficiary of the investment.”

This emphasis has the effect of directing attention away from the motives of investors and the mechanisms of investment, subjects that so often, in this sector, preoccupy us. It focuses instead on the impacts and outcomes of the investment, on the mission ends, rather than the means. This has a clarifying effect, reminding us of the real reason we are doing any of this investing at all, and keeping the focus of the argument practical and close to home.

Lessons—and satire

At a time when the idea of social investing is gaining mainstream traction—with more national governments as well as mainstream finance organizations getting involved—this report holds lessons about the realities of making social investing work in practice.

One of them is that hype has the power to hijack even good ideas and prevent them from delivering results on the ground. Another is that there’s a danger of loss of focus in our sector, with the emphasis shifting away from social benefit and the organizations that can, with support, deliver it. A third is that more attention needs to be paid to the fact that, despite claims, most social investing is still subsidized in one way or the other—and that is fine, so long as it creates real benefit for real people.

But the biggest lesson of the ACSI report is probably that the presence of a dissenting voice in our sector is a very good thing. With its focus on the practical, and its satirical bent (“Social investing is dead!” reads one subhead, and another, “Long live social investing!”) it makes refreshing reading and should encourage others to pitch in and provide alternative points of view.

Now go and water your plants!

Bare It All: ESG disclosure is the new obsession of investors and businesses alike

businessman opening shirt to reveal superhero costume with green energy theme

By Marta Maretich @maximpactdotcom

Here’s a riddle: Investors are demanding them. The global business community is boosting them. Companies large and small are trying to figure out how to produce them. What are they?

You guessed it: Extra-financial performance results—the environmental, social and governance (ESG) metrics that demonstrate that a company is acting responsibly as it conducts its business. In a major shift in global attitudes toward sustainability and the role of business in society, this fast-growing area is now a major focus for businesses and investors alike.

Not new, but moving fast

The movement behind making ESG criteria for investing has been gaining ground for four decades, with pioneers like Hazel Henderson and Joan Bavaria of Trillium leading the charge. But the pace of change has recently been accelerating across non-profit, public and business sectors alike leading more investors to look to ESG when making decisions.

Several factors are driving the shift. Increased concerns about the effects of climate change are leading citizens and governments to demand tougher environmental regulations for businesses (E). Social factors (S), such as human rights abuses, are now recognized as material risks. Poor governance is widely seen as a factor in the financial crash of 2008, sparking investor demands for more information about the G in ESG. Meanwhile, evidence is mounting that shows companies that pay attention to extra-financials actually perform better in the long term.

Extra-financial and ultra-influential

All these factors contributed to making 2014 a watershed year for investment decisions based on extra-financial factors. Fossil fuel divestment was one area where investors were seen to make decisions for reasons other than financial performance.

Investors controlling billions of dollars, such as the Rockefeller Brothers, The Wallace Fund and Ben and Jerry’s, all divested their holdings in fossil fuels in an effort to combat climate change. More of this is coming. Major institutions such as museums, universities, city governments and pension funds are all feeling the pressure to divest.

Private investors are an important part of the trend with some 70% now expressing an interest in investing with a conscience. As a result, asset managers in many parts of the industry are climbing on board and looking to expand their expertise in what is a strong growth area of the market.

Changing attitudes to ESG in business

These trends are putting new ESG-related obligations on companies and investors alike.

For companies, there is increased pressure to track and report ESG performance, an activity that costs organizational resources and must be carefully managed for good results. Luckily, attitudes toward ESG are changing across the business world. Top executives no longer see it as mainly a reputational or branding exercise. Rather, ESG-competence is emerging as good business practice that can foster innovation, lead companies to identify efficiencies and help manage risks. Embracing ESG reporting provides greater access to capital, too. It’s a necessity in a climate where investors will turn down deals with companies that don’t disclose well enough or don’t disclose at all.

Across the world, companies are racing to incorporate ESG into their monitoring and reporting frameworks. To help them, the Global Reporting Initiative (GRI) provides a range of resources, including this one for absolute beginners. GRI starter kit. Other groups, like the EVCA, a European group of private equity investors, have developed their own framework to help businesses disclose ESG performance.

Investors incorporate ESG in decision-making

The EVCA framework—for businesses but developed by investors—is one example of how seriously investors are now taking ESG. And there is further evidence that the investing sector is taking positive steps to get better at incorporating extra-financials into decision-making processes.

The UN-sponsored Principles for Responsible Investing (PRI) initiative has been around since 2005 and today has 1,371 signatories around the world. The PRI provides a framework for incorporating ESG concerns into investment practice as well as reporting. It now includes a climate change pledge for asset owners.

Global investors are banding together around ESG, joining groups like the Global Sustainable Investor’s (GSI) Alliance. The Alliance supports progress in sustainable investing by identifying trends and acting as a network for national groups. It has attracted important national members including Europe’s Eurosif, British UKSIF, American US SIF, Canadian RIA and the Asian region ASrIA.

Standards are also being developed to help investors compare ESG performance across companies. The CDP amasses disclosure data on climate change issues and works with investors and companies to improve performance and reporting. Today its membership includes more than 822 institutional investors representing in excess of US$95 trillion in assets. In 2014 the CDP scored over 4700 companies on climate-related performance.

Meanwhile, the Sustainability Accounting Standards Board (SASB) is establishing the materiality of sustainability issues, applying an accountancy approach to determining their value. Operating as a non-profit, SASB makes its standards in areas like healthcare, infrastructure and renewable resources available online to investors and businesses alike. Like the CDP and the EVCA, SASB offers paid consultancy services to help clients embed ESG into their reporting and decision-making processes. (Note that this kind of service provision around ESG disclosure looks set to be a growth area for the sector.)

Burdens and opportunities

Extra-financial disclosure presents both a burden and an opportunity for companies and investors. On the burden side, it takes time, resources and in some cases a profound change of attitude for companies and those who capitalize them to embrace ESG and make it part of normal business practice. On the opportunity side, the link between non-financial performance and long-term organizational health and profitability is becoming clearer. That of course leaves aside the core argument for ESG reporting: that it is a powerful tool for reigning in the damage business can do and turning its efforts to benefit in the larger sense. This is something both companies and investors should get behind.

Monitoring for Social Enterprises: How to Protect Mission and Deliver Profit

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By Marta Maretich @maximpactdotcom

A growing body of sector research is shining light on the principles of how social enterprises can use outcome monitoring to strengthen mission and deliver a blended bottom line.

Up until now, the commitment to measuring and reporting outcomes has been one of the things that distinguished social investing from mainstream investing. Today, that’s changing. Increasing regulation and a global movement for integrated reporting are making impact monitoring everybody’s business, though in different ways and to different degrees. The will to verify is increasing, yet the questions of how and what to measure remain tricky ones for companies, even as measurement standards and services proliferate.

For social enterprises with a double bottom line to account for, outcome monitoring remains even more challenging as well as more important. Proving impact and demonstrating sustainability are key to building brand reputation, attracting investment and winning customers. Beyond these well-known values, evidence now suggests that these activities can actually provide managers and directors with the tools they need to protect the mission while delivering profit.

Two kinds of social enterprise

To understand how this works in practice, the team behind a recent report—researchers Alnoor Ebrahim, Julie Battilana and Johanna Mair—first identify two distinct kinds of social enterprises and then reveal the best monitoring approach for each.

One kind of enterprise, the “differentiated hybrid”, keeps social activities separate from commercial ones. For them, the profits generated through selling products or services are used to pay for activities that help beneficiaries who are not their primary customers.

In a second kind of enterprise, the “integrated hybrid”, beneficiaries and customers are the same people. These businesses create social benefit directly through delivering their products or services. Many microfinance organizations work on this basis, providing loans to beneficiaries who couldn’t otherwise get them.

Facing the danger of mission drift

For both kinds of social enterprises, the report says, mission drift—the failure to realize social and environmental benefit goals—is a danger. But in each case, the threat takes a different form.

For differentiated hybrids, the danger comes from financial pressures leading the company to prioritize creating value for customers at the expense of delivering value to beneficiaries—for example, using increased revenues to grow the business rather than dedicating the money to mission delivery.

For integrated hybrids, risk arises when commercial activity is misaligned or “de-coupled” from social or environmental benefit goals. For example, if delivering the commercial good or service doesn’t reach the intended client group, or it proves too expensive for them to access, then the business has failed in its mission, even if it’s succeeded in the marketplace.

Two different approaches to monitoring

To avert the danger of mission drift, both kinds of social enterprises need to establish systems that deliver information about the effect of their activities—and this is where outcome monitoring comes in.

Differentiated hybrids need to monitor the outcomes of both financial and beneficial streams of activity and use these metrics to evaluate the way commercial activities are supporting beneficial ones. For example: How much profit did the business generate and what was the resulting increase to social or environmental benefit? Monitoring efforts will focus on managers: those heading the social and financial work and those whose job is to integrate the two areas.

Integrated hybrids need, first and foremost, a sound model to begin with, one that makes it possible to deliver benefit through commercial activities. They then need to monitor behaviour, the “how” of the way the business is done. For instance: Are sales agents targeting the intended client group? Do the products meet needs or, as in the case of inappropriate lending, do they make the situation of the client group worse? In this case, monitoring needs to cover those overseeing the behaviour of salespeople in the field and those delivering services.

A governance challenge

Monitoring is, obviously, a good idea for social enterprises: this research is more proof of that. But the really important insight here is how the monitoring information can be used, and who will use it, to preserve mission delivery.

This report forms part of a growing body of evidence that links outcome monitoring systems and data collection to organizational leadership and governance. With measurement data in hand, directors and managers can see for themselves whether mission is being met or not and take action. Just as importantly, in a climate where businesses are increasingly expected operate transparently, investors and customers will be able to see it, too. This could ultimately prove the strongest incentive for social benefit companies to adopt monitoring systems that help them keep on course.

Download the full report here.

Does the Social Investing Sector Need Activist Investors?

 

devil shadowActivist investors are changing the terms of engagement between businesses and investors. What will that mean for social businesses and the investors who back them?

By Marta Maretich @maximpactdotcom

Social investing continues its march toward the mainstream. Sector research shows a wider variety of investors—including pension funds, mutuals, and governments along with an array of private investors—demonstrating an interest in capitalizing the blended bottom line. This is all to the good, yet the growth of our industry is bound to expose socially beneficial companies, many of which have led sheltered existences in the care of mission-driven investors, to the stormy seas—and resident sea monsters—of mainstream capitalism.

Consider the growing importance of activist investors. These are hedge funds that take a small stake in a company—typically around 5%—and then launch an aggressive campaign to determine strategy and/or change leadership. The activists have gone into overdrive in recent years, carrying out successful campaigns to unseat powerful CEOs, like Microsoft’s Steve Balmer, break up giant corporations, such as Yahoo, and win themselves board seats in corporate giants like PepsiCo. Their aim is to maximize their own profits by re-engineering their investees’ businesses.

Once known as corporate raiders and asset strippers, these bad boys of capitalism are now attracting positive media attention, notably from The Economist, which recently concluded that, overall, activists are a force for good in the marketplace. Their interventions actually can make organizations stronger in the long term, the journal says, bringing more rigor to companies and “waking up” passive institutional investors. Other commentators have reached similar conclusions. Like it or loathe it, there’s no doubt that the threat of the activist investor is a now a force be reckoned with in business; even the biggest, oldest and most influential corporations ignore it at their peril.

Are they coming for us next?

With activism on the rise and activists winning new respect, should the social investing marketplace start preparing to repel attacks in the near future? Probably not.

So far activist investors have only gone after the biggest prey, targeting industry giants, like Dow Chemical and Ford, that they deem to be underperforming. Although rampant in the United States, they’ve had limited impact in Europe, which has a different corporate culture, and hardly any at all in Asia. The danger of them turning their unwelcome attentions on the small fry of social investing is, as yet, remote.

And yet the trend toward activism points to larger changes in investing culture that social investors and mission-driven businesses should pay attention to:

Investors, even small ones, are more powerful than ever. Activist investors are able to wield power with only a small stake in the company through launching proxy campaigns and winning other investors, often passive index funds and institutionals, over to their way of seeing things. The activists may have perfected the mechanisms for forcing change, but they aren’t the only ones capable of putting them to use. It’s certainly possible to imagine a future where investors use similar tactics to take over other kinds of organizations to suit their own ends.

Shareholders are increasingly taking an active stance. The example of the activists is forcing other kinds of investors to reexamine their relationship with the companies they invest in. Index and pension funds, normally passive investors or “lazy money”, are being increasingly drawn into debate with company managers about strategy through the activists’ proxy campaigns. Meanwhile, the “bossy money” of private equity now has to look over its shoulder for the activists, preempting their interventions with forceful strategies of their own.

The importance of the aligned investor

The implications of these changes are likely to be felt most strongly when social investors and businesses come in contact with mainstream investors and markets, for example when they raise capital to scale up. Yet with activism becoming the new normal, other investors, including ones with social credentials, may feel the need to change the nature of their relationships with investees, becoming even more active in shaping strategy and influencing governance decisions than they already are.

The trend toward activism places a new emphasis on the motivations and conduct of investors. For social businesses, more investor influence means that choosing the right investors, ones that will really and truly support the delivery of a blended bottom line over time, is more important than ever. For social investors, and equally for mainstream investors with ambitions to enter the social investing marketplace, the trend should be cause for some soul-searching. How far are they actually willing to support impact? How will they react if social benefit delivery impinges on profit?

More profits, speedy exits

Taking a step back, the phenomenon of the activist holds other lessons for social investors.

The aggressive activism we’ve seen in the mainstream is all about turning bigger profits from quick exits. The approaches taken by activists maximize their own short-term profits but, despite their claims to be doing a service for the market—by shaking up complacent, bloated corporate giants and making them more efficient—it’s debatable whether they strengthen the companies they attack. Activism has been blamed for deterring inward investment, draining money from R & D, and hampering employee training, all things that can add authentic rather than paper value to companies.

Today’s activists are not the right investors for the social sector, obviously, and their new respectability throws the difference between the social and mainstream investing sectors into sharp relief. Through their aggressive interventions, they’re managing to turn profits in a time of sluggish economic growth. It’s quite a feat, but it’s important to remember that’s all they do. They don’t prevent climate change, provide essential financial services, deliver healthcare, ease inequality or reduce poverty (except their own and their investors’). Clever and ruthless as the activists are, turning pure profit is child’s play compared to the complexity of delivering profit and measurable benefit on the same balance sheet.

A new definition for the activist investor

By implication, the social investing sector needs a completely different approach to creating value through investing in businesses and this will involve establishing a new model for the relationship between investors and businesses, one that is collaborative rather than confrontational. The sector is now gaining practical experience about how to achieve true  partnership, but a step further would be to replace the functional primacy of shareholders with the primacy of stakeholders.

For a variety of reasons, the interests of shareholders have come to dominate the world of mainstream finance, and this is what really lies behind the rise of the activists. For the social sector, finding legitimate ways to shift the focus away from shareholders to a wider perspective that includes beneficiaries, customers, employees, habitats and communities, could turn the tide. Doing this will mean continuing to develop the infrastructure of our sector, for example establishing more legal forms that protect directors who make decisions for extra-financial reasons, and persuading governments to adapt regulatory policy.

As we move toward the mainstream, it may also mean resisting the temptation to adopt the mainstream’s norms. Despite encouraging signs that the corporate mainstream is beginning to embrace aspects of the social agenda, especially sustainability, the success of the activists reminds us that the fat bottom line is still king, even when it comes with unquantified costs. Social investors need to continue to work with businesses to find better ways to transform capital into healthy businesses with positive impacts.  If we manage this, it will lead to a new, much more positive definition of the term “activist investor”.

After Davos: Lessons for Impact and Social Investors from the WEF 2015

By Marta Maretich @maximpactdotcom

Aerial photograph of Davos, Switzerland

Davos: Returning to normal after WEF15 but what will the forum mean for us?

The World Economic Forum has been and gone, leaving the Davos snow more than a little trampled. Now that 2500+ of the world’s most powerful people have flown home in somewhat fewer (it seems) than 1700 private jets, what do we know about what’s coming in 2015? And, more specifically, what lessons did the Forum hold for impact and social investors?

