15 januari 2015

Past, Present and Future of II

The past, the present and the future of impact investing,
A contemporary history surfing the world wide web in Dutch perspective

A long term trends vision can be found here  
The-evolution-of-impact-investing-1.0, 2.0, 3.0 & 4.0

De Nederlandse versie van dit artikel staat hier:IINieuws Pagina 
De-evolutie-van-impact-investing-1.0, 2.0, 3.0 & 4.0 ned

My Past, Present and Future, Impact indicator, A Dutch perspective.

The recent Past
Impact Investing is named, United Kingdom, Social Investment, the European Union, Academia, The impact investing industry, Public Equity Impact Investing, EVPA European Venture Philanthropy Association.

Meanwhile in The Netherlands
The Acces2Medicine index, Mission Related Investing for charities, SNS Bank's Impact Investment Asset Management, SOCAP Europe, Care Credit Fund, Handbook impact measurement for charities, Global Real Estate Sustainability Benchmark (GRESB), ABNAMRO Social Impact Fund, 1st Social Impact Bond, 'A Billion to Gain: The Dutch contributions to the micro finance sector’, the Bankers oath.

Proof of concept
Development bank bonds, Community Development Bonds, Vaccine bonds, Uridashi in Japan.

The present: 2014-2015
Academia, World class thinking, the Practitioners, ESG integration, Impact indices and metrics, Green, sustainable or Climate bonds, Corporate venturing and CSR 2.0, From impact first to sustainable impact investing, Introducing Inclusive Impact Investing, 2015: a wish for Mercer research in Impact Investing.

The Future
Impact investing arguments: Market failures, Philanthropy and public spending, the entry of private capital, Corporate Venturing and megatrends, Suggestions and affirmations.

Four years ago I started studying impact investing on line and I thus am
sort of reaching the Masters thesis time line. Without taking any exams, as there is no official academic Impact Investing curriculum that I know of. This piece is the result of about a 100 news & research blogs since 2011.

Time for a review of the road I traveled, which as any trip took me to unexpected places, meeting interesting people, encountering inspiring thoughts and steering me towards a personal focal point. I will use the past, present and future as a road map for the introduction and this chronicle.

Past: my point of departure
First a short author profile because it explains why and how I started studying impact investing in the first place. I read political contemporary history at the University of Utrecht and Groningen graduation on strategies and trends in Dutch Development Cooperation (1964-1984). After that I went to the (now Erasmus) Institute of Social Studies in The Hague where I attended the International Law and the Organization of Development Diploma course and moved on to a Masters in Politics of Alternative Development Strategies. Looking back they all seem to have prepared me for the field of Impact Investing, but for about 20 years I worked for charities in public relations and lobbying, marketing and fund raising (mass media campaigns). 

The first 15 years I worked for National health charities and the last part for the Dutch Protestant Church/ICCO&KerkinActie which works both for the (local) church activities and welfare and international cooperation, emergency aid and reconstruction. This is the one I most fondly remember, due to it's ambitions, culture and unique perspective(s). It turns out they are one of the Netherlands biggest impact investors investing with 20% of their assets in Oikocredit, the world's leading micro finance fund. Which by the way is a spin off of an idea launched at the World Council of Churches meeting in 1968.

Unaware if this, as my campaigns got bigger and bigger, but a bit repetitive as well, I started to doubt the realism and effectiveness of (all) charities strategies and activities in the face of growing needs due to population growth, aging, deteriorating health and environment and (inter)national conflicts. All a bit Apocalyptic indeed, so probably I was just ready for a career shift anyway.