Impact and social investing are part of the global economic reality, so the larger trends identified at Davos will be felt in our sector, too. Quantitative easing in the Eurozone, the unpredictable fallout from the Grexit, the slowdown in growth in China and India, its surge in the US, will all shape the world economic outlook for 2015 and will inevitably have their effects on the social sphere. And yet it was interesting to notice certain issues — some our own favorite topics — were more prominent on the agenda than they have been in previous years.

Climate Change

The financial crisis pushed climate change off the agenda; the presence of Gore as the opening act at Davos seems to indicate that it’s now back on. The ex-US Vice President (and his musical friend Pharrell Williams) were on hand to drive home, once again, the message that we need to act fast to avert disaster. This can’t have been news to the delegates at Davos, all of whom have heard Gore’s arguments before and yet have presided over the increase in the use of fossil fuels we’ve seen in recent years.

Among those in the know, real indicator that things are changing was the advocacy of Lord Stern, Tony Blair’s climate change adviser.  At Davos, he argued cogently that fossil fuel is not, as it long appeared, cheap anymore, and that alternatives are now getting cheaper. Governments don’t have to make a tradeoff between growth and preventing climate change, he said, and his argument seems to be gaining traction in the world of business. It’s one that impact and sustainable investors have long understood, of course, but the mainstreaming of sustainability should bring new opportunities for impact investors and climate-friendly social enterprises alike, especially when it comes to collaborating with business and government.

Alternative energy

Related to the issue of climate change is that of energy, another hot topic at Davos. The energy landscape is changing, partly because of the wider acceptance of the reality of climate change, but also because alternative energy sources are coming into their own. A plunge in oil prices, due in large part to the availability of cheap gas from fracking, is driving oil-producing nations to re-examine their strategies, diversify their activities and rethink their future. It’s also fanning the flames of the divestiture movement, which is gaining ground as the value of fossil fuel stocks, for so long the central pillars of many portfolios, continues to fall.

For impact and social investors, this shift in focus will help in two ways. First, the exit of capital from fossil fuels could spur a renewed wave of investment in existing forms of alternative energy such as wind, solar and hydrogen, and in energy efficient technologies, all areas where impact investing has a track record. Second, turning away from fossil fuels will require more investment into developing new alternative sources of energy. Investment in energy R&D and in companies rolling out alternative energy solutions to new markets will be attractive opportunities for social investors.

Inequality

The specter of Thomas Piketty was found haunting many of the sessions at Davos. The French economist’s landmark tome, Capital in the 21st Century, has sparked wide-ranging debate about the nature and role of capital in our times. One of its impacts is to highlight the growing problem of wealth inequality, an important theme threading through many discussions at WEF15.

The Economist explains Piketty in four paragraphs

Different delegates working in different contexts and sectors interpreted inequality in a number of ways. Piketty is mainly concerned with the current dynamic that sees wealth in societies moving inexorably in one direction—upwards—and accumulating in the hands of fewer and fewer people at the top (such as those attending the Davos conference, for instance). Other kinds of inequality, however, were on the agenda, including the disparity between rich and poor nations, and among different groups, for example women and marginalized groups, within societies.

For impact and social investors, investments aimed at reducing inequality of all kinds are already part of the landscape and can take a number of forms. Affordable loans for college students, edutech that brings learning to those who need it, and provision of healthcare for girls and women, are all examples of investments that can help reduce inequality. Technology also has a role to play. Sheryl Sandberg, when asked by Arianna Huffington, opined that more technology, specifically access to the internet, and, less specifically, “more data” would bring more equality to the world. Social investments that extend tech to the tech-poor are already on the cards, but more work, targeted specifically on easing inequality, is needed from our sector.

Corruption and crime

In a recent blog, we showed why the impact and social investing sector should be putting its weight behind the growing global movement to fight corruption.  At Davos, corruption and crime were prominent on the agenda, an indication that the movement is now hitting the mainstream thanks to the efforts of campaigners like Global Witness. The connection between corruption, poverty and the health of markets is becoming clearer, as is the role of the business community in tackling this scourge. These topics and others were addressed in number of sessions and an issue briefing at the WEF. Impact and social investors should keep abreast of how this discussion develops and, in keeping with their commitment to ethics, adopt anti-corruption strategies wherever possible.

Changes to the way the world invests

The delegates at Davos showed a new level of interest in the way capital markets are changing, and this has implications for the impact and social investing movements. This change-consciousness was evident in this year’s sessions, many of which acknowledged, in different ways, a new mood and attitude toward investing in  mainstream markets. Yet it can be seen most clearly in the future projects funded by the WEF for next year. Projects on accelerating capital markets in emerging economies and direct investment by institutional investors, for example, point to trends in the markets that could be important for impact investors. Meanwhile. Phase III of the Mainstreaming Impact project has been cleared to move forward, led by Abigail Noble. If the excellent work coming out of this project so far is any indication, this will give us even more data to work with and deepen our understanding of the developments in our own corner of the financial world.

An insight into the things to come?

The World Economic Forum provides a fascinating snapshot of the forces that shape our global economy and thus determine the fate of billions—billions of people, that is, not only dollars. It gives us a fleeting glimpse of the individuals making the decisions and the merest hint of how things will go in the year to come. For our emerging sector, it’s vital to tune in to the lessons of Davos and learn what we can, especially if our aim is to one day become the mainstream that Davos represents.

And yet, in another sense, Davos may be less relevant to us than it first appears. As a guage of the status quo—what is now—nothing compares to it. But as a guage of what will be, it falls short. Piketty reminds us all that economics is, after all, not a hard science like mathematics, but a social science with historical underpinnings. Looking at the past is very helpful for understanding the present, as he ably proves. However it doesn’t necessarily help us predict the future with perfect certainty. For many, Davos is already the past. The future, if committed impact and social investors have their way, could be very, very different.

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Reducing Risk and Improving Performance: Mainstream Sustainability Comes Into its Own

By Marta Maretich @maximpactdotcom

Boy reaches up to touch battered statue of earthIt’s official: sustainability is mainstream. 2015 is tipped to be the “year of sustainability” according to UN chief Ban Ki-moon.  Following the publication of the UN report setting forth development goals to 2030, including substantial sustainability goals that link global prosperity with the protection of natural resources, the spotlight is on sustainability as a means to address a range of planetary ills and change the very nature of business.

What’s driving this move? Deepening concerns about vanishing natural resources, climate change and pollution are heightening awareness of sustainability issues on a popular level. This in turn is having an impact on the world of business, which is making sustainability more of a focus.  Many of the major themes dominating this week’s WEF conference in Davos—climate change, oil, development, wealth and social inequality —  touch on issues of sustainability. For Ban Ki-moon, the private sector will play a key role in sustainability, alongside governments, in creating a future that includes more jobs, increased gender equality and better health for world populations.

All this is validation for the green business sector and impact investors who have long embraced the sustainability agenda. Even more heartening —  and more indicative that the movement will endure and expand its influence — is a growing recognition that sustainable practices bring business advantages in two areas: attractiveness to investors and improved performance. While the principles behind sustainability have wide appeal, hard-nosed decision-makers in financial institutions will only factor sustainability in if it brings material benefits. Fortunately, a growing body of evidence reveals that it does, especially when it comes to mitigating risk.

More sustainability = less risk

For most mainstream investors sustainability is all about risk management.  A growing body of evidence shows that companies that ignore sustainability issues, or, worse, engage in unsustainable practices, present increased risks for investors in many areas. As a result, investors who formerly took no interest in non-financial performance are starting to pay attention. They now look carefully at sustainability, along with other factors including governance and social impact, because of the risks associated with these areas.  In a global trend, investors now expect company reports to disclose detailed information on non-financial information including ESG measures and impact. If it is missing, or unconvincing, they won’t commit.

In a knock-on effect, investor demand for more transparency and accountability on non-financial performance measures is driving a global trend toward increased disclosure and integrated reporting. SASB has established standard measures that allow companies to attribute “materiality” directly to sustainability issues. Meanwhile, the demand for third-party verification of sustainability performance information is fuelling the continuing expansion of a data validation industry.

The pressure to disclose places obvious burdens on the companies that have to establish sustainability systems, then track, validate and report sustainability information. However, the rewards of sustainability are becoming more apparent and may offset the added cost.

Boosting performance with sustainability

A growing body of research indicates that companies that voluntarily adopt social and environmental sustainability policies can outperform companies that don’t. A Deutsche Bank review academic literature, for example, concluded that firms with higher ratings for ESG exhibit both market-based and accounting-based outperformance. New Eurosif research shows sustainable investments outperforming the mainstream in European markets. In  3-year study by PWC, higher impact portfolios outperformed a traditional portfolio model on both return (higher by 1.6% per year) and risk (lower by 1.7% per year).

Improved performance must be the ultimate inducement to mainstream investors — and of course it’s yet another piece of evidence that the early advocates of sustainability were right all along. But this news is good for the sector in other ways.

For socially-minded investors who already use sustainability as a measure of investability, the normalization of sustainability will bring good things. The fact that businesses of all kinds are embracing sustainability will mean that impact and sustainable investors will be able to choose from a wider pool of suitable investments. The presence of mainstream investors will expand the reach of sustainability, offer opportunities for partnership and collaboration and bring the principles of sustainability to bear on a wide variety of global issues.

Nonetheless, the social and impact investing sector will go on playing a key role in maintaining standards, innovating techniques and leading the field in making sustainability a core value for global business. As Ban Ki-moon writes, “There is no country or society where sustainability is not important or necessary. We all share the responsibility to work for a sustainable future and we will all reap the benefits.”

Image credit: Hope of Deliverance by Matias Brum

Best Twitter Hashtags for Following Trends in Impact Investing

hashtagBy Marta Maretich @mmmaretich @maximpactdotcom

Twitter is hot in the impact investing sector. The overwhelming reaction to our post on the 30 must-follow twitter feeds for impact investing demonstrated once again that the impact world relies on Twitter to keep in touch. (To those of you who sent in your recommendations, thank you! A follow-up post is in the works.)

Using #hashtags (the metatags that categorize tweets) is a further way to tune into conversations in the impact space. Here at Maximpact, we try to keep up with the evolution of impact in its broadest sense, so we use many different Twitter hashtags in our social media. The hashtags are constantly changing, even as the as the sector changes, but here are some we find ourselves using on a daily basis:

#impinv, #impactinvesting: Impact investing news, dialogue, trends. The most common metatag for impact tweets.

#socfin, #socialfinance: A common metatag used for a variety of different types of activity around social investing including impact.

#socent, #socialenterprise: Social enterprise and social investing activity, often crosslinked with #impinv and #socfin.

#socinv, #socialinvesting: Social investing in its broad sense, often includes tweets on #impinv, #socent and other approaches.

#sustainableinvesting: Tweets on investing in sustainable businesses as well as sustainable strategies for investment.

#SRI: Activity around social and responsible investing as well as SRI programs and investment strategies.

#CSR: Corporate Social Responsibility many CSR programs are now experimenting with financial methods including impact.

#ESG: Information about ESG (environmental, social, governance) standards and companies or programs using them to support responsible investing.

#3bl, #tbli: Stands for triple bottom line investment, aka #peopleplanetprofit, one approach to responsible investing that can involve impact.

#ethicalfinance, #ethicalinvestment, #positiveinvestment: For more buzz about impact investing and other social finance approaches.

Major impact-focused events often establish their own hashtags and these can be a good way to connect with the conversation even if you’re not in the room. We never fail to tune in to #socap events.

Hashtags for specialist areas of impact investing: #cleantech, #greentech, #renewables, #natresources, #SIBs (social impact bonds), #SROI (social return on investment), #carbon, #climate, #climatechange, #crowdfunding. #zerowaste, #netzero. #sustainability, #susty, #financialinclusion.

This is only a small selection of the possibilities. Metatags abound, and new ones are being thought up every day by clever Tweeters and ones who recognize a new area of interest. Which hashtags are your favorites? Which are key to keeping in the loop? Let us know @maximpactdotcom.

For more on trending hashtags and tips on how to use Twitter click here.
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Copyright: 72soul / 123RF Stock Photo

Investing With a Purpose: A detailed look at the San Francisco Bay Area Impact Investing Landscape

By Ana LaRue, Digital Media Manager at Maximpact, @larue_ana

While a large part of the San Francisco Bay Area is busy discussing the latest definition of “hipster” and inflated tech valuations, there is another trend currently creating a lot of buzz. This one is related to the notion of “doing well, while doing good” by addressing social and environmental challenges through the deployment of capital.

Doing well while doing good: Trend or mainstream investing approach?

Impact investing is an investment approach that intentionally seeks to create both financial return and positive social and/or environmental impact. It typically focuses investment on for-profit, social- or environmental-mission-driven businesses. Impact investments can be made in both emerging and developed markets and, like other types of investments, impact investing returns can range from below to above market rates. (It is estimated that 79% of impact investors are already targeting market rates of returns.)

Investors interested in making a difference in the world can focus on a variety of sectors, such as energy, natural resources, water, sustainable agriculture, clean technology, biomimicry and financial services. Regardless of the chosen sector, impact investing focuses on building new markets and supporting socially and environmentally beneficial businesses as they scale, something that resonates with responsible investors in the Bay Area.

Recent successes show that the field has a lot of potential and that the buzz is justified. This investment approach could unlock significant sums of investment capital, complementing efforts by public bodies and philanthropic organizations to address the most pressing global challenges. To make it even more attractive, estimates show that the impact investing industry could grow to US$500 billion in assets by 2020 (from around US$50 billion in assets back in 2007 when the definition of impact investing first emerged).

Impact investing vs. venture capital

Why is this trend so significant for the Silicon Valley area, you might ask? A recent article published by Sir Ronald Cohen, a man widely regarded as the “father of social investment”, created quite a stir when he stated that “social impact Investing is the new venture capital.” Cohen argued that impact investing will play a transformative role in the future of our society, similar to the one venture capital has in the past.

While there are similarities between impact investing and principles traditionally applied to venture capital, there is more to the story. Most promising technology entrepreneurs have no problem coming up with a compelling exit strategy: acquisitions and IPOs are a well-known path to success in Silicon Valley. However, investments that blend financial returns with intentional social or environmental impacts tend to be more complex, often calling for longer repayment schedules than those used by venture capital (VC) deals, especially when the investment is in less mature markets where business models need more time to develop.

Impact investors are also often willing to take on significantly more risk than a traditional VC if the social mission aligns closely with the investor’s vision and his commitment to developing non-traditional sectors. Finally, even if a company appears attractive from a purely financial perspective, impact investors won’t invest unless positive outcomes (impacts) can be quantified and demonstrated.

Find impact investing opportunities in the Bay Area

If impact investing is on your radar, the Bay Area is a great place to start looking for ways to get involved. The region is home to a substantial pool of potential funders as well as many highly creative impact entrepreneurs, giving investors plenty of choices. Below we list* just some of the biggest impact players in the Bay Area.

Venture Philanthropy Organizations: Non-profits that invest using a VC strategy

Impact Investors: Organizations investing in for-profit companies that have social impact potential

Impact Intermediaries: second-party organizations (accelerators, incubators, venture capital consulting companies and others) operating in the impact investing arena

Non-Profits and Foundations with unique models that incorporate venture capital principles

Social Entrepreneur Organizations with existing venture capital support

Connectors: Organizations that bring together impact investors with social entrepreneurs

Looking beyond the Bay Area

The Bay Area offers rich pickings for impact investing, but remember that impact is a global game: would-be impact investors shouldn’t limit their search to a single geographic area.

Today there are literally hundreds of impact funds across the globe, with diverse areas of interest and investment philosophies. They are run by specialized asset managers as well as mainstream financial institutions such as J.P. Morgan, UBS, Credit Suisse and Deutsche Bank. The same goes for innovative networking platforms that connect impact investors and entrepreneurs looking to make a difference. Maximpact is just one example of such a service, offering an online deal listing platform where a broad array of global opportunities can be examined in one place. So if impact investing intrigues you, don’t hesitate to look more broadly and take advantage of innovative tools available to impact investors today.

*This list is partial and there are plenty more innovative impact investing focused businesses serving the Bay Area. If you have additional suggestions, we would love to hear about them.

Social Investing Infographic

30 Must-Follow Twitter Feeds for Impact Investing

TwitterBlog

By Ana LaRue

The impact investing sector is evolving at lightning speed. It’s an exciting time for all of us, but keeping up with the pace of change can be challenging, even for enthusiasts.

Thank heavens for Twitter. Like many media-savvy celebrities before them, the movers and shakers of impact investing are now communicating through tweets, making Twitter a great way to keep up with everything that’s happening in the sector.

The following list features thirty of the top Twitter influencers in the impact investing space. Add them to your feed and tune in to the latest news and views on impact today.

Organizations with must-follow Twitter feeds for Impact Investing

Individuals with must-follow Twitter feeds for Impact Investing

  • @ab_noble – Abigail V Noble, Head ofImpact Investing at World Economic Forum (@WEF@davos)
  • @ABLImpact – Antony Bugg-Levine, CEOof Nonprofit Finance Fund (@nff_news)
  • @adamspence – Adam Spence, Founder ofthe @theSVX and Associate Director at MaRSCentre for Impact Investing (@MaRSDD )
  • @BlendedValue – Jed Emerson, Impact Investing and Entrepreneurship Thought Leader
  • @cathyhc – Cathy Clark, Director, #CASEi3 Initiative onImpact Investing
  • @franseegull -Fran Seegull, Chief Investment Officer and Managing Director, ImpactAssets (@IAimpactassets )
  • @HarveyKoh – HarveyKoh, Director, @InclusiveMkts part of Monitor Deloitte
  • @ImpactInSight – BenThornley, Director, InSight at Pacific Community Ventures (@PCVtweets)
  • @jnovogratz – Jacqueline Novogratz, Founder and CEO of @Acumen
  • @LisaGreenHall – Lisa Hall, Impact investing expert, former Chief Strategy Officer Calvert Foundation (@calvert_fdn)
  • @pdgoldman – Paula Goldman, SeniorDirector at @OmidyarNetwork
  • @pierre – Pierre Omidyar, Founder of @OmidyarNetwork

Of course, we know this list is partial: there are plenty more interesting tweeters out there using social media to deliver new perspectives on impact investing. If you have suggestions, we’d like to hear about them. Get in touch to let us know who’s on your must-follow Twitter list @Maximpactdotcom.

Image credit: Anatolii Babii, 123FR

Ashoka financing agency, FASE, closes first impact deal

By Ellinor Dienst and Markus Freiburg, FASE Team

von unruh

Attila von Unruh

Ashoka, one of the pioneers of social entrepreneurship, launched the Financing Agency for Social Entrepreneurship GmbH (FASE) to make growth of social enterprises financially viable in Germany. The FASE model allows co-investments by impact investors and philanthropists through an open pipeline of investment-ready social entrepreneurs, and it develops innovative financing models specifically suitable for social enterprises. The objective is to create a complete ecosystem for financing social enterprises.

Now FASE has successfully closed its first deal, financing the efforts of German social entrepreneur and Ashoka Fellow Attila von Unruh (pictured) as he establishes a private consultancy that helps social enterprise businesses in crisis.

Extending services for entrepreneurs

Von Unruh’s new enterprise builds on a solid track record of social entrepreneurship. Three years ago the Ashoka Fellow founded BV INSO (the German Association for New Opportunities for People in Bankruptcy), a nonprofit that offers advice and personal support to entrepreneurs in crisis. So far, BV INSO has helped over 8,000 people both before and during bankruptcy.

The overwhelming success of these services led to increasing demand for individual counseling, and, because counseling isn’t funded by donations or membership fees, von Unruh saw a business opportunity. With financing from FASE, he founded the for-profit turnaround consultancy firm, Von Unruh & Team, to offer advice and support for entrepreneurs, self-employed businesspeople and freelancers who find themselves in business crisis or threatened by bankruptcy. Its main goals are preventing business failures through early consultation and providing assistance to restart businesses after bankruptcy.

The founder describes his approach as follows: “We offer eye-level crisis and turnaround advice, with a focus on the person and the creative power of the entrepreneur. Our specially-trained consultants have their own crisis experience, and our clients are usually supported right up until their personal and entrepreneurial comeback. With this approach, von Unruh & Team actively and effectively creates a ‘second chance’ culture.”

His approach; preventing the insolvency of small and medium-sized enterprises with advice from entrepreneurs who have their own experience of crisis; is unique in Germany and beyond. The company von Unruh; Team works as a social enterprise subject to market conditions. Any profit generated is invested in the further expansion of the business or donated to the organization’s nonprofit regional support groups, BV INSO and von Unruh’s other nonprofit, the Stiftung Finanzverstand (the Financial Literacy Foundation). This income supports projects to develop the consultants’ financial expertise.

Innovative models for social investment

While von Unruh’s not-for-profits are funded by membership fees and private donations, private seed capital,in the form of impact investments, was raised for the establishment of the new private consultancy firm.

For the first financing round, FASE developed a financing model on the basis of a conditional revenue sharing agreement to meet the needs of social enterprises. Two investors were then selected from the recently established Ashoka Angels Network to provide seed capital for the development and expansion of von Unruh’s business. Both strongly believed in the scalability and social impact of the business model as well as the personal integrity of the entrepreneur. This entrepreneurial solution to the social challenge was crucial for von Unruh, who wanted to attract investors who would personally act as the company’s Social Business Angels.

FASE developed the financing structure to accommodate the accounts of the business model by giving the social entrepreneur flexibility, but still giving the investors a fair share in the success of the business. This conditional profit participation agreement involves investors with a predefined share of up to a predetermined amount of the company’s revenues.

This form of revenue sharing leads to very flexible financing costs for a social enterprise, especially in the initial stages. The limitation of payments and very flexible repayment options, as well as increased sales, will keep valuable liquidity in the company which can be invested in the expansion of business activities. The social mission and the scaling of the business model are substantially supported by the chosen financial instrument.

The international legal consulting firm Hogan Lovells accompanied this transaction as a pro-bono consultant. Key aspects and components of the financing contract are available as an open source document from the FASE website for adaptation by other social enterprises and social investors.

About the authors: Ellinor Dienst started the Financing Agency for Social Entrepreneurship together with Dr Markus Freiburg in February 2013. Markus studied Economics at Witten/Herdecke (Dipl’k.) and Cambridge University (M.Phil) and promoted at the WHU Koblenz on investments by institutional investors in Private-Equity-Funds (Dr. rer. pol.). Markus has over seven years’ experience as a management consultant with McKinsey & Company, where he spent more than four years doing pro-bono consulting for social entrepreneurs. Ellinor studied in Lausanne and Oxford University, completing a degree in Hotel & Restaurant management. After a career in marketing for luxury goods, she worked as an independent marketing and fundraising consultant for social enterprises in Germany.

About Ashoka and the Social Business Angel Network: Ashoka is the world’s first and leading organization for the promotion of social entrepreneurship. It is supported by an international circle of successful entrepreneurs and leaders who also support Ashoka Fellows as mentors. Many of these sponsors are also interested in financing social enterprises through direct investment and acting as Social Business Angels: so the. Ashoka Angels Network was founded. Based on their personal investment preferences, the members of this “investment club” are regularly informed by the FASE of investment opportunities from the Ashoka environment and beyond, with outstanding social impact.

Learn more about Ashoka and FASE.

Transforming Poverty into Sustainable Prosperity through Agri-business and Agro-processing

Guest port by Dave Wreford, Hermanus Rainbow Trust

This blog post is part of a series of posts, introducing latest deals within Maximpact’s portfolio, written by our members. To register and promote your own sustainable profit or non-profit initiatives and projects looking for investment, grants or other types of collaboration, please register with Maximpact.

 

“An innovative solution to a complex problem”.

 

Like in many regions around the world, Poverty is the scourge that’s destroying our disadvantaged communities in the Overstrand region of the Western Cape – South Africa. It is important that we utilize every available resource to eliminate Poverty, which is the cause of broken families, malnutrition, hunger, child mortality, crime and the lack of “early childhood development” and education for our children.

 

The Challenges of Living in an Impoverished Community.

 

Imagine living in a community where about 80,000 people live under terrible conditions, with 50,000 living in small shacks with no fresh water, electricity or sewerage available in the shacks. The unemployment levels are very high (71%) and the literacy levels low, with 59% earning less than R1,200 per month ($110) and 4% not having any form of income at all. It is estimated that 45% are “infected” with HIV, but the reality is that virtually every family is “affected” by HIV in one way or another. Tragically this is further aggravated by widespread crime, gangs, drugs, violence, rape, teenage pregnancies, spread of HIV, neglect and the abuse of women and children.

These devastating conditions have resulted in the breakdown of society and family structures causing single parent families and “child-headed” households with hundreds of orphans, vulnerable children and disadvantaged families. Many of the people have been forced to join gangs and resort to crime to survive the ravages of poverty and inequality.

“Community and Social Development”

 

The Hermanus Rainbow Trust was founded as a non-profit organisation in 1999. Since then the Trust has been providing community and social development; services and support to hundreds of orphans vulnerable children and disadvantaged families affected by HIV and poverty. These services have been funded through “grant funding” from government, business and private individuals. Unfortunately over the last few years the recession has resulted in a significant reduction in “grant funding”.

“Wake up Call”

This seriously impacted the delivery of services and support and prompted the Board of Trustees to develop an innovative “sustainability strategy”. The strategy is based on the establishment of a “Social Enterprise”with commercial business activities, whose surplus revenue (profits) will fund and grow the existing “social purpose programmes”.

The Dawn of a New Era

The “Social Enterprise” has established a number of small revenue generating pilot projects over the last year while researching and developing an innovative long term sustainable solution to the complex problem of “Poverty”.

The Agri-business Solution

Agri-business and Agro-processing solution focuses on 5 integrated initiatives that provide training, skills development and mentoring, the creation of business opportunities and jobs, and the production of unique functional foods and nutraceuticals. These initiatives will go a long way to eliminate poverty in our communities.

  • - The Agri-business Training College, Training Farm andNursery
  • – The “Business Development Services” and “Supply Chain Management” Incubator
  • – The Agri-business Co-operative and Production Farm
  • – The Agro-processing Centre with 4 commercial “FunctionalFoods” and “Nutraceutical” production lines
  • – The “Rainbow of Hope” Shop and Tourist Centre.

Social Impact Benefits

The mission is to rebuild the family structures, enabling children to develop fully and become future leaders, while enabling the family members to participate in the various poverty alleviation business activities.

The current programmes that incorporate over 1,000 people, include:

  • – Parenting Worx; providing comprehensive parenting, life’s kills and “early childhood development”.
  • – Children’s Circle of Support; provides psycho-social support to orphans, vulnerable children and child headed households
  • – Sponsor a Child; provides support and enables disadvantaged children access to education
  • – Special Support Groups; Support and counseling for adults and children with terminal and chronic diseases (mainly HIV/AIDS)
  • – Grade R Edu-care Centers; providing formal Grade Reduction as a foundation to primary school education.

Financial Requirements

The total financial requirements for the 3 year roll out of the “Social Enterprise” commercial Agri-business projects, including all of the infrastructure, facilities, equipment, vehicles, systems and operational costs through to break even, is $4.3 million (£2.6 m, € 3.12 m, R47.0 m), for the 5 integrated businesses. The “Social Enterprise” is looking to establish a balanced funding portfolio. This will consider a combination of sub-market debt and equity from Social Impact Investors, Corporate Social Investment, Corporate Enterprise Development, Foundation grants, Venture philanthropists, and Social VC funder.

About Dave Wreford: Dave Wreford is the General Manager / Administrator of the Trust. Dave is a social entrepreneur, visionary and strategist, with over 15 years; experience in community and social development programmes and Agri-business and Agro-processing projects. Dave has expertise in natural medicine, health and wellness, “Functional Foods” and”Nutraceuticals”, with over 10 years; experience with Moringa growing and production. Worked for IBM, both locally and internationally for 27 years, the last 10 years in senior management positions.

Photo credit: All pictures have been taken by staff members of the Trust and belong to the Trust.

Maximpact Deals: Recent Successes and Measurable Impact

By Ana LaRue, Digital Media Manager, Maximpact, @larue_ana

What is Maximpact Deals?

Maximpact Deals is an online platform that lets you list your project or venture and enables you to connect directly; free of charge and commission-free; with partners and potential funders in the impact and sustainability industry.

With a mission to foster collaboration between different parts of the growing impact and sustainability sectors, our platform is wide open, making it a shared community where everyone is invited to participate and benefit from direct connections and high-impact collaborations.

The platform brings together entrepreneurs, nonprofits and investors in a way that gives everyone a chance to promote their projects, network with others, share resources and identify opportunities. It is a win-win situation for all.

How does Maximpact Deals help you achieve impact?

Since its launch in 2012, Maximpact Deals has had role in developing a number of deals and fostering many productive partnerships. As the platform grows and evolves, it’s becoming clear that there are many benefits to our open collaboration model.

Connect directly: One of the comments we often hear from our members is that the platform truly facilitates direct connections for high-impact collaborations. Because the registration allows you to personally connect with individuals by giving you their direct contact information, the experience is very direct and highly effective.

As one of our members told us: “The platform lets you tap into the Maximpact ecosystem and find your perfect partners very quickly and without having to search the entire web.” So far, a handful of such connections have already evolved into long-term partnerships and our goal is to continue connecting the dots and setting the stage for more high-impact collaborations.

Promote your business: Maximpact Deals is different from some deal platforms in that it does not act as an intermediary; a fact our users appreciate. Rather, it serves as a showcase where projects can be discovered by investment funds, intermediaries, incubators and accelerators. Kiva is just one example of the many organizations currently sourcing ventures and projects through Maximpact.
On the funding side, our current membership includes over 350 financial intermediaries and funds such as World Vision, Triodos Bank, LGT, Big Society Capital and others. So by listing your project or venture you not only tap into our network, but also increase your chances of being noticed by other intermediaries, accelerators and incubators, thus extending your reach and multiplying your chances of success.

Secure funding or source attractive new deals: As Maximpact Deals continues to develop, the strength of our network is becoming more and more apparent. At the moment, Maximpact offers access to over 500 live projects. Because a single project is often seeking funding in various geographic locations, this adds up to over 1500 business opportunities.

Start connecting today

If Maximpact Deals is that simple and that good, how do I get started, you may ask? A simple registration process allows you to immediately start sharing information about your projects and begin contacting the network.

Begin by registering your organization. Once your registration has been vetted and approved, you will receive a notification allowing you to log in and list your projects and ventures and search for deals on our secure, password protected platform.

Let’s make it even better; together!

The strength of Maximpact Deals lies in its community of users. Without our loyal members and supporters, we would not be celebrating the success stories that give us so much satisfaction. With every deal and connection made, we come one step closer to achieving our mission: facilitating communication and increasing deal flow across this previously fragmented sector.

With this motivating us, we go on trying to improve the user experience. We welcome suggestions and would love to hear about your own success stories using the platform. Let us hear from you at: media@maximpact.com

Making Safe: Seven Strategies for Managing Risk in Impact Investing

By Marta Maretich

Risk is the spice of life and a necessary factor in most investing. Investors are compensated for putting their capital in peril (to a degree) with higher levels of risk attracting higher returns. Without risk there would be little reward.

This makes the art of risk management one of the most important skills in modern finance. Delivering financial products that provide the right level of risk for different investors is key to the success of advisors, fund managers and investment firms. This is as true for impact investing as it is for mainstream finance, especially now that the sector is starting to diversify and attract more corporate, institutional and other large investors.

Yet impact investing faces special challenges when it comes to managing risk, as a recent report by Bridges Ventures highlights; and this unique risk profile calls for special handling when it comes to putting together impact investing products.

To start with, impact has more risks than other kinds of investing. Not only does it have all the risks usually associated with mainstream capital placement; capital risk, transactional cost risk, exit risk and others; it also has what is known as impact risk: the risk that the intended impact will fail to materialize, or that what benefits one set of stakeholders will have negative consequences for another.

In this way, impact risk can be directly related to another risk for investors: reputational risk. It can also pose a problem for institutional and philanthropic bodies who might otherwise use grants or subsidies to bring about intended outcomes in a more predictable way. While these forms of support may have their own drawbacks, impact risk can be a deterrent for this sector of the market, the study shows.

There are other ways risk is different in impact, too: Transactional cost risk can be higher in impact investing where deals are often smaller; exit risk is exacerbated when the need for liquidity conflicts with a commitment to impact outcomes, for example.