Present: Disruptive change
At the time I attended a course of wealth planning for dummies* organized by my bank in which sustainable or socially responsible investment came up and suddenly everything came together. I was going into impact investing: starting from scratch and practice it as an income focused investor. To practice and as I had only micro assets, I became a do-it-yourself investor. Even though ready made sustainable investment products with impact investing elements are easily available in the Netherlands. Practically all banks and asset managers offer it, but the Netherlands actually has a unique offer through it's two 'super' sustainable banks: Triodos and ASN Bank. Banks with credible track records of 25 and 50 years and quite excellent results. Alas they stem from the exclusion** era, focus on value investing, hardly pay dividends and (used to) charge fund fees that made them unattractive for a micro income investor focusing on basic needs and impact catalyst sectors. So I became a direct investor, with a preference for (sustainable) companies bonds and took advantage of the rise of exchange traded products for diversification, next to my best-in-class companies investments in ''basic needs'' and impact sectors such as finance, health, food and IT. This is how I am on my way to develop a portfolio and asset management strategy for my impact investment ambitions.

The Future Who knows what it brings? 
First: I hope to continue my missionary work in promoting impact investing as a viable investment strategy and portfolio model for micro investors with impact and income ambitions.
Second: I aim to inspire charities to discuss with their asset managers the possibilities of impact or social investing to achieve their ambitions and not think of impact investing as merely a private equity activity that is way to risky for their fiduciary obligations. Also I hope they look into income generating projects to develop new means to achieve their ambitions and consider charity and social impact bonds to finance upscaling of effective interventions.
Third: I want be a ''nudger'' for the financial and investment scene. Stimulating asset managers and investment bankers to look into the developments and possibilities of impact investing to meet their clientèle's interests and demands. By improving risk assessment and returns, based not just on integration of ESG risk and opportunity, but looking into companies and portfolio's in impact sectors.

The impact indicator for investment products is just a start***. It amazes me that such a marketing tool was not developed before. Giving investors insight in the impact of investment products at a glance to me seems the ultimate marketing tool for sustainable and responsible investors. Because if it can be done for risk -which is much more volatile and unpredictable- it surely can be done for impact based on a simple analysis of sectors, companies activities and investment products. 
One explanation that it hasn't been done, is that impact is about 'doing good'. Whereas typical exclusion or responsible investment strategies are merely about 'doing less harm'. To me Impact investing is about moving sustainable investors forward to the next, 2.0 level from doing less harm to doing good. Of course sometimes quantifying impact reflects both results. By lowering emissions or saving fresh water use. But if that saved water is not made accessible to the bottom of the pyramid population that needs it as drinking water or for sanitation it's impact is rather relative....

A Dutch perspective
You will find my regional perspective quite focused on the Euro zone and the Low or Netherlands. Being Dutch obviously for currency risk and practical reasons. Studying impact investing literature many a time I encountered Dutch exemplary track records. Mentioned are our international development bank FMO, our super sustainable banks Triodos and ASN and we have mainstream banks that are innovative and proactive as are small(er) asset managers. We have institutional investors developing their own impact measurement systems and there are interesting initiatives such as indices for companies active in basic needs such as health, nutrition and seeds looking at inclusive policies. A few individuals/families have journeyed with their charities to move beyond grants and charities to impact investing. In private equity I must mention TBLI which organizes investors conferences and started a foundation to promote impact investing. Our Association for Sustainable Development (for investors) takes an interest in impact investing and it's director is also chairman for the European Social Investment Forum. And we have Prof Harry Hummels, who is nicknamed Mr Impact Investing in the Netherlands, you will learn why. So I have added Meanwhile in the Netherlands to pay tribute to my countrymen and women and their work in the field of impact investing.