All this leaves little doubt that managing risk is a tricky business for impact investors, a fact the sector has known for some time; Jed Emerson has written on the subject of risk management in two reports for ImpactAssets. However, this research brings more detail to the picture through a close examination of 20 real-world impact investment products along with in-depth interviews with fund managers and investors. Crucially, it identifies seven strategies for managing risk in impact investing products:

1. Downside Protection

Provides a safety net if the investment doesn’t work out. A common strategy is to establish a “capital stack” with junior equity providing the first layer of downside protection, preferred equity or mezzanine debt the second and senior debt the third. Collateralisation is one version of this; an alternate version uses third-party guarantees.

2. Bundling

Traditional fund structures are “bundles” of investments rolled into one product, spreading risk. More broadly, “bundling” is the aggregation of products that are dissimilar enough to provide diversification. “For example,” the report says, “an intermediary could construct a multi-asset portfolio with property-backed debt balancing higher-risk equity investments, or with liquid product balancing illiquid”.

3. Track Record

Track record is still an issue in the impact space where few fund managers have had time to develop solid reputations for success. Yet the researchers found evidence that established mainstream fund managers are starting to partner with impact investment experts; an echo of Emerson’s multilingual teams. There are also cases where impact investors with a track records of delivering one kind of impact investment product are adding new products to their existing platform. “First-time fund managers (or first-time products) can build credibility with investors by bolting on to an existing platform (benefiting from the experience, networks and back-end), rather than starting from scratch.”

4. Liquidity

This report defines a liquid impact investment as any product that is “tradeable on a platform, where the platform may be a widely used exchange or a smaller listing that matches buyers with sellers by providing detailed product information (including financial and impact track record, as well as associated risks)”. Some products in this study used platforms like Ethex to achieve liquidity, others traded on open markets such as Capita’s online share portal and the Euro MTF Market in Luxembourg. Factors such as the quality and type of legal documentation, the number of trading platforms and market-makers, transaction costs and overall market transparency all influence liquidity.

5. Technical Assistance

Already a common strategy for organizations like Root Capital and Village Capital who blend market-building with impact finance, technical assistance strengthens businesses through interventions such as improving financial controls, upgrading management staff, improving corporate governance and providing impact assessment training. The research also highlighted a variation of technical assistance: impact investment products that form part of a larger investment management platform. In these cases, a new product benefits from an experienced investment team providing standardized best practice support across the platform.

6. Placement and Distribution

According the report, impact products are de-risked through the involvement of advisors who can “demystify and explain” them to investors, as well as those who have a wide distribution network. With mainstream markets, de-risking requires a bigger network in the form of “a number of advisors or underwriters” working together to sell the investment and potentially take responsibility for managing its liquidity needs.

7. Impact Evidence

Impact strategy, impact measurement, aggregating and analyzing social and environmental impact data; all these have long been the center of debate in the sector. The report offers more evidence of the centrality of impact with products incorporating impact measurement and reporting systems as a way of mitigating risk. Interestingly, products in the study used a number of methods including IRIS, ESG frameworks and nonspecific methods developed privately. Impact that could show a focus on wider stakeholder groups was seen to be most valuable when it came to managing risk.

Managing risk will continue to be a challenge for impact investors, yet this study represents an important step forward in sharing learning across the sector. More than just an academic exercise, it offers a rare opportunity to see inside the workings of a range of impact investment products. Its message is practical (it includes a “toolkit” for risk mitigation) and directed at asset managers, product developers and intermediaries. But we can all learn something about risk management and the practice of impact from its findings.

Download the Bridges Ventures report.
Find impact deals.
Read more about risk management in impact investing.

Image Credit: 123RF

Seven Steps to Allocating More of Your Portfolio to Impact

Guest blog by En Lee and Sam Lindsay

For many investors, impact investing has remained largely confined to private investments. For this reason, impact investments may still account for only a small proportion of many portfolios.However, with new opportunities for impact investing now emerging across different asset classes, investors are beginning to allocate more of their assets to businesses that generate social and environmental outcomes. To encourage this move, the Investor Team for the Impact Investing Exchange Asia (IIX Asia) has come up with a simple 7-step process that helps investors and advisors assess investment portfolios and begin the process of shifting the emphasis in the direction of more impact investments.Step 1: Define Core Values and Mission

  • Identify core values, mission, country and sector preferences
  • Understand the motivation (e.g. preserving family legacy or instilling values in the next generation)

Step 2: Identify Target Impact Areas and Role of Investment

  • Identify your target outcomes and objectives (improving healthcare, empowering rural women through education)
  • Define the risk/return profile of your investments (wealth preservation, commercial returns etc.)

Step 3: Integrate Impact Allocation

  • Determine allocation across asset classes: cash, fixed income, public/private equity, real estate…
  • Distinguish between philanthropic and investment capital in the portfolio

Step 4: Evaluate and Select Investment Opportunities

  • Determine which investments should be non-impact, mission-related and mission-driven
  • Direct investments (e.g. private equity, debt, hybrids etc.)
  • Indirect investments (e.g. funds, funds of funds etc.)

Step 5: Implement a Strategy

  • Identify potential impact investment opportunities (e.g. by using a impact accelerator such as Impact Partners or a deal site like Maximpact)
  • Commence due diligence, structure investment, execute and close transaction and if necessary, post-deal monitoring (specialists can assist in these areas)

Step 6: Monitor, Analyze and Report Results

  • Measure financial, social and/or environmental returns
  • Insist on impact assessment report from a reputable assessor (professionals such as Shujog Impact Assessment can help)
  • Identify a suitable impact methodology for the identified outcomes (e.g. GIIRS)

Step 7: Consider Changes in Objectives, Strategy and Managers

  • Revisit country and sector focus
  • Evaluate investment financial and social/environmental performance
  • Assess asset allocation, risk/return profile and intended social and environmental outcomes

A version of this blog was first published in the IIX Asia digital publication, Impact Quarterly.


About the Authors:
En Lee is Co-Head, Asia Pacific for LGT Venture Philanthropy, a global impact investor supporting organisations with outstanding social and environmental impact. He is the former Director and Head of Investor Team at Impact Investment Exchange Asia. Sam Lindsay is a consultant for the Aligned Network and a former Investor Team Member at IIX Asia.


About IIX Asia:
Impact Investment Exchange Asia (IIX Asia) is the world’s first public trading platform dedicated to connecting social enterprises with mission-aligned investment.


Image credit: 123RF

Spotlight Deal: Maximpact forestry deals achieving positive results

Maximpact spotlight deals shine a light on the forestry sector. Currently Maximpact Eco has over thirty forestry deals listed and many of these are seeing a high degree of interest from impact and sustainability investors.

The number of responsible investments in the forestry sectors of the emerging countries may still be limited due to uncertain market environments and a low level of investment experience. However, there are attractive deals in the marketplace now; and those listed with Maximpact Eco are proving attractive to investors looking to place capital in sustainable businesses.

Twenty of these deals have been chosen and show cased to a select group of the Maximpact Eco investor community. As a result six of them were short listed and three of them are now in advanced discussion.

These are very promising results for a sector where, in large investment portfolios (USD 1 billion), forests and forestry usually represent only around one percent of the total portfolio. Yet it isn’t enough: From an impact point of view, more investment is needed worldwide in order to effectively combat forest exploitation combat carbon related issues and build bridges between sustainable forestry and investors.

The fact that forestry deals are getting substantial traction is a step in the right direction, demonstrating that, when it comes to sustainable forestry and impact investors, the attraction is mutual.

Interested in forestry deals? Login or Register now.

Global Supply Chains: It’s Time to Decide on the Way Forward

Guest contributor Dr. Maximilian Martin

As we start using our new holiday gifts this year, it is too easy to ignore the miraculous supply networks that allow us to enjoy the products of human labor and ingenuity around the world. Sustainability is increasingly viewed as a strategy for enduring in a world of scarce resources and unlimited needs; but we seem to be locked in an endless cycle of merely reacting to deep-seated economic and social problems. It is now time to decide on the way forward: do we want to make supply chain upgrading happen across the board and reap the benefits, or continue using half measures and band aids?

Perhaps more so than other industries creating value through global supply chains, the textile and garment industry illustrates the crossroads we are at. A three trillion dollar industry that encompasses the manufacturing and selling of textiles and garments, apparel has long been considered a source of economic progress around the world and has historically served as a catalyst for national development and industrialization. The inverse of this growth and the accelerating production of fashion has been a broadening and deepening track record of poor working conditions and heavy pollution. The collapse of the Rana Plaza factory in April 2013 in the Bangladeshi capital Dhaka jolted to life widespread and increasingly prolonged scrutiny of the industry. It has brought to the forefront longstanding questions over how to bridge the gap between economic viability and social and environmental performance. To the credit of many buyers involved, attempts to address the social and environmental issues plaguing the apparel industry in Bangladesh (and elsewhere) are being made; the European buyer-funded Bangladesh Accord on Fire and Building Safety and the US buyer led Alliance for Bangladesh Worker Safety are just two of the high profile efforts underway. But the New York Times also just published a piece reporting how clothing companies like Mango have declined to contribute to a landmark $40 million compensation fund for victims of Rana Plaza disaster. And as we are just entering the New Year, in Cambodia, where apparel is the country’s most important industry, a special military unit in riot gear dissolved a garment worker demonstration for higher wages on January 2, 2014, using force.

How can we graduate to a new normal where next level sustainable value creation is the standard state of affairs? To help address this need, Impact Economy; a global impact investment and strategy firm; has just issued my report, Creating Sustainable Apparel Value Chains, so industry stakeholders can begin to build a common way forward. The key insight is this: systems created this situation, and a systemic solution is now needed to address it. The good news is: there is ample value creation potential. A redesign of production processes paired with better infrastructure and training can save up to 20 percent of chemical inputs, up to 40 percent of energy, and up to 50 percent of water. Building humane working conditions, an improved environmental footprint and staying competitive need not be at odds.

The report offers a framework that links greater resource productivity with an ambitious agenda to improve working conditions and environmental footprints. This framework includes four key levers that need to be pulled in order to achieve industry transformation, including: (1) fostering total resource productivity and transparency across the supply chain; (2) upgrading the industry infrastructure by (impact) investing; (3) improving working conditions with a new level of ambition; and (4) studying and replicating the best practices of leading producers.

Of course, no one actor or lever is a panacea unto itself. But the framework presented in the report offers a more comprehensive way to consider the issues influencing the development of the industry, and to design effective responses to them. And the apparel industry is far from unique. Fragmented approaches to industry transformation, which otherwise prevent a fundamental and systemic shift to sustainability, are widespread.

Take the commodities industry. In 2012, the value of the global metals and mining industry approached $1 trillion. In 53 mining countries, three-quarters of whom are low or middle income, extractive industries are a cornerstone for millions of people. They often face a unique set of social challenges due to the high impact nature and close proximity to environmentally sensitive areas. Geostrategic tensions result from attempts by the world’s main powers to guarantee their preferential long-term access to vital commodities.

The electronics industry is no different. Covering everything from computers, mobile phones, and televisions to name just a few consumer products, the global electronics market is set to reach $1.4 trillion by 2015, according to Global Industry Analysts, Inc. Yet again, electronic waste due to the use of toxic chemicals and difficulty of recycling is a growing issue.

Growing trends such as green growth and energy efficiency, the rise of the LOHAS (“Lifestyles of Health and Sustainability”) consumer, and rising demand for affordable products and services at the base of the pyramid (BoP) will only serve to emphasize the need to determine how global supply chains can be harnessed to drive inclusive value creation; in all industries, and for stakeholders and investors alike.

As we go about using our electronics and fashion gifts in the New Year, let us not forget that the opportunity for sustainability has the potential to be great. But Rana Plaza type disasters won’t be avoided, and the impact of progress will increasingly worsen unless we attempt a bolder strategy. To achieve industry transformation, we need to step up the game. It is now time to decide on the way forward.

___

Maximilian Martin, Ph.D. is the founder and global managing director of Impact Economy. Before creating the brand Impact Economy and founding the firm, he served as founding global head and managing director of UBS Philanthropy Services. Dr.Martin also created the first university course on social entrepreneurship in Europe. His work, and more than one hundred articles and position papers, have helped define the trajectory of market-based solutions and the impact revolution in finance, business and philanthropy. He was invited to write the primer on the status of impact investing for G8 policymakers in 2013, which considered the potential and development options for this new USD 36 billion branch of the financial industry.

Maximilian Martin_impact economy

[Image credit: 123RF, Impact Economy]

Impact Investing in 2013: Reasons to be Cheerful

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by Marta Maretich

This has been an amazing year for impact investing. Here we round up some of the top reasons why the sector has the right to feel cheerful about 2013; and look forward optimistically to 2014.

1. The Impact G8

If it needed confirming, June’s Impact G8 was the sign that impact investing has officially arrived. It was UK Prime Minister David Cameron’s own idea to host this high-level social investing pow-wow; and the leaders of the world’s eight largest economies were eager to attend. That tells us something. For the first time social investment found itself on the G8 agenda and we saw major nations, like the US and the UK, announce significant investments in developing our sector. How good was that?

2. Mainstream Investors Join the Party

Morgan Stanley, USB and Goldman Sachs were some of the big financial institutions that created impact funds in 2013, largely because of demand from investors. Good for them. We knew they’d get there eventually.

3. Social Stock Exchanges

A sensible idea that’s catching on partly thanks to the UN’s Sustainable Stock Exchange initiative. 2013 saw the launch of a Social Stock Exchange (SSE) in London and an enhanced Impact Investing Exchange Asia (IIX). They joined other global exchanges including the SVX, Ethex, and KSIX in a global push to establish more exchanges.

4. Social Impact Bond Results

We’ve been keeping our fingers crossed for social investment bonds (SIBs) since the first was rolled out in 2010. Finally the results are coming in and it looks like this pay-for-performance model is delivering. Phew! Now can we expect to see more take-up of the SIB model by the public sector? Hope so.

5. Metrics Move On

Questions may remain about how to measure impact and how best to use measurement data to improve effectiveness across all three bottom lines. But, take note: no one is arguing about the need for metrics any more. Instead, 2013 saw us using our energy to develop more streamlined, business-based and strategic approaches to impact measurement. IRIS, the best-known system, has come a long way and we are looking forward to alternative systems emerging including ones that measure outcomes and impact, not just outputs.

6. Better Exits

2013 brought some relief for those of us who are still worried about the lack of exits in the sector. The traditional venture capital exits; IPOs and acquisitions; may not be right for all impact investments. But now clever impact financiers, many working in developing economies, are beginning to identify other ways for investors to get their money out: royalties, demand dividends and employee stock ownership plans are some of the creative approaches being used. New methods of grassroots capital sourcing, like crowdfunding, could mean exits are less of an obstacle in the future.

7. Smartness

It’s been a terrific year for sector research. There’s no way to do justice to all the publications; major and minor, digital and in print; that have informed us in 2013, but here are some game-changing staff picks: From Blueprint to Scale (Monitor Group); From the Margins to the Mainstream (WEF); Women Wealth and Impact (Veris Wealth Partners); Bridging the Pioneer Gap (ANDE and Village Capital); Impact Investing 2.0 (Pacific Community Ventures, CASE, and ImpactAssets). More of this quality research in 2014, if you please.

8. Data Adds Up

The ability to gather, analyze and deploy data is becoming vital to success for all kinds of industries, including ours. So it’s a good thing that 2013 saw impact investing gain not one but two (count’em) open data platforms; Wikivois (soon to become part of The Global Value Exchange) and ImpactSpace; created just for us. Now all we have to do is find new ways turn this raw sector data into positive impacts in the real world.

9. Great Get-Togethers

The social investment sector loves to socialize and 2013 gave us more opportunities to get together than ever before. At SOCAP, Skoll, events around the Impact G8 and countless smaller national and regional convenings we schmoozed, we shared, we learned and we found inspiration. Why stay in your silo when there are so many great events to choose from? Get out there!

10. The Next Generation

2013 brought us glimpses of the next generation of impact investing leaders. They are young “millennials” many are female; many come out of developing economies. They are “multilingual“, fluent in the languages of finance and business and philanthropy and development. For them, the idea of using market models to create beneficial impacts is a no-brainer. They’re perfecting their craft in an increasing number of graduate programs that teach social finance and impact investing as part of the core curriculum. We can’t wait to see where this new generation takes the practice impact investing next.

So there you have it, our list of reasons to be cheerful about 2013.

There are certainly more reasons than this (it has been a fab year!) and we would really love to hear about them from you. Email or Tweet us with your own reasons to be cheerful about impact investing in 2013 and we will be delighted to share your stories with our readers.

In the meantime, have a great holiday season and be sure to rest up: next year is set to be even more lively for the impact investing sector. Can’t wait!

[Image credit: 123RF]

Maximpact’s Tips for a Sustainable Holiday Season

By Sarah-Jane George

With the Winter Holidays close at hand, thoughts of gift buying are at the forefront of most people’s minds. This month instead of focusing on the financial side of making an impact, we decided to look at how sustainability can be incorporated into your giving.

Here is our list of gifting ideas and green tips on how to make your holiday shopping experience a more sustainable one.

Quick Sustainable Tips.

Gift WrappingUse brown paper bags, old comics, newspaper, vintage maps, and old music sheets as wrapping paper and decorate with some ribbon or string. Don’t use gift tags, write directly on the wrapping paper using gold, silver or colored pen. Wrap your gift in another gift, such as jewelry wrapped in a scarf then tied with ribbon.

Save last year’s wrapping paper from gifts you’ve received and reuse when gifting. If you do have to buy wrapping paper, buy recycled paper.

If you use Christmas stockings, simply put smaller gifts into the stockings unwrapped. Stockings are wonderful as they can be reused yearly. Over sized gifts don’t need lots of wrapping paper, just tie a bow to the item and hide until gifted.

Holiday Cards: Send holiday e-cards instead of standard greeting cards by choosing providers such as Paperlesspost or Jibjab. Be creative and make your own cards out of old holiday cards you have received in previous years. There are many things you can do with old holiday cards. If you do purchase cards buy recycled content cards.

Gift Giving Ideas: Make gifts instead of purchasing them, such as baking goods or a DYI cooking gift. (Put your favorite easy cookie recipe in a 24oz mason jar, add a bow with the directions (wet ingredients, oven temp and cooking time) and you have a delicious creative gift.)

Look for gifts that are minimally packaged, or have no packaging at all. Consider the impact of your gift; giving gifts like a fruit tree or native tree to someone who can plant it in their garden is a creative and sustainable gift in one.

Give the gift of reusable items such as stainless steel water bottles, stylish ethically minded coffee travel cups,bamboo travel utensils, Eco-friendly lunch food containers or recycled tote bags that can also be used for grocery shopping. When you’re shopping consider purchasing more durable items, which will last longer.

When buying fashion items look for brands that promote using less water such as Levis waterless or use sustainable textiles like organic hemp, bamboo and Organic cotton. Brands that make their items from salvaged and recycled materials such as Yellow 108. When out gift shopping always remember to take reusable shopping bags with you.

Re-gifting is a wonderful way to recycle, while gift certificates are a great way to ensure that someone gets what they really like. Tickets to events such as art exhibitions, sporting events or concerts are also a great way to lower unwanted gift wastage.

Thrift stores are becoming more and more popular for finding great gifts or holiday decorations. Shopping at a local thrift store is always a unique experience and ads additional joy as you are making your reused product purchase.

Give an unwrapped gift such as Oxfam Unwrapped (America,UK, Canada, NZ). Nothing says happy holidays like the gift of Honey Bees, chicken manure or books for kids to those who really need it. There are many such organizations that do such unwrapped style of gift giving. You can also donate to a good cause on the behalf of someone. Sites like EarthShare have various charities that are working to benefit the world, why not choose them for one of this year’s gift giving ideas.

Give a membership gift that makes a difference. There are local conservation societies with memberships, whose benefits can include outdoor outings, becoming part of a local conservation team, magazines, discounts and more. For the animal lovers, give them a wild life conservation membership such as the Wildlife Conservation Society or symbolically adopt an endangered species in their name from the World Wild Life Fund.

Some wonderful gift options that also make a difference:

Try and give locally made gifts and support your local economy. If purchasing overseas, try buying consciously and take the time to think about who will benefit from the purchase of your gift. There are many fair trade stores and products such as Global Girlfriend and Jjangde, whose proceeds help to support economic development for women in need by creating sustainable markets for their products. One of Maximpact’s recent blogs, Sustainable Luxury Heroines highlights some wonderful high-end sustainable products that would be more than welcome on anyone’s holiday wishlist.

And finally, here are some Green Gift Guides for additional inspiration on making your holiday gifting more sustainable:

From us all at Maximpact, we hope your winter holidays are filled with joy and impact.

[Image credit: 123RF]

Empowering Women Through Impact Reaching a helping hand across the “Pioneer Gap”

by Marta Maretich, Chief Writer, Maximpact.com

Women’s financial empowerment has been a hot topic in recent months. There’s a definite (deserved) buzz around gender-lens investing and its potential to make more of impact capital. Yet, while the gender lens approach is an exciting step forward for women’s financial empowerment, it isn’t the whole story.

Impact investing isn’t an island anymore; it’s now becoming part of the financial mainland. By the same token, investing in women happens within the much larger context of the global financial markets on the one hand and the developing impact investing industry on the other.

Looking more deeply into the subject of women and the flow of impact capital reveals a number of areas where the practice of gender lens investing intersects with larger issues in the impact sector. One of these is the sticky issue of supporting impact businesses as they struggle through the”pioneer gap” the tricky mid-stage between startup and market viability.

It’s now clear that women business leaders are a good bet in both financial and impact terms. But when it gets down to choosing investments, practical questions remain: Which female leaders are we really talking about? And which businesses, at which stage?

Doing good vs. making money?

To make the right decisions when it comes to gender lens investing, investors and funds need to come to terms with the fact that the impact investing sector is still a divided marketplace. On the one hand are businesses whose main aim is to do good, especially for the poor; on the other are those whose central goal is market-rate returns. The gender lens, while it helps bring focus in many ways, may not pick up this fundamental difference.

So at which end of the spectrum should we put our capital if our goal is to empower women? The answer is both; plus more in the middle.

There are good options for female-centered investors who want their capital to have the most impact for poor and under served women. Veteran social financiers like Root Capital and Village Capital have reliable track records. Incubator programs, contests and honors for women social entrepreneurs have proliferated across the social benefit finance sector. The enterprises they work with are typically small seed-stage ventures, run by individuals or small teams. They often use microfinance models and with notable exceptions they are often based in the developing world.

On the other end of the spectrum are more impact investments in traditional areas like large-scale infrastructure, renewable energy, real estate and commodities. Today the majority of the more than $4 billion of impact capital is invested these kinds of businesses in developing markets. Very few of them are led by women (as a benchmark, women CEOs run only 4.2% of Fortune 500 companies; only 16% of directors are women). Some of the “new”impact industries, especially tech firms, are among the most male-dominated. And while these businesses may bring benefits to women in a broad sense, their positive impacts tend to by pass the poorest and neediest.

Targeting the missing middle

There’s nothing necessarily wrong with any of this;diversity is one of the strengths of the impact investing sector and the picture is always changing as we learn more. Yet the division points, once again, to a nagging sector-wide issue: the lack of mid-stage businesses with both strong impact credentials and growth potential. This is a crucial problem for female-friendly impact investors.

Recent research has identified some of the factors behind this “pioneer gap”. The main problem is that it’s very difficult for impact businesses to scale up,especially in developing countries where they lack basic market infrastructure, skilled workers and the right kind of capital. Often, there’s support from incubators at the seed stage, but this evaporates as the enterprise gets bigger and its needs become more specialized and complex. Entrepreneurs, whether male or female, struggle to provide leadership at this stage, often lacking key skills or access to expertise or networks that can help them. Many promising impact businesses die here.

For female-focused investors, there’s another issue. The abundance of seed-stage female-led businesses tends to divert attention away from the shortage of investable female-led businesses at the middle stage. The fact remains that many small seed-stage social enterprises, though worthy, will never scale up; some can’t, some simply don’t want to. Yet impact investors; those who are playing for real; need to place capital in businesses that grow, or at least have growth potential.

The disconnect between seed-stage social businesses and growth helps create a hole in the middle of the marketplace where some of the most dynamic investment opportunities should be. More importantly, it can mean that women-centered investments don’t have the transformational effect they should have. Investing in seed-stage women entrepreneurs may bring local benefits, but unless they go on to build organizations and scale their businesses, they will never enter the mainstream global marketplace or reach more beneficiaries. This limits their scope for impact.

Growth-friendly and female-friendly, too

The problem of the missing middle is slowing the development of the impact sector, but it also creates an opportunity for investors and funds. Those who want to focus their capital on women can multiply the benefit of their investments by targeting mid-stage female-led businesses with growth potential.

  • – Make supporting mid-stage impact businesses a priority in your woman-centered portfolio.
  • – Analyze the portfolio: How much investment is going to mid-stage businesses? How much capital is backing intermediaries and accelerators who work with mid-stage businesses?
  • – Partner with impact accelerators and intermediaries who specialize in supporting businesses in the pioneer gap; LGT Philanthropy’s Smiling World Accelerator Program is one example.
  • – Consider women-friendly investments with more modest financial returns: 5% per year or lower. Modest return goals mean mid-stage businesses can benefit from capital without being squeezed by investor expectations.
  • – Create a woman-centered fund backed by philanthropic capital. Rather than channeling philanthropy dollars away from good causes, use them as capital for supporting mid-stage businesses in the pioneer gap, as Acumen does.
  • – Build blended investment funds that combine capital with philanthropic or technical support funding for mid-stage businesses. Sophisticated impact funds, such as the Grassroots Business Fund, are increasingly using models that blend philanthropic with impact capital.
  • – Look outside the social benefit sector for scalable female-led businesses that have positive impacts. Mainstream investments in areas like health, renewable energy, accessible finance,education and biomimicry are all areas where women business leaders are making a mark as well as a contribution. Open deal sites like Maximpact have a range of different kinds of deals in different sectors.

Using gender lens goes some way toward encouraging investment choices that benefit women. By looking more deeply at the nature of these businesses; and meeting their needs at each point in their growth cycle; investors can do even more for women, especially those making the difficult shift from entrepreneur to organizational leader. At the same time they can help build the impact marketplace by nurturing businesses through the pioneer gap. It’s a win-win-win situation for women, investors and the marketplace.

[Image credit: 123RF]

Impactful Empowerment: UnitedSucces

Guest contribution by Yvonne Finch, Director of UnitedSucces

When exploring the words “impact” and “empowerment” it is easy to overlook the true depth of meaning behind the potential for the words when you combine them! Exploring how women throughout the world can be positively affected so that they feel the true benefit of impactful empowerment it is important to explore why women don’t succeed or don’t proceed as fast as expected.

In business it remains a fact that there are not enough women on Boards, that access to finance for a woman to grow her business is a consistent challenge, and acceptance that a woman can juggle the roles of mother, wife, and successful career woman are still questioned.

Getting to grips with why progress seems slow is the key to unlocking the potential of “what might be”. Questions asked of women about how to survive and climb up within the world of business world evoke interesting responses and are often not related to the predicted ones. Concerns about proving competency, even though this is unnecessary, and worrying about how to move to the next level, surface from those perceived to be successful and in all cases there is no proven reality to their thoughts.

So what is wrong? What should women do to bridge gaps? What is the real challenge?

Interestingly everything is fear based. Fear from the individuals of what might happen as a result of some action. If they speak up about development needs could they be seen as incompetent or weak, or if they share their years of knowledge will their job or business be compromised?

How can fear be circumvented? Acknowledging the emotion is the first step forward and once this is accepted it is a small step to find the courage to understand the basis for the fear and to address it. This is where the open and honest support from other women can provide a platform for personal growth.

Choosing a women’s organisation whose members understand the journey being undertaken and where those members are prepared to reach out and share their expertise, life journey or skill is a proven way to overcome some of the paralysis that fear can provoke. Mentoring programmes also add an alternative dimension to understanding and individual growth.

These interventions are based on women being able to access a place of trust. A trusting environment allows individuals to grow at their own pace, safely. And it allows for feedback to be given where barriers to acceptance are negated. Seeking creative solutions to challenges through the support of another has proven to have worth.

When women make the time to engage with each other and put budget aside to join an organisation that exposes them to women in other world geographical locations, they can more easily assess the true relevance of any negative self-talk they may experience.

They can meet women who could become their informal mentors or participate in a more formalised mentoring structure and they can become mentors for others. These actions allow for bench marking of achievements and women learn that it is OK to pat themselves on the back.

Women often live exceptionally busy lives, and are known to work longer hours than their male counterparts, so they will often put themselves at the back of the queue in the opportunity of self development, as they perceive that other commitments should come first. Yet wisdom states that the journey “forward” is far longer when started from the back!

So “impactful empowerment” or “strong liberation” will result when concrete steps towards eradicating fear are achieved, and positive self belief replaces negative self perception.

About UnitedSucces

UnitedSucces is an international business organisation of carefully selected ethical women entrepreneurs. UnitedSucces believes that economically empowered women, who have a support system they can depend on, have a significantly high impact on society, through investing in improved livelihood, health and education of their families and broader communities. By supporting the needs of emerging and established female entrepreneurs, and by sharing best practices of impactful and sustainable female-owned businesses, UnitedSucces aims to empower and support future responsible female leaders assisting them to make a lasting contribution to the communities and countries they operate in. For more information visit: www.unitedsucces.com

[Image credit: United Succes]

Impact Investing 2.0 and the Rise of Multilingual Leadership Teams: An Interview with Jed Emerson

By Marta Maretich, Chief Writer, Maximpact.com

To mark the publication of Impact Investing 2.0, a watershed study of 12 successful impact investing funds, Maximpact talks to co-author Jed Emerson about “multilingual leadership” and why he thinks the very nature of leadership in impact organizations is changing.

Maximpact: At SOCAP13 you took turns with Cathy Clark, of CASE and Ben Thornley, of Pacific Community Ventures, to introduce different findings of your joint Impact Investing 2.0 report. You presented the part about “multilingual teams”. Why are multilingual teams so important to impact investing funds and why are they so interesting to you?

Jed Emerson: This is a really critical issue, first because all organizations need leaders and I think that there have been profound changes to the concept of leadership in the last ten to 15 years. In someways the Impact Investing 2.0 research is one more step forward in that progression and in other ways it’s a new way to think about leading impact organizations.

Maximpact: In Impact Investing, your seminal book with Anthony Bugg-Levine, you write about the need for a move from charismatic to collaborative leadership. Do you see evidence in this report that an evolution is taking place in fund leadership?

Jed Emerson: I think it’s clearly taking place! It’s interesting, because in 2000, when I published my first working paper on blended value during a faculty appointment at Harvard Business School, I talked about “mutant managers”. At the time I said we need these oddly genetically modified people that could play both/and rather than either/or in social investing.

The term “multilingual leaders” is probably a more accurate way to describe what these new kinds of leaders do; cutting across silos to draw connections between business and the social/development finance sectors.

For me this term holds special meaning because in some ways that’s the background I come out of. I started my career in social work and youth work and morphed from that into venture philanthropy, community development, sustainable private equity and then on into the areas I’m active in now, in impact investing. In an important sense, this is a very personal kind of observation for me.

Part of this insight was formed simply from watching the sector develop over time. I’ve spent the last 20 years observing both the field and its practitioners emerge into this “new” space. It’s been striking to see the finance-first people, who’ve come into the conversation with traditional banking and investment skills, needing to get up to speed with the social element of impact investing. Meanwhile, you see people coming out of the more traditional development backgrounds who are really sucking up the skill sets around investing and finance while recognizing that if your ventures are not sustainable on financial terms they won’t be sustainable in impact terms.

Whether you’re giving your profit to shareholders and investors or using it to build community equity, if you don’t know how to play this type of dual game you won’t be effective.

As we were going through the two-year process of first identifying the 12 funds we wanted to profile and then beginning the deep dive analysis and case study work, we did multiple interviews with investors and managers making use of the various products and strategies these funds were bringing to market. It was really interesting to see our research team as a whole realizing this issue of leadership was central to the success of the funds we looked at.

I was surprised myself because I think the focus of a lot of the discussions around impact investing in the last five to ten years has been “we need to improve our skill set around financial structuring”, or “we need people who have done deals who know how to invest”. We’ve heard a lot of this kind of rhetoric.