*They did not call it that, but Mathijs Kanis author of the book with this title which I highly recommend, was one of our lecturers.
**I was quite disappointed to learn that the majority of sustainable investing actually does not actively focus on sustainability themes, but is merely excluding sectors producing harmful products such as Alcohol, Gambling, Tobacco, Adult Entertainment and Firearms. International law added anti-personell mines and cluster ammunition to this list though not all countries have enforced it yet, even in Europe! Also companies with environment, social and governance policies can be labeled sustainable even though their core product is hardly that. Sustainable investment products may thus offer companies producing products or services that have nothing to do with basic needs or sustainability.
***The impact indicator for investment products resembles the risk barometer required by EU consumer information laws. It comprises of 7 levels:
0 = I just care about financial returns.
1 = I
care about financial returns and do not invest in harmful industries and products.
2 = I care about financial returns and Environment, Social & Governance risks. 3 = I care about Environment, Social & Governance opportunities.
4 = I care
about financial returns and global threats and solutions.
5 = I care
care about financial returns and peoples basic needs.
6 = I want to invest in impact & am willing to give up return.
(Formally there could -1 = I'll invest in anything: even illegal weapon builders, totalitarian regimes etc.) A visualization of the Indicator can be found here: Twitter/alcanne/media

The (recent) PAST
Though around for decades under different names with micro finance as the biggest financial success and sector, the term 'Impact Investing' did not exist under it's present marketing label until 2007.

Impact Investing is named
This quite cool and effective label was coined at the Belagio Conference Center, an activity of the Rockefeller Foundation to 'establish new connections across disciplines and geographies, encourage dynamic, small group interactions, and promote innovative and creative thinking' i.
The Rockefeller Foundation consequently launched it's first Impact Investing Action Programme (2007-2012) ii. It is now undertaking it's 2nd Action Programme implementing recommendations such as organizing collective action, upscaling, building an infrastructure and research and advocacy iii. In 2007 The Global Impact Investing Network was conceived when the Rockefeller Foundation gathered a small group of investors, uniting charities, impact investors and for profit financial institutions, to discuss the needs of the emergent impact investing industry. It was founded officially in 2009 as a global network of leading impact investors with the aim to develop a standardized framework for assessing social and environmental impact, and a development of a working group of investors focused on sustainable agriculture in sub-Saharan Africa iv.
In 2009 the GIIN asked the Monitor Institute (now Monitor Deloitte) to research the potential of impact investing and it came up with a matrix of ambitions, actors and activities and 17 priorities to promote acceleration of the emerging industry. The famous prediction that impact investing could grow from 50 to 500billion US$ in 2020, thus surpassing philanthropic grants and supporting public spending in impact areas, comes from their report v.

The GIIN launched Impact Base: a search-able on line database of impact investment funds. Also the metrics system IRIS: Impact Reporting Investment Standards and GIIRS: the Global Impact Investing Ratings System, an analytics and rating system for impact investment funds (comparable to Morningstar) vi. Today the GIIN is the source of the most comprehensive collective data on impact investing publishing reports with JP Morgan Social Finance vii. It recently started training programmes Strengthening Environmental, Social, and Governance (ESG) Management en Raising Impact Investment Capital

In the summer of 2012 the GIIN appointed Harry Hummels director of Dutch Bank SNS Impact Investing AM as one of their European liaisons. It paid off: almost 20% of the GIIN Network members is Dutch: a mix of banks, wealth managers, investors and (trust) funds viii.

United Kingdom
Across the ocean, in the UK, the Big Society Bank launched it's investment activities through BigSocietyCapital. Sir Ronald Cohen, ''the father of venture capital'', is re-inventing himself as ''the father of social investment'' working arduously to promote and develop social investment in the UK and later through the G7. The funding of Big Society Capital came from legislation creating access to 400million UK£ of unclaimed bank assets. 4 'High street' banks brought another 200million UK£ to invest in the social sector ix.