However, what we found during the course of the research was, no, in fact what funds need are more people who can play in the muddy middle, first, without losing track of the financial discipline that one needs and, second, without losing the focus on impact, which is the reason we’re applying those financial skills to begin with.

The research process reminded us what a lot of us already knew: that funds need both financial and impact discipline to be successful. On the other hand our research has shed new light on the idea of multilingual leadership. For us, at the level of fund investment teams, this means a kind of leadership that includes various individuals that speak the language of various parts of the practice.

The funds that have performed most effectively are those that have teams and individuals who can really play across perspectives and silos rather than coming in as representatives of a particular, individual perspective or silo.

Maximpact: Can you say more about how it works? Who is on the multilingual management dream team?

Jed Emerson: We speak of it as themes rather than directives in the report because in each case the constellation and makeup of the teams is different. Yet, at the end of the day, all of them reflect this multilingual orientation.

For example, you may have a fund with a leader who has more expertise on one side or the other but who has the ability to understand all the perspectives and the language of all the different silos he or she is drawing upon. The leadership team might be made up of individuals who are each fully multilingual, or be comprised of folks who come into the conversation with a deeper expertise in one or the other silos.

The important thing is that all team members have an understanding of the humility with which multilingual leadership comes forward. By that I mean an awareness of the fact that, though you may be really great in your area, you won’t be successful unless you’re able to take your expertise and marry it with that of the other experts in your team in an effective way. As individuals, it means seeing your own “blind spots” and working to establish a wider vision of where you yourself need to develop new skills and leadership language.

In the context of the funds we’re seeing, yes, there are individuals who are outstanding in terms of their work and expertise and skill set. But the success of the fund is a function of teamwork and integrated perspective and practice. It’s not the success of an individual, not the triumph of the charismatic leader. The charismatic leader may be able to hold the torch, but the light is shed by the team as a whole.

Maximpact: What are the core skills needed on a fund management team?

Jed Emerson: On the one hand, there are skills around being able to maintain financial discipline: analyzing deals, understanding the marketplace in which the deal will function, looking at various investors; perspectives on value creation in a possible deal. It’s having the skills needed in order to be a successful financial investor.

At the same time the management team needs to understand the impact context in which the investment will play out. For example, if your impact goal is job creation but you’re creating lousy jobs, then that’s not a successful strategy.

That financial discipline has to be complemented fully by an understanding of context and social opportunity. If you have both those things, you can then translate that social opportunity into financial metrics. In this way the impact investment process looks more like a DNA strand than a double bottom line. From this we derived the schematic for the Mission First and Last section of the report.

Maximpact: Does multilingual leadership reflect the multi-stakeholder nature of impact investing?

Jed Emerson: Definitely! It speaks to the idea that when you’re investing for impact there are multiple beneficiaries; as well as multiple actors contributing to value creation. You have various levels of financial return that come to shareholders and stakeholders alike. Those financial returns are in fact part and parcel of the generation of social and environmental impacts that grow out of being able to work on a sustainable financial basis. The multilingual team reflects that range of interests and outcomes.

Maximpact: Can graduate schools create the kind of multilingual leaders you’re talking about?

Jed Emerson: Not only can graduate schools create multilingual leaders, but they have to! I read a comment in a McKenzie report the other day that said business schools can no longer be teaching business as usual and the incoming classes are increasingly demanding schools give them the skills and tools needed to execute within this new context of impact generation.

20 years ago none of the graduate schools were doing anything like this. Then slowly things began to change. Harvard Business School started the ball rolling with its social enterprise initiative in the 90s. This was complemented by the work at Stanford Center for Social Innovation and Kellogg School of Management; I taught social entrepreneurship at Kellogg in 1999-2000.

We’ve seen this movement come forward over two decades; and now it’s been fully unleashed. I see the evidence everywhere. For example, I wasn’t able to attend the NetImpact conference this week but I was tracking the twitter feeds. Boy, could you feel the passion and enthusiasm coming through those posts and tweets! More than that, you could feel the sense of urgency and focused direction from the participants. To me, this is the driving force behind the need to train our future leaders in this multilingual way.

Maximpact: Are any grad schools doing it now?

Jed Emerson: A good example of a school taking up the challenge is the James Lee Sorenson Center for Impact Investing in Utah. Lewis Hower is their fund director. The interesting thing for me is that they’re using students to engage in the due diligence around impact investing opportunities.

When I first heard about this, honestly my reaction was, “Man, that’s got to be a recipe for disaster!” Because you’ve got these folks who are learning skills while they’re doing the analysis, so you might think maybe that analysis is going to have to be improved over time. Yet the work these students are doing with Center staff is evidently really strong. It’s very good analysis.

My other observation is that the students who are coming to learn at the Sorenson Center are not just business or economics students. They’re coming out of the humanities and much more traditional liberal arts backgrounds as well. Now, that is the future of impact leadership!

In my view, the Sorenson Center and others are creating an environment with the potential to produce the multilingual leaders of the future. No CEO can aspire to lead a global organization these days and not be aware of all the things beyond the balance sheet that will determine whether that organization is successful. As a matter of course, the leadership of these organizations will be looking to hire managers and team members who can come to the table ready to play on that basis. Business schools and graduate programs will have to provide their students with the education and the tools and the learning they need to be successful in this new market.

Maximpact: How can impact funds go about building these multilingual teams?

Jed Emerson: I work with a small set of family offices, one of which is currently recruiting folks to run a new impact fund. I wasn’t sure when we started recruiting what kind of candidates we would see. Truthfully, I expected a lot of candidates with very traditional private equity and venture capital backgrounds who had decided they were done making money and wanted to go “do good.” And I’m not such a big fan of the “do gooder” approach, so was kind of bracing myself;

But I was pleasantly surprised to see the number of folks that clearly fit our research team’s description of multilingual leaders. Yet the thing that really surprised and pleased me was the high caliber and solid quality of these individuals. The experience has validated my feeling we’re on the right track and the change is happening.

I’d like to point out that the Impact Investing 2.0 report doesn’t say, “This is what needs to happen”. It’s not prescriptive in that sense. What the report says is, “This is what is already happening in the most successful funds”. It describes what is currently the practice of the better organizations. As new fund mangers and new investors come up through these processes, I think we will begin to see the practices we identify in this report as the default operating process of the field. This will simply be the way we do business.

Maximpact: What happens to those poor charismatic leaders once the multilingual team takes over?

Jed Emerson: (Laughs) I think that the role of the charismatic leader will always be with us yet we’ll move beyond them being the focus. We need those individuals for movement building and for creating so many aspects of organizations. That said, you can’t build a successful organization on the back of an individual!

The most successful charismatic leaders will recognize this multilingual future. As opposed to the classic “founder-syndrome” individual who clutches on to power until the organization withers and dies, successful charismatic leaders will take on a new role helping position their teams for success.

The rise of multilingual leadership provides charismatic leaders with the option of an out, an opportunity to go back to developing new ideas, to be innovative, to be visionary; yet they will have to step aside. They’ll be able to pursue new avenues because they can be confident the teams they nurtured are shepherding their original vision; but taking it to new places and new levels of success.

I see “Leadership of the Whole” rather than leadership of individuals as the future of this sector. It’s a movement in many ways, but it’s also simply how you build effective sustainable organizations that are creating value over the long term; over multiple lifetimes and not individual careers. For me, this topic of leadership is really the crux of how we will all and each be successful over the long haul!

About Jed Emerson

Jed is widely recognized as an international thought leader on impact investing, performance metrics and sustainable finance. Originator of the term blended value, he has spent over two decades exploring how capital investment strategies may be executed to create multiple returns.

Jed has held appointments at Harvard, Stanford and Oxford business schools and has written extensively on impact investing, social return on investment, and related areas. He is co-author with Anthony Bugg-Levine of Impact Investing: Transforming How We Make Money While Making A Difference.

Jed is Chief Impact Strategist for ImpactAssets and chair of the ImpactAssets 50, a field-building strategy that promotes leading impact investing firms. He is a founding director of both Larkin Street Services and the Roberts Enterprise Development Fund (REDF), a founding board member of Pacific Community Ventures, and the first senior fellow at Generation Investment Management, among numerous other appointments.

Jed is currently a senior fellow with the Center for Social Investment (Heidelberg University) and senior advisor to The Sterling Group (Hong Kong).

You can follow Jed Emerson on Twitter via: @blendedvalue

Read the full Impact Investing 2.0 report.

Watch the video of Jed Emerson, Cathy Clark and Ben Thornley introducing Impact Investing 2.0 at SOCAP13:

[Image credit: Courtesy of Jed Emerson]

Fresh and Live: The Women in Green Forum

Women in Green By Sarah-Jane George

Sustainability isn’t marginal anymore. Today, sustainability is moving to center stage and professional women are leading what amounts to a global green shift. Maximpact was on hand for the 4th Annual Women In Green Forum in Los Angeles to chart the change.

Founded in 2009 by Three Squares Inc., an environmental consulting firm from Santa Monica, Women in Green Forum (WIGF) is designed to attract professionals from all aspects of the environmental industry to share the latest innovations, develop powerful professional networks, and build upon each other’s successes. Attendees included business owners, entrepreneurs, investors, governmental department heads and a large number of women within sustainability departments of various companies. There was a broad spectrum of companies varying from the dental industry to aerospace, each with well-established sustainability departments.

The caliber of attendees proved that sustainability has come a long way. Gone are the days when the company receptionist was given responsibility to set up a few recycling bins in the office. Today, jobs in sustainability are the fastest growing type of role within many organizations. WIGF guest speaker Kim Matsoukas, sustainability manager at Vans, described how organizations in all industries are focusing on sustainability as good business practice. Industries such as apparel and fashion are trying to set their own industry standards, she said, with programs like the self-reporting Higg Index, part of the Sustainable Apparel Coalition.

A lineup of inspiring speakers shows the range of WIGF:

Kabira Stokes, Founder; CEO of Isidore Electronics Recycling who has combined lessening the impact of electronic waste on the environment by recycling locally and offering jobs to people who suffer from severe barriers to work, specifically those previously incarcerated.

Monica Dodi, Co-Founder and Managing Director of Women’s Venture Capital Fund spoke about Funding Innovation in Sustainability. Ms. Dodi gave key points on what investors are looking for, and gave advice from an investor’s perspective to fund managers looking for potential investment. She highlighted that recent research has shown that 85%of women interviewed are highly dissatisfied with current sustainable products in the market and discussed how locking into what women are really want is a key to standing out.

Jaime Nack, President of Three Squares Inc. spoke about the importance of employee engagement, awarding employees for innovative sustainability ideas, encouraging actionable environment stewardship and measuring both the organization’s and its employee’s carbon footprints.

Michellene DeBonis, Co-founder of The Brand Studio closed the event with an entertaining talk on utilizing the power of story to enhance an organization’s brand.

A lineup of inspiring speakers at the Los Angeles WIGF.

Multimedia was at the forefront with moving short films from GE Focus Forward Films: New Gift tells the story of Dr. Vandana Shiva who believes seed is a gift of life and the Invisible Bicycle Helmet, a documentary by Frederick Gertton about the two women who developed a revolutionary new product. The short feature Black Girls Code focused on an organization created to teach coding to girls and so increase the number of women of color in the digital industry.

WIGF and Care2 presented trailblazer awards to inspiring women like Dr. Sylvia Earle Founder of Mission Blue. Dr. Earle explained her work and the importance of endangered areas of the ocean she calls “hope spots”, which if protected there is hope that they will be restored.

With so much to offer, The Women in Green Forum is going from strength to strength. This year will see the bicoastal expansion of the WIGF series with their upcoming East Coast Forum, which will be in Washington, DC on September 25th 2013. To register for this upcoming event, click here.

New Biomimicry Deals Seeking Investment

Biomimicry, a design discipline that seeks sustainable solutions by emulating nature’s time-tested patterns and strategies, is an emerging field that is increasingly catching interest from impact investors and social businesses.

According to The Global Biomimicry Efforts: An Economic Game Changer report, biomimicry-based goods and services could account for approximately $300 billion of U.S. GDP by 2025. The sector could also provide another $50 billion in terms of mitigating the depletion of various natural resources and reducing CO2 pollution.

Many established and emerging biomimicry companies are now looking for organizations that could fund, invest in, and support their operations. At Maximpact, we are excited about this trend because we believe biomimicry is here to stay and will represent an important part of future social business innovation.

Below we list three new biomimicry impact deals currently seeking investment on Maximpact platform. A complete list and contact details can be viewed when you register:

Water treatment technology inspired by aquatic plant systems

This company is a leader in natural, cost-effective, and sustainable water treatment technologies. It designs, builds and operates an all-natural, sustainable technology by harnessing nature’s power to restore polluted lakes, streams, and estuaries.

Its products have already been demonstrated on pilot and commercial scales. Clients in the pipeline include a well-known mining company and an environmentally responsible mixed-use real estate development company.

Wastewater and water pollution treatment inspired by biological processes that operate in nature

The company has over 30 years experience with natural wastewater treatment design, general aquatic management, and project supervision. Its design harnesses the biological processes that operate in nature taking the form of an engineered treatment system to successfully meet discharge standards and permitting requirements.

The company is a pioneer in the use of natural systems for the removal of chemicals, petroleum hydrocarbons, endocrine disruptors, and other detrimental water pollutants. They envision the remediation of impaired natural water bodies and soils as a major part of their future work.

Fans inspired by the whale’s fins

This company produces fans and turbines and makes extensive use of digital technology which extends from design specification, through CNC machining and fabrication. Their one of a kind fans use a new kind of airfoil which is more energy efficient and much quieter.

The performance of the fan’s blades is ideal for a product that can save operational energy consumption while reducing heating and cooling costs significantly by de-stratifying and mixing the different layers of air in rooms. The company is now ready to take the product to the next level, instead of just designing fans and turbine elements they also want to move into manufacturing and sales.

For further resources on Biomimicry we highly recommend reading the book Biomimicry: Innovation Inspired by Nature by Jamine M.Benyus, seeing her TED talk or visiting Maximpact’s newsstand which holds additional industry resources.

[Image credit:123RF Stock Photo]

19 Ways to Find Funding for Impact!

By Ana LaRue

Across the globe, the spectrum of innovative financing solutions for social impact is broadening. It is becoming clear that the sector is no longer just for funders and companies as new investing possibilities have evolved rapidly over the last five years.

A central feature of Maximpact’s platform is the ability to list impact deals and seek collaborative opportunities with others. What a first time visitor, who is still considering registration, does not see is the complexity of Maximpact’s deal search and its deal listing opportunities.

At Maximpact we are very proud of being the first platform to offer a very broad spectrum of funding options. Our registered members can choose among 19 different funding possibilities that include:

funding optionsSo whether you are interested in debt, equity or anything in between, listing your deal with Maximpact allows you to examine the potential of either opportunity.

Future of innovative social impact financing

In the future, we believe the different types of stakeholders participating in impact investing will broaden even further. New intermediaries and traditionally secular players will bridge the gap between financing need and investment reality.

And as more actors join the impact investment discussion, newer and even more innovative financing options will inevitably be created and implemented.

At Maximpact we are firm believers that open collaboration, co-investment and more funding options are needed to increase deal flow and foster sector growth. We promise to follow these trends with the mission to increase the flow of capital so that our members can continue to focus on solving the world’s most pressing problems.

The New Role of Impact Intermediaries

By Marta Maretich

The impact landscape is changing fast and progressive impact intermediaries are changing with it, as shown in a recent article by Willy Foote for Forbes.

Foote spoke to Antony Bugg-Levine, head of the Nonprofit Finance Fund (NFF) about some of the current challenges facing impact investing intermediaries. This pair know what they’re talking about: Foote is the founder of Root Capital, one of the leading proponents of impact investing in farming and agriculture in the developing world; Bugg-Levine is a former Rockefellar Foundation director and co-author of Impact Investing: Transforming How We Make Money While Making a Difference, with Jed Emerson. He now leads the NFF, which provides investments and advice to mission-driven organizations.

It emerged that both of these pioneering intermediaries are facing different versions of the same problems at this point in their development:

  • – a shortage of best-quality impact investment opportunities;
  • – more competition from mainstream lenders and foundations;
  • – a rise in risk as their clients face adverse market forces and decreased government support.