Another one of Sir Ronald's more hands on activities is Bridges Ventures, an impact investor for Britain's poorest region's. It publishes her lessons of 10 years of thematic investment in Sustainable Growth (3 funds for SME's, Health and Care, vocational training and the environment), Property (2 funds in regeneration area's) and the Social Entrepreneurs Fund. Bridges Ventures proves impact and returns are no enemies and a trade off is not necessary x. A reflection of Sir Ronald's ambitions is his chairmanship of the G8, now 7xi Social Investment Taskforce. This meeting is organized next to the 2013 G7 meeting in London to promote the concept and share experiences in a series of country reports to be published in 2014. The United Kingdom report summarizes 10 years of building an infrastructure for Social Investment and I highly recommend it and it's recommendations. Adjoining the SI G7 the Impact Investing Policy Collaborative (IIPC) meets and defines the London Principles for public policy facilitating impact investing. The principles stress a clear focus and realistic perspective, organizational capacity in the government, creation of public and sectoral support, incentives for social entrepreneurs and universal transparency xii.

Social Investment has become a recognized industry in Britain after ten years of government incentives (and investments). It launched the world's first Social Impact Bond for Peterborough prison and British charities even have their own bonds: one now has a listing on the London Stock Exchange (ORB) xiii. All kind of intermediaries are working to make social sector organizations investment ready and local councils can get funds from a special government budget. Nesta an innovation charity that helps people and organizations bring great ideas to life surveys public interest in social investment amongst the well off. Four realistic retail public equity products are presented: charity bonds, community business share issues, a social enterprise property fund and / or social investment funds xiv. The (younger) private respondents are positive and interested, don't mind lower returns (impact first) appreciate the diversification and local investment opportunities. What are they waiting for...?

The European Union launches legal incentives for promote Venture Capital (VC) funds and their expansion in the EU area. They promote innovative start up SME's (Small Medium Sized Enterprises, EuVECA) and Social Enterprise funds, EuSEF xv. As SME's create 80% of new workplaces and Social Businesses are 10% of the EU economy or 11% of the workforce these are important incentives for impact investing as well. Funds must invest a minimum of 70% of their assets in private equity and are open to institutional and retail investors (with at least 100.000 Euro).

In the Spring of 2011 Antony Bugg Levine* en Jed Emerson published the handbook Impact Investing, Transforming how we make money while making a difference xvi. It presents elaborate 'principles of additionality' for impact investors to distinguish them from (impact washing) venture capitalists. They point at the prospects of impact investing in health, social housing, education, agriculture, utilities in developing countries, restructured social spending and social bonds. The pioneering era is a closed chapter: it is time for collaboration and defining roles and tasks in advocacy for public policies, adoption of metrics and rating systems, training intermediaries and involving education institutes. Although managing 100% impact investing portfolio's, they (still) promote the 1% portfolio allocation to impact investing for those not involved (yet). *Chairman of the GIIN board of Directors.

In December 2011 researchers at Harvard Business School present a comparative analyses of 90 sustainable or responsible sector leaders to 90 Low Sustainability firms. It is a retrospective study going back 18 years. The Impact of Corporate Sustainability on Organizational Processes and Performance. Leaders did 'significantly' better at the stock market: +4,8% were less volatile and they showed better Returns on Assets and Equity.xvii Blogger: This is the academic first proof of best-in-class concept for me the discussion about the costs of sustainability or CRS policies for best in class strategies is closed.

McKinsey Consultant Alex Hamilton Chan wrote ''The responsible hand: overcoming the shortcomings of impact investing'' xviii for the Stanford Social Innovation Review. He refers to the concept of Socially Responsible Equity to overcome lack of incentives for impact continuity, impact effectiveness and the trade of between return and impact. The concept describes responsible share(holder)s agreeing (not) to cash in / exit merely on return based arguments, but ensuring the earlier mentioned shortcomings of the impact of investments.

In 2013 the 1e official Dutch academic impact analysis report is published by Harry Hummels (theGIIN) and ECCE, the European Centre for Corporate Engagement at the University of Maastricht. It is a case study and analyses a project funded by St. DOEN (prime beneficiary of the Dutch commercial lotteries) in Ecovative Design LLC and presents A Stairway to successful innovation. The company produces a 100% bio-degradable packing/isolation material to replace polystyrene. It is thus a clear case of disruptive change in sectors dominated by polystyrene. Ecovative is a classic impact investing case study starting out with grants, gifts, awards then it attracted equity investment. St DOEN put it up for analyses as a case study of catalytic impact investing. The analysts present an impact ladder Enlightment, Adoption and Goal attainment. They also present a set of impact success criteria such as strategically siding with nature (abundance of resources, cradle to cradle production) xix. Blogger: What stuck with me most is that even when you have a good product with positive impact: upscaling in a competitive market -however environmentally unsound- is an uphill battle.

In the Fall of 2013 I read Heinrich Liechtenstein and Uli Grabenwarter (European Investment Fund on a sabbatical) paper In Search of Gamma - An Unconventional Perspective on Impact Investing xx at IESE Business School, University of Navarra. To the authors the traditional approach of impact first investment is merely a cocktail of investment and charity. The acceptance of a lower return for impact is a mere subsidy or grant and leading to an nontransparent market.
Blogger: For charities, philanthropists, development banks or catalytic (Star) impact investors it is functional as it aligns with their broader mission responsibility to achieve impact. Thus for instance putting up seed capital to come to the stage where impact investors step in with growth capital. Maybe even in the growth capital phase, where upscaling is critical to create a viable market(share) and turn a market around. The authors stress the importance of transparency and monitoring all costs (due diligence, impact assessment etc.).

The impact investing industry
Earlier the concept of catalytic impact investment had entered the thinking about impact investing. To me in a series of blogs written by the Omydiar Network xxi for the Stanford Social Innovation Review. The Omydiar Network is an important thematic impact investor. Thematic refers to their sectoral approach. By doing that, they found that it is important to build the impact investing market in such sectors from the bottom up to have investible (growthcapital) opportunities. Like impact first investors they would give up return for impact, but the impact was aimed at priming the pump, creating impact investment in that specific sector.
In 2013 the GIIN published Catalytic First Loss Capital xxii. The publication with case studies describes Catalytic first-loss capital as socially- and environmentally-driven credit enhancement provided by an investor or grant-maker who agrees to bear first losses in an investment in order to catalyze the participation of co-investors that otherwise would not have entered the deal.

Public equity Impact Investing
While attending a Club of Amsterdam conference about The Future of Impact Investing in the Spring of 2013 I am introduced to Dr Maximillian Martin's concept of Corporate Impact Venturing. Or public equity sectors or corporations investing in activities with positive impact. Think ESG Environment, Social and Governance policies or saving their capital resources on expenditure for natural resources such as energy, water and raw materials, personnel's health, turnover and human resource management and fines for cartels, corruption, tax evasion or other forms of mismanagement. All impactfull activities with a capital gain. The blog with a review of Dr Martins concept of Corporate Impact Venturing opening up a pathway to public equity impact investing, is to date the most popular one at Impact Investing Nieuws xxiii.

An organization that I have not mentioned above but deserves special attention is EVPA: the European Venture Philanthropy Association. It 'envisions a European philanthropic and social investment market that enables efficient funding of Social Purpose Organizations (SPOs) at all stages of their development, where venture philanthropy and social investment complement and strengthen other forms of funding. Its mission is to be the natural home as well as the highest-value catalytic network of European social investors, venture philanthropists and foundations'. Being a membership organization it primarily serves those members, offers networking opportunities and sharing experiences. It stresses all of these for impact investing and Venture Philanthropy investments as well. It's accessible on line resource Knowledge Center offers insight in the state of affairs and current developments in impact investing (for charities and philanthropists) xxiv.