As practitioners with long track records, Root Capital and the NFF can be seen as bellwethers for the emerging sector. That they are both seeing the same problems is significant—as is the fact that some of these problems (specifically increased competition) are the result of the growing popularity of impact investing, a movement they helped create. Significant, too is how both intermediaries are changing the way they do business in response to these challenges.


Applying more, better expertise

Both leaders stressed the importance of doing more to help clients to become investment-worthy:

Willy Foote: “At Root Capital, we invest heavily in financial management training and, where necessary, supply chain integration (e.g., between natural product buyers, third-party certifiers, local technical assistance providers, and other social lenders) for both pipeline development and to prepare our clients for long-term, sustainable growth in volatile agricultural commodity markets. While time intensive, our approach bears fruit as these earlier-stage businesses tend to grow, expand their impact, and take on successively larger loans.”

Anthony Bugg-Levine: “We are also increasingly finding in our work that impact investing needs to be understood as one part of a broader “complete capital” solution. The complete capital approach recognizes that enabling organizations to navigate this challenging environment often requires them to fundamentally adapt how they run their operation. This requires not only financial capital (impact investments and grants), but also intellectual capital (the right ideas about what needs to get done), human capital (the management skills and tools to do it) and social capital (the ability to bring different partners to the table). We have built a national consulting practice that provides some of this to our clients alongside our lending capabilities and partner widely to bring the skills we do not have in-house.”


A deeper, broader skill pool

The idea of intensive investor engagement is not new. Venture philanthropists, like members of EVPA and the AVPN have been doing it for years, as have traditional venture capitalists.

What is new is the depth and extent of the expertise now held by some impact intermediaries, the fruit of years of doing deals in the real world and building their pool of skills to meet the needs of their clients. Judging by what Bugg-Levine and Foote are saying, these skills have now reached a high level. They are being strategically cultivated by intermediaries and by educational institutions now establishing courses to train the impact professionals of the future. What’s more, this highly specialist expertise forms an increasingly important part of what intermediaries see themselves bringing to the impact equation.

New role for intermediaries: helping other impact investors
And that’s not all: In another part of the interview Bugg Levine describes a brand new role for intermediaries: deploying their expertise to support other impact investors.

“We also see great opportunity in helping the new group of impact investors do deals themselves,” he says. “Instead of worrying about competing for deals with these foundations, private bank clients and family offices, we are partnering and advising; we are drawing on our experience and track record of making investments to help them be smarter and more efficient in their investing.”

His comments struck a chord with us at Maximpact. Part of our mission is to bring new investors into the impact arena; another part is to strengthen impact investing practice. So we think this evolution in impact intermediaries is a positive step with the potential to broaden the uptake of impact investing among new investors; and make impact outcomes more effective. By honing their expertise and, crucially, making it available to other impact investors, highly-skilled intermediaries can do even more accelerate the pace of impact investing. And that, in our eyes, can only be a good thing.

New Educational Opportunities for Impact Investing Professionals

by Ana LaRue
Increasing numbers of emerging business professionals are seeking careers in impact investing, trying to merge the gap between finance and sustainability, a trend that anyone working in the field should be proud of. Young professionals are increasingly concerned about doing something meaningful with their careers, including students in the financial and business fields.
The topic of educating emerging impact professionals is lively among popular forums and social media networks such as LinkedIn. This reflects the growing popularity of the sector and shows how eager young professionals are to prepare themselves for careers in impact investing.
BAs, MBAs and Masters programs have generally had a history of sending graduates into more traditional corporate careers; something a growing number of these graduates are becoming skeptical of. How can they be sure that their education will allow them to learn about investing for profit and social or environmental impact?

At Maximpact we examined the opportunities available to aspiring professionals looking for a career at the intersection of sustainability and finance. Our list includes top business schools whose programs cater to the field of sustainability and impact investing:

Below are additional resources we found useful listing MBA programs in terms of their sustainability focus:

  • Beyond grey pinstripes: A database informing prospective students about social, ethical and environmental impact management curricular programs. The database ranks schools that are providing training in social and environmental skills as part of business decision making.
  • Bloomberg Business week MBA Rankings: An article listing top Business Schools according to their Sustainability focus.

Finally, we believe it is important that future graduates examine whether their chosen programs treat sustainability and social entrepreneurship as an integrated part of their business curriculum or as a complement to the traditional business tracts. These are important factors influencing one’s ability to receive deep and specific knowledge, merging investing for profit and social or environmental impact.

Feel free to share other educational opportunities in the comments.

GREENPOP: FIGHTING DEFORESTATION WITH FUN

Greenpop is a social enterprise that combats deforestation by organizing community-based tree planting projects, green action events, educational workshops, social media campaigns and green voluntourism. Based on the idea that sustainability can be fun and empowering for communities, Greenpop started in September 2010 and has since planted over 17,000 trees in over 200 beneficiary schools, crèches, old-age homes and community centers as well as deforested areas in Southern Africa. This map shows the extent of their work.

In July 2012, Greenpop rolled out its creative approach to tackling deforestation to other parts of Africa by launching a new initiative, Trees for Zambia. Zambia has seen rampant deforestation in recent decades, mainly as a result of bad land management, slash and burn farming methods, unsustainable logging and tree cutting for charcoal. According to the UN-REDD programme, the country now has approximately 50 million hectares of forest, but suffers an estimated deforestation rate of 250,000 to 300,000 hectares per year.

Part of the challenge is raising awareness of this problem inside the country. According to Anne Masinja, Director of the Zambian Forestry Department: “It is a pity that most of the people do not realise the harm they are causing to the environment due to careless cutting of trees “we need to do something to stop this.”

To help raise awareness and kick-start community action, Greepop worked in partnership with local authorities and a range of NGOs, organizing 200 volunteers from both Zambia and around the world in a mass reforestation event in Livingstone. Over three weeks, the group planted 4135 trees and established monitoring systems to assure their survival. In addition, they made solar stoves for residents and set up workshops at schools and with local farmers on sustainable living and conservation issues. In July of this year, Greenpop returns to Zambia to host a second reforestation event with the aim to plant 5000 trees and run conservation workshops and sustainability education for the surrounding communities and volunteers.

Greenpop uses a range of attractive programs to support this good work. Individuals and groups can donate trees or give their time by taking part in planting days. Companies can gift trees to support sustainability or become partners or sponsors of Greenpop. Company employees can get involved directly by volunteering on planting days and tour operators and companies with high travel miles can offset carbon emissions by signing up to Greenpop’s convenient Trees for Travel scheme. Greenpop also hosts a range of outreach events including yoga in the park, musical performances and green bicycle rides to raise funds, boost environmental awareness and draw people into activism.

For more on this year’s Trees for Zambia event, including how to take part, go to the Greenpops website.

Impact Investing and CSR

7978415_sImpact investing and Corporate Social Responsibility (CSR) have much in common. Both are founded on a belief that business can be used to affect positive social and environmental change. Both use market mechanisms and harness business expertise, though in different ways. And both are reflections of a global trend for aligning the goals of enterprise and with the needs of society.

These similarities are bound to make impact and CSR natural allies in the years ahead. Yet the two sectors have important differences, too. And in these differences lie opportunities as well as challenges for both sectors.

THE BENEFITS OF MATURITY

Impact investing is still the new kid on the block while CSR, with its origins in the corporate culture of 1950’s America, has been around for some time. With decades to mature, CSR has had time to grow its infrastructure and consolidate its working models to a degree impact can only dream about. Its workforce of CSR managers and consultants has professionalized. This body of professionals has honed the practice of CSR, helping to integrate it into day-to-day business processes worldwide.

Crucially, these professionals have also developed the art of communicating about CSR to a range of stakeholders including the public. Corporations, especially large ones, have become adept at using CSR to manage reputation. At the same time the public and government have come to expect them to have comprehensive CSR programs. In a paradigm shift that has seen the practice of CSR move from fringe to mainstream, CSR today forms an integral part of corporate culture.

THE CORE DIFFERENCE

This widespread acceptance marks a triumph for those who believe in CSR’s social aims; and it should be an inspiration to a young impact sector, which has yet to reach this level of recognition. Yet there is a fundamental difference in the way they relate financial and benefit goals.

For all its popularity, CSR remains voluntary and self-regulated. This means that businesses define “social responsibility” for themselves and practice CSR in very different ways. There is a movement toward establishing CSR standards based on sustainability, and some companies are already reporting their results using guidelines such as those provided by the Global Reporting Initiative (GRI). One Maximpact-listed company, CSRHub, has created a research tool that aggregates information about CSR ratings for some 15,000 companies. Yet most companies don’t use any such standards and most don’t report. It’s also the case that many keep their social benefit activities (like employee volunteering or philanthropic grant making) entirely separate from their profit-generating ones.

This is where CSR differs significantly from impact investing. By definition, an impact investment must demonstrate a social as well as a financial return. This means that benefit is, at least theoretically, hard-wired into every impact deal. Admittedly, metrics remain an issue for the sector and questions will persist until some measurement methods prove their reliability. Yet the principles of yoking social and financial impact, and demonstrating outcomes with metrics, have been central to impact from the start.

THE CSR/IMPACT OPPORTUNITY

For the CSR sector, this innovative way of delivering benefit using market mechanisms presents an opportunity. Many businesses have already shown an interest in early-stage social enterprises through their CSR programs, for example those who work with venture philanthropy intermediaries like Impetus. Impact investment is a logical next step for such companies, especially those who would like to support later-stage development. With a wide array of sectors, new technologies and geographical areas to invest in, impact opens up a world of possibility for CSR capital.

For businesses whose CSR work has meant hands-on mentoring and grants-based philanthropy, a blended approach to impact is also possible. As recent studies suggest, a combination of grants with mentoring plus impact capital, each applied at the right time, can be just what a young venture needs to grow beyond the startup stage and become a viable business. With deep pockets and expertise to spare, corporations have all the elements needed to bring enterprise potential to fruition. With aims aligned tightly with a defined social mission, impact provides a new way to use all CSR resources for good.

It’s clear that CSR capital could bring much to the impact sector. Impact also may have something to offer the more mature CSR sector. Its triple commitment to profit and benefit and metrics provides a template for thinking about how business might do more to bring benefit. Ultimately, the tools developed for impact measurement may prove a boon for all types of social business projects, including those pursued by CSR programs. By taking impact’s cues and integrating their business goals with their social mission, CSR programs could take a huge step forward in creating a positive impact.

DATA FOR IMPACT

data 302x302by Marta Maretich @maximpactdotcom

Data is a hot topic in the worlds of government, business and philanthropy. As information technologies mature, the increased availability of data, coupled with advances in analysis, mean that many sectors are reaping the long-promised rewards; and feeling the pressure of a new age of data immersion.

This data boom will affect the growing impact investment sector on several levels. First, it will provide new opportunities for research and development. As others follow the lead of institutions like the World Bank and the UNDP, and governments like the Netherlands and Sweden, and begin to make their data public in open data initiatives, huge amounts of information about countries, communities and projects will be available online for the first time. This information is are source for entrepreneurs and investors, who can use it to identify markets, develop deals and target capital where it will have the most impact.

Impact measurement will be another field influenced by the rise of data. As the sector develops, investors from every part of the spectrum will come under increasing pressure to collect data and use it to demonstrate impact. How to measure impact is still an issue and the race is on to find the right tools for the job: IRIS and GIIRS are already available and other systems will emerge as the sector expands. Yet measurement is here to stay. As impact investing gains popularity, the call for evidence-based accountability grows louder and serious players will need to answer.

The call for transparency is another dimension of data. Like many other sectors, the impact sector is coming under more pressure to share its data publicly. ImpactIQ,a nonprofit media platform for social finance, has challenged the sector to “put its data where its mouth is” and contribute deal information to an open database. The aim is to collect data for analysis and research to build the sector. Several Maximpact funds, including Toniic, the Unreasonable Institute and Impact Engine, are already taking part. For more, see this blogpost by ImpactIQ editor David Bank.

The overall message for the sector is to get ready for data: using it, collecting it, analyzing it, sharing it and publishing it as never before. With its philosophy of openness, Maximpact supports this move to a more transparent future for data and for the sector as a whole. By sharing more, we stand to gain a lot.

Spotlight Deal: LightUp Africa

light-up-africa 302x302Lack of electricity is a barrier to development for millions of people around the world. Without an affordable source of electric light students can’t study, craftspeople can’t produce goods and businesses are limited in when and how they can operate. The electricity shortage is particularly acute for people living in rural areas, many of whom are forced to walk hours simply to charge the mobile phones that provide vital links to networks and services.

Light Up Africa (LUA) is a for-profit company with a mission to bring reliable, affordable electricity to the developing world, starting with Kenya. The brainchild of founder Alan Hurt, an engineering student from Northern Illinois University, its first product is the Zoom Box, a portable device for harnessing the kinetic energy from everyday activities and storing it in a battery. This small and highly adaptable generator can capture and keep energy from the movement of cattle and livestock, bicycles, scooters, motorcycles and even fishing boats. It can create energy when attached to children walking to school or women fetching water; or even people dancing.

headshot of Alan Hurt

“When was the last time you had to go without electricity for a day? Now imagine going one day,one month or your entire life without access to electricity. That is how life is for 85% of Kenyans, over 500,000,000 Africans and 1.5 billion people around the world.” Light Up Africa founder Alan Hurt

Given the appeal of this simple, clever idea, Light Up Africa has a kinetic energy all its own. In little more than a year what began as a gleam in Hurt’s eye was developed by him and three fellow students into a proposal for the first-ever Social Venture Business Plan competition held by the NIU College of Business. They won, carrying away $10,000 and an introduction to experts for further advice. Further developments have lead to LUA’s selection as one of only 200 semifinalists of the Dell Social Innovation Challenge, a competition that attracted some 1700 submissions.

Maximpact.com caught up with Alan Hurt during a recent trip to Kenyan and spoke to him about Light Up Africa’s plans for the future:

“We’ve come a long way in less than a year,” said Hurt.” Within this time, we’ve made some significant changes to not only our business model, but also to the product itself. We decided that as a company investing in Africa, we had to stop talking and start listening more. We met with individuals, families, and entrepreneurs. And we learned that, while a stand alone product that brings access to electricity wouldn’t change the world, a platform would.

So we went back to the drawing board and designed not only a product, but also a platform that combines the mobile with the immobile and energizes consumers into entrepreneurs. We designed a way to capture and store energy from what Kenyans are already doing everyday: moving. In this way we effectively create an energy currency in a mobile market.

During this discovery process, we applied for highly selective fellowships and business accelerators like The Impact Engine, Starting Bloc, Global Engagement Summit, and Think Impact and got accepted. Most importantly, we’ve raised over $35,000 in less then a year while growing our relationships with those on the ground who understand the market and climate the most.

In the next six months we will finish product development, then manufacture and launch our second pilot program in western Kenya. We are really excited to share what we’ve learned with the world.”

MOBILE TECH COMMUNICATES IMPACT

Mobile phones and other forms of mobile communication technology are making their mark on the developing world. The number of mobile subscriptions has grown to 6 billion, of which 5 billion are in developing countries, according to a World Bank report. More than 30 billion apps; pieces of software that extend the capabilities of phones were downloaded in 2011. It’s likely that record will be far surpassed in 2012.

For impact investors, the rise of mobile phones provides a new platform for delivering products and services. A small sample of deals currently listed on Maximpact.com reveals how social innovators are using mobile technology to make social impact pay dividends.

VIVUS

VIVUS combines the smart use of mobile phone technology with a shared rural transportation system and an inclusive business model to create an integrated supply chain of food staples feeding growing Ghanaian cities. They’ve developed a mobile-based “crowd-purchasing” system for women vendors who receive a “Deal of the Day” SMS text message, offering staples at discounted prices.

InVenture

InVenture offers a standardized credit scoring system for unbanked individuals to qualify for financing, something more than 2.7 billion individuals lack. Using InSight, a simple accounting tool that works on most mobile phones, it promotes financial literacy and provides accounting and credit scoring through a text-messaging platform. InSight captures data which feeds understanding of how bottom-of-the-pyramid individuals, households, businesses manage money.

UNIT9 Lifesaver

The Lifesaver app from media company UNIT9 delivers interactive emergency training to people via their mobile phones or tablet devices. It educates about first aid and health and safety through video modules that use gaming technology to create an interactive learning interface. Lifesaver offers an engaging way to increase public competence in lifesaving techniques in a convenient, cost-effective manner.