Meanwhile in The Netherlands
From 2008 The Acces2Medicine index bi-annually published it's index of inclusive pharmaceuticals. The index evaluates pricing policies, cooperation and R&D activities for epidemic and endemic diseases in poor countries. The Dutch initiative is sponsored by the Bill&Melinda Gates Foundation, Dutch Developments NGO's and the Dutch ministry for Development. xxv

The Dutch association for fund raising charities VFI offered a guide with scenarios for responsible asset management. It included mission related investing, the charities terminology for impact investment. From the first of January 2011 charities had to comply or explain their choice not to. The guide was written by Professor Harry Hummels who is also director of SNS Bank's Impact Investment Asset Management department. It is first the Dutch bank to open an Impact Investing department it caters to institutional investors and High Net Worth Individuals. (But) It offers two (previously) existing funds for micro finance xxvi. It launches a third fund for SME's financing cooperating with the Dutch Development Bank FMO in 2013 and a third Micro finance fund in December 2014 xxvii.

In Spring Amsterdam-based PYMWYMI, Put Your Money where your mouth is run by impact first investor Frank van Beuningen, hosts SOCAP Europe. It is the Social Entrepreneurs conference and it's first European event. A hundred interested parties listen to seasoned impact investors in 50 presentations, workshops and round tables xxviii.

In September 2011 the super sustainable Triodos Bank and a charity for handicapped children (NSGK) launch a 2million Care Credit fund for which the charity puts up 500.000xxix. Other Dutch charities are still struggling to define impact as opposed to output and the company of impact investing charities is not much bigger than a dozen. Trust funds impact strategies are underreported because on average they are not nontransparent. Regulation linked to their fiscal privileges should improve this.
In the summer of 2013 the Dutch Bureau for Fundraising Charities (CBF) publishes a guide with impact metrics models and characteristics it is a Handbook impactmeasurement for charities xxx. It aims to inspire them to look at their work and the results in a new way and give them a toolkit for impact measurement. Once impact is defined and recognized the foundation for impact investing is ready. A charity can decide to either put up seed or start up capital as grants or growth capital from it's assets depending on the development phase.

In October 2011 Global Real Estate Sustainability Benchmark (GRESB) is launched, a Dutch initiative with mostly Dutch institutional investors as partners and sponsors. It's mission: to enhance and protect shareholder value by evaluating and improving sustainability practices in the global real estate sector. 340 major real estate funds shared their data and GRESB evaluated: Management, Policy & Disclosure, Risks & Opportunities, Monitoring & EMS, Performance Indicators, Building Certification & Benchmarking and Stakeholder Engagement. GRESB is a project of Maastricht Universities ECCE: European Center for Corporate Engagement xxxi. Blogger: Note that as GRESB measures performance indicators it fits impact investing definitions. But as GRESB mainly focuses on offices and shops, to me it is more about collecting data and experience to be applied for social housing and public utility buildings purposes in the (near) future.

In a survey published in November 2011 all major Dutch banks and wealth managers claim to offer impact investment possibilities in a sector survey by the Dutch Association for Sustainable Development, but it is all 'tailor made' and no information is offered on line. At the same time Dutch charities express clear interest in impact investing in a survey by the same organization, but were awaiting specialized and experienced intermediaries to help them explore the possibilities. The active number of impact investors remained at 13. (but) Of Dutch religious organizations surveyed by the same organization 45 (49%) reported having impact investments xxxii.

Early in 2012 PGGM a Dutch institutional investor managing 110billion assets and serving mainly (large) pension funds, presented it's tailor made impact metrics system for private equity investments. The Social Impact Fund Factsheet. It is a joint production with the Erasmus University of Rotterdam and Dr Karen Maas who wrote her PhD on impact metrics systems and a case study of the Dutch Heart Foundation xxxiii.

In March 2012 ING Bank publishes 'A Billion to Gain: The Dutch contributions to the micro finance sector. Micro finance is now a 80 billion US$ market, with 4% growth in 2011 and a little under 30% foreign / international market share. Dutch banks and micro finance investors have 2,1 billion US$ invested or 8,4% of international micro finance. They were early adapters, now experienced investors and active in promoting innovation and transparency in the sector xxxiv.