Project Ray

Project Ray brings advanced mobile communications services together with the many capabilities offered by specially built tools in a single hand-held device that assists the visually impaired and their families. Based on an off-the-shelf smartphone that runs the company’s user interface, it supports a range of utilities and online services including telephony, photography, messaging, navigation, text-to-speech, object recognition, social networking, remote assistance and entertainment. The device serves as a platform for use in vertical markets and provides an open interface and API, allowing third parties to develop additional applications and services.

View other Maximpact deals.

Bright Green Island Bornholm In Action


“Some people believe that words like technology, design and creativity belong to the big cities and that big problems should be solved by big companies in big offices. We as a small island have decided to prove them wrong: Innovation, solutions and development can take place anywhere at anytime by anyone.” Bornholm

Bornholm is the first place in Denmark that sees the sunrise; this leap ahead symbolises our core idea. Bright Green Island, Bornholm wants to be 100% green in the future, a carbon-neutral community based on sustainable, renewable energy. To achieve this we will supply a number of innovative green solutions for our own benefit and for the benefit of the whole world. The island has implemented a number of green solutions to the big problems facing the world today and we are constantly working to further improve them.

Bornholm is proud to host the Ecoislands Global Summit for 2013.

 

Equitable Origin: An Eco-label for Fossil Fuels

 

post-featured-frog

Imagine a Fair Trade-style eco-label for fossil fuels. A glance at the logo tells customers buying this fuel – or products made from it – that it’s produced using the highest environmental standards and in a way that helps rather than harms local communities. This is the idea behind Equitable Origin, the first and only independent certification and certification trading system for oil and gas production. It’s now seeking impact investment on the Maximpact deal site.”

The buzz in cleantech circles may be about renewable energy, but fossil fuels are set to be the world’s main energy source for decades to come. Demand is projected to rise 7% by 2020 and 28% by 2035 due to industrialization of countries such as China and India. And not only will the environment suffer from this increased push for production, so will many indigenous communities. Some 60% of the world’s proven oil reserves are located in emerging economies; countries that lack national standards for responsible production or the incentives to enforce them­.

David Poritz, Equitable Origin founder and co-President saw the impact of these problems first-hand. He spent a decade working with indigenous peoples in Ecuador, a nation rich in fossil fuels where local communities struggle to protect themselves and their lands from the negative consequences of extraction. Through this experience, he began to see an urgent need for a market-based mechanism to incentivize oil and gas companies to operate with the highest levels of social and environmental performance.

Equitable Origin Logo

Poritz developed the Equitable Origin system through extensive consultation with the oil and gas industry, NGOs, indigenous communities and governmental agencies. The result is the EO100 Standard, a comprehensive standard for oil and gas exploration and production as well as a certificate trading system and ecolable program.

The EO100 Standard provides metrics and performance targets that address the social and environmental impacts of oil and gas production. It rates a company on six principles: corporate governance and accountability, human rights and social impact, fair labor, indigenous rights, climate change and environment, and project life-cycle management. Companies that score above a certain minimum level of performance and in these areas are granted certification.

Certification can then be converted into tradeable certificates that can be bought by consumer-facing brands wanting to green their supply chain and offer a choice to support responsible production. The Equitable Origin logo can be attached to products made from certified fuels, rewarding oil and gas industry for applying the highest standards of environmental and cultural care to their work while allowing customers to support better production practices with their choices.

Equitable Origin has built an impressive cross-sector team around this idea including experienced petroleum industry professionals and environmental, sustainability and stakeholder involvement experts. It is now seeking investment to scale its operations into more markets in oil-producing countries including Ecuador, Brazil, Peru, Bolivia, Venezuela and Mexico.

Introducing Maximpact Newsstand

To help, Maximpact introduces Newsstand, the free online resource that puts the latest news, analysis and data on impact investing at your fingertips.

With a searchable index of reports, blogs, books, magazines, articles and editorials Newsstand helps you keep your finger on the pulse. Our targeted search function makes it easy to find just the resources you need. Simply enter your criteria, search, select and click directly through to the originals. It’s easy; and free.

Have information you want to share? Newsstand is an open platform where you can make your publications available to a wider audience. Simply upload your resources to Newsstand’s virtual reading shelf. Listing is free of charge.

For more information go to Newsstand.

Pyrum Innovations: Transforming Waste into Value

Thermolysis. You may not have heard of this process yet, but if the team at Pyrum Innovations have their way, you may soon find yourself using the valuable raw materials or the oil, gas and electricity it produces. Pyrum Innovations has perfected an industrial process that uses thermolysis; the thermal dismantling of substances under oxygen shortage; to turn recycled polymer waste into a variety of commercially useful substances including oil and gas. With a prestigious green innovation award and two rounds of financing already under its belt, the German company is now moving into a third round of financing; and it’s listing its latest deal on Maximpact.com.

Pyrum Innovations started with the ambition to find breakthrough solutions to recycling polymer waste, the waste from used tires, bituminous roof insulation, weather stripping, various kinds of packaging and many other common items. Currently 50% of this waste is burned while the rest is buried in landfill. Both disposal methods carry an ecological cost; and they represent a missed opportunity to recapture the valuable polymers locked in the disused products.

Pyrum’s solution is a revolutionary recycling unit that uses pyrolysis, a type of thermolysis, to process polymer waste. These modular self-contained units are able to handle up to 5000 tons of waste per annum. With no moving parts, the units are transportable and easily installed on industrial premises. They can be scaled up, used in series, or downsized to meet a range of capacity needs. Best of all, they are energy self-sufficient, and can be engineered to generate a range of products including rubber flour, soot, coke, activated charcoal, oil, gas, electricity and heat.

Scalable:

  • – Pilot plant for tires – 300 tons/annum
  • – Industrial plant – 5000 tons/annum
  • – Partners can make 2 units of 5000 tons/annum per month
  • – Plans to extend capacity to 8-10 units per month

Pyrum’s exciting work on polymer recycling hasn’t gone unappreciated: in 2012, it won best innovation of the year in Germany and was named “green champion”. Its two early financing rounds attracted funds from angel investors and the European Union as well as garnering matching funds from industrial partners.

Along the way, Pyrum has established relationships with a range of industries, many of whom have a direct interest in the success of the technology. The young company has collaborated with variety of potential clients in the development stages, including tire manufacturers, bitumen producers, aluminum producers and EPDM (a type of synthetic rubber) producers. Pyrum has also forged supportive relationships in other sectors, for example drawing talent and expertise from universities and engineering companies. This widespread interest is one indication of the potential value of their product in a range of sectors and applications.

There’s a buzz around Pyrum. Yet the question remains: Is there market potential in its innovative approach to polymer recycling? With demand for sustainable and green manufacturing processes continuing to grow globally, the answer is yes.

Take used tires as just one example: currently Europe alone generates 3 million tons of used tires; worldwide that figure increases to 13.5 million tons per annum. Pyrum’s pyrolytic recycling units offer a practical alterative to burning or burying this mountain of waste; a proposition that will be attractive to both industry and government. By capturing just 10% of this market, the company could achieve a cumulated turnover of around 4 billion euros. At the same time it could reduce pollution and CO2 emissions, generate useful raw materials and create a beneficial impact for the planet and its inhabitants.

In the fairy tale, Rumpelstiltskin turned straw into gold. Now Pyrum Innovations possesses the technology that turns polymer waste into gold of a different sort. For more information, see their deal on Maximpact.com.

View other Maximpact spotlight deals.

Slow Money’s 4th National Gathering

Boulder Theater, Boulder, CO

April 29-30, 2013

“The gathering was life changing. Welcome to a revolution!”

 

– Paul Tryba, THE FARM, Long Beach, CA

Looking for a new kind of social investing for the 21st century? If so, plan to join Slow Money’s emerging network of thought leaders, investors, donors, farmers, social entrepreneurs and everyday folks for their 4th National Gathering this April in Boulder, CO. Two days of conversations, network building and action planning in a food-loving town. What could be better?

The list of speakers is phenomenal: the international founder of Slow Food, Carlo Petrini; Wes Jackson, founder of The Land Institute, which for 30 years has conducted cutting-edge research on sustainable agriculture; Author Joan Gussow, who Michael Pollan has referred to as “my guru”; and many more.
There will also be investment presentations from two dozen small food enterprises and break out sessions on topics ranging from New Visions of Corporate Philanthropy to Exploring Seeds and Biodiversity to Impact Investing, plus the opportunity to collaborate with folks from around the country who are finding new ways to connect money, culture and the soil; including members of the 16 chapters channeling millions of dollars into local small food enterprises.
The Slow Money National Gathering brings together people who are rebuilding local food systems across the U.S. and around the world. More than 2,000 people attended the first three national gatherings; with over $22 million now invested in more than 185 small food enteprises!
Join this forward thinking group now. For details and to register, click here

Maximpact: Broadening the Definition of Impact Investing

 

Outdoor photograph of Tom Holland

Maximpact Founder Tom Holland

 

Interview with Tom Holland by Marta Maretich

Maximpact.com is characterized by its “big tent” approach to impact investing. What made you set it up this way?

When I came in as an impact investor and started looking for deals I began to realize that the sector had structural inefficiencies. The deals above $100,000,000 are taken care of by private banking, the deals below $25,000 are handled by micro-finance and other intermediaries. Everything in between is a sort of no-man’s land where people are working in silos of activity, there’s insufficient deal-flow and insufficient liquidity. The good news is that the sector is really beginning to wake up to the problems created by this gap; a recent article in the SSRI, Closing the Pioneer Gap, described the problem very well, I thought. From our point of view, one of the things that makes the gap wider and dilutes the market is the very narrow definition of what counts as impact investment. I thought this was something we could work on by building our deal portal around a broader definition of what an impact investment could be, and so drawing in widest possible field of players from philanthropy, CSR, the eco; green technological sectors, entrepreneurs, intermediaries and funds.

What is that definition?

At Maximpact we say that as long as the investment is good for the planet and good for its inhabitants; and that includes animals, not just people; we consider it to bean impact investment and subject to quality checks we will allow it to be listed on the site. This approach allows us to be far more inclusive in terms of the kinds of deals we list and it lets us reach out to a broader range of investors, some of whom are new to impact investing. Our aim is to draw more players into the arena, get them working together to increase deal-flow and encourage innovation.

Is this approach controversial?

Less and less so. The idea of using financial models to bring social and environmental benefit has really gained ground across the whole sector and with the public in recent years. Some of the prejudices about how that should be done have gone away, and that’s a good thing. Everyone is beginning to see that it’s possible to use a whole range of financial approaches, involving a broad spectrum of different kinds of players, to do good. The important thing is not the means but the ends, the outcome, defining and accounting for the benefit. The sector still has some way to go before we have a sure-fire way of doing this, but we’re all working on it. In the meantime, we think experimentation and innovation are the best ways to learn what works, and we are doing our part to encourage them by being as inclusive as we can be and facilitating collaboration wherever it happens.

So who should be using the Maximpact platform?

I want to see everybody using it to list and source deals: financial intermediaries, funds,asset managers, foundations, philanthropists, venture philanthropists,technology start-ups, qualified family officers, governments, high net worth individuals, banks and other major financial institutions. I’d like to see more CSR investors active on the site; this is a new way to give something back to society. I’d like to see more foundations using the site to source PRIs and MRIs through the platform. Foundations represent a huge pool of capital that’s still not committed to social benefit and Maximpact can help them achieve more in this area.

What can these different players do on Maximpact?

Maximpact brings together all the players; philanthropy, impact, funds, CSR and eco; green technology. In a simple way it enables people to find each other and to find the types of investments they want. They can all come onto the platform, contribute deal flow and get into a collaborative environment where they can cross-invest with one another. There’s no reason why philanthropy can’t take part in an eco or green tech investment, and the same goes for CSR.There can be two or three different kinds of investor taking a combined investment position. At the same time, the platform allows users to reach out to specific funding groups and find like-minded entrepreneurs and investors, if that’s what they prefer. It’s all about being inclusive and collaborative and trying to resolve the bigger issues that we’re all facing.

 

Supporting the sector-based shift in impact investing

Sector-based investing, rather than investment in entrepreneurs or businesses, is the way forward for impact investing, according to a recent series of online articles published in the Stanford Social Innovation Review. The series of posts, written by Matt Bannick, a managing partner of the Omidyar Network, and Paula Goodman, its director, draw on the organisation’s broad experience in the field to conclude that investors can achieve more impact by applying capital to sectors, not just firms.

“In the past five years we’ve seen an exponential growth of interest in our industry, much of it focused on individual firms,” write the authors. “Most impact investors see their primary goal as finding and investing in enterprises that yield strong financial and social returns.”

Although the Omidyar Network shares and supports this approach, the authors say, they’ve come to see it as limited.”Our experience from the past eight years is that impact investors can massively increase the number of lives they touch by concentrating investments in specific industry sectors in specific geographies, and by investing in a range of organizations to accelerate the development of these industry segments. The need for investment is particularly acute at the earliest stages of innovation, which provide the foundation in which entire new sectors can emerge and scale rapidly by tapping commercial capital markets.”

Bannick and Goodman go on to argue for a shift in focus toward the goal of scaling entire industry sectors in addition to individual firms. The point is market acceleration: By supporting an entire sector, they maintain, investors can multiply the rate of change and bring much greater impact, faster.

What does this mean for Maximpact users? Not all investors will want to adopt the Omidyar Network’s sector-based approach, but for those who do, the shift is already supported by Maximpact’s architecture.

Maximpact’s platform allows users to define search parameters by sector, geographical region, and country, helping them to hone in on developments in a particular impact sector and part of the world. Maximpact’s open access policy ensures a wide variety of listings covering a range of developments at every level, from crucial early-stage innovations to complex international scaling projects. Its saved search function lets users group deals and review them comparatively, getting a more integrated picture of how investing might actually catalyze sector development. And, because listings are transparent, users can see who else is engaged in supporting a specific sector,giving them the opportunity to find synergies and engage in collaboration.

On another level, Maximpact is itself apiece of key infrastructure for the growing impact investment sector. Providing a functional, accessible marketplace for all players, Maximpact’s goal is to accelerate development across the entire sector, and, in the words of Bannick and Goodman,doing its part to “spark, nurture and scale” this new sector to bring about social change.

LGT Venture Philanthropy Launches New Impact Fund

lgt_group302x302LGT Venture Philanthropy (LGTVP) has launched a new impact investment fund with a global reach, Impact Ventures Global (IVG). Building on their success in supporting social ventures on behalf of the Princely Family of Liechtenstein, LGTVP’s fledgling fund invests in young organizations that offer sustainable, market-based solutions for improving the quality of life for less advantaged people.

Managing Partner Wolfgang Hafenmayer, explains: “LGT Venture Philanthropy now has a strong track record of 5 years of impact investing with a global team of 25 members on 5 continents. We’ve established the Impact Ventures Global fund as a way to increase the number of 8 million less advantaged people that our 27 portfolio organizations already benefit.” The fund’s main objective is to maximize social impact while achieving an attractive financial return.

IVG’s diverse portfolio includes both new and follow-on entities from Latin America, Europe, Africa, India, Southeast Asia and China. Each portfolio organization is handpicked to reflect the integrated interests of the fund, which include renewable energy, water, education, resource management, social market infrastructure, nutrition, agriculture and health. IVG’s commitment to its portfolio organizations goes beyond finance: As with organizations supported by LGTVP, its portfolio organizations are mentored by LGTVP teams based in their countries and have access to its global network.

IVG has listed five different deals on the Maximpact portal to date: Glovax, providing access to vaccines in the Philippines; Mukatri, combating deforestation in Colombia; Salud Digna, bringing affordable medical care to Mexico; Ecolink, providing training for farmers in Vietnam; Bali Recycling, improving waste management in Indonesia; and ToHe, developing children through art teaching in Vietnam. Each deal offers an insight into the social commitments that stand behind every investment decision IVG makes.

“We’re looking to extend our networks and find new partners and new synergies,” says Hafenmayer of his decision to list with Maximpact. “Listing with Maximpact seems to offer a good way to do this and we welcome its innovative approach to supporting the sector. It will be interesting to see how the platform develops and what benefit it brings to us and to the sector as a whole.”