Once named the world most sustainable bank by the Financial Times the Dutch ABNAMRO Bank opens a Social Impact Fonds xxxv to invest growth capital in Dutch sustainable social corporations. In it's first year it invest in a crowd sourcing consumer platform (Nudge Nudge) and the Netherlands first Social Impact Bond for youth unemployment in the City of Rotterdam together with an employment trust fund: The Start Foundation xxxvi. That works with the profits of a privatized government temping agency and is is one of the rare Dutch impact investing charities, revolving 20% of it's working capital through loans to social enterprises.

2013 kicks off with hundreds of Dutch senior bankers meeting in the Grote Kerk (big church) in The Hague to swear a bankers oath. Promising to uphold their professional integrity and duly weigh all the interests of their bank, clientèle, shareholders, employees and society xxxvii.  
Blogger: Tunnel vision makes me interpret this as avoiding negative impact and seeking positive impact in financial transactions …. All banking employees are expected to swear this oath in the coming years).

Proof of concept
This blog does not allow for a comprehensive review of public equity investment products offered by international, regional and bilateral reconstruction and development banks. Or the one of a kind vaccination bonds to finance the end of massive children's mortality to preventable diseases xxxviii. Note that the latter are often private equity investments and that public equity investments are mostly not inclusive or retail investments with a minimum investment of a 100.000 .
There are however the unique Japanese uridashi retail bonds for the reconstruction of the Tsunami hit area's and Asian regional environmental development xxxix.
In the USA offerings of Community Development Bonds have developed rapidly in recent years according to local impact investors such as KL Felicitas Foundation, a public equity impact investing pioneer xl. The concept of Social Impact Bonds is taking root in the US and the legal foundations are laid out at the national, state an local level. Worldwide 100 Social Impact Bonds are in the pipeline including exiting innovations such as corporations investing in health impact in countries where they are active.
Blogger: The relevance of these developments is not merely their impact, it is also important to note that they are proof of concept with track records and impressive numbers. For instance 23 years and 6,3 billion US$ of financing in the case of vaccination bonds. They show that it is possible to finance impact through public equity and not just private equity as impact investing has somehow claimed to do.

The present: 2014-2015
2014 was the year that for me they pieces of the puzzle of public equity impact investing were falling into their place. Probably not coincidentally the fourth year of my research project. Market developments, academia and the result of impact investors research projects by practitioners delivered my biggest revelations.

In March Beiting Cheng, Ioannis Ioannou and George Serafeim published The Impact of Corporate Social Responsibility on Investment Recommendations xli. They investigated whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance. It does.
Blogger: The critical concept of the role private capital and capital markets in impact investing is supported by the mechanism they describe. CRS policies and/or positive impact lead to upscaling and cheaper access to capital which are an incentive for further innovation and R&D. If corporations and investors can be 'nudged' towards impact sectors such as basic needs and impact catalysts, this can be an immensely powerful driving force to solution for the worlds challenges.

World class thinking
Academia/consultancy was also very inspiring. Capitalism Redefined in Democracy: A Journal of Ideas was written by former McKinsey consultants, Hanauer and Beinhocker, and McKinsey shared a summary in their third Quarterly Insight for 2014s. The term impact investing does not come up. (but) The authors present an analysis of capitalisms market failures and suggest modern capitalism where corporation focus on developing solutions for societal needs. It ensures to use the genius of capitalism to create, innovate and scale up to a global level. All of this requires long term thinking and planning of investments, but ensures better balancing of stakeholders interests in developing solutions. To make sure one's solution is not someone elses problem, the political system of democracy has the best track record in balancing the interest of the majority of people and avoiding conflict xlii. (including a video)

The World Economic Forum in Davos always showed an interest in impact investing and in it's 2014 meeting organized: From Ideas to Practice: Strategy Solutions Insights in Impact Investing. One of the thought pieces in the literature was a public equity portfolio methodology: Evolution of an Impact Portfolio: From Implementation to Result. It is the brainchild of San Fransisco based Sonen Capital and the KL Felicitas Foundation, a public equity impact investing pioneer xliii. A 'first in it's kind' portfolio impact measurement method. In the following summer they published their 2013 Annual Impact Report, Impact Investing in Public Markets: Methodology, Analysis and Thought Leadership xliv. The result in their own words: The net effect of our overall framework is the ability to deliver multiple, different and mutually reinforcing impact themes and sustainability approaches, all of which can be qualified, monitored and reported at the strategy level. Sonen Capital is headed by Raul Pomares who wrote Solutions for impact investors: From strategy to implementation xlv in 2009, for the Rockefeller Philanthropy Advisors. The solutions offer an overview of relevant investments sectors with impact, so an outline of a portfolio allocation for impact investors. The portfolio model was the trigger for my impact indicator giving insight in the impact of a investment product at a glance. Not the detailed impact metrics that the sector is developing through IRIS and other measurement systems, but a simple applicable tool for the marketing of impact. In stark contrast to the jungle of ethical, responsible and sustainable investment claims that never seem able to come up with a clear answer to their doing good effect.

ESG integration
Another exiting development in 2014 was new SRI in Europe data xlvi presented by Eurosif: the European Sustainable Investment Forum. This data included ESG integration in sustainable investing which is over 40% of AuM. When I was developing my impact indicator model I guessed the ESG levels of risk and opportunity assessment were thin and crispy maybe panpizza, but it turned out to be quite a fifth (my guestimate) of the impact investing pyramid.
Though exclusion and compliance(!) remain the main strategies, in the press release the director of Eurosif Francois Passant states that ''Discussions are shifting from whether SRI makes sense or not from a financial return standpoint, to how its tangible impacts can be measured''. Applying Environmental, Social and Governance criteria covered 40% of sustainable investments. Also 40% applies ESG systematically and this can mean three things: 1 the investment analists have access to ESG data: so quite passive; 2 they apply ESG data systematically: which means they are mainly looking for risks; or 3 they are obliged by investment mandates to work with ESG criteria in investment decisions.
Blogger: It is clear that impact metrics discussions are not just a hobby of 'quant' (output and numbers) or 'qualit' (holistic effects) focused impact investors, their accountants and consultants and metrics system developers. Sustainable investors sometimes welcome impact investing, such as the Dutch Triodos Bank. Others are hesitant and critical, I wont name names, but they are taking notice of the importance of transparency of effects thus impact of corporations for the environment and (all) their stakeholders i.e. society.

Impact Investing within sustainable investment
The field of impact investing in private or public equity remains a difficult area to tackle for sustainable investment watchers. They (only) surveyed institutional investors and development banks thus private AND public equity impact investors. It grew rapidly +132% since 2011 to 20billion € thus a tiny part of the almost 10 trillion € (mainly Western) European SRI market xlvii. It's main markets with 66% market share are the Netherlands with 8,8billion and Switzerland with 4 billion . Half of it is (reported) in micro finance. Eurosif does not regard impact investing as sustainable investing 2.0 BUT unique in it's impact (measuring) ambitions.

Impact indices and measuring
In the fall of 2014 I dove into the world of transparency indices xlviii. The earlier mentioned Access2Medicine Index benchmarking inclusive pharmaceuticals has inspired 3 followers The Access to Nutrition Index xlix is functional and effective by stimulating inclusive healthy nutrition initiatives. The Access to Seeds Index l and Responsible Mining Index li have a draft methodology and are organizing stakeholders consultation meetings.
Blogger: Though still few, the rise of such indices is a promising development introducing impact metrics for public equity corporations. They are evaluated on their ESG performance already, but their ''doing less harm'' performance can be seen quite apart from their ''doing good'' performance as these indices show.

At a company level an interesting development is the rise of agencies developing ways to measure the real costs of production for society. Accountants and consultants had been lobbying for awareness and expanded ESG integration for a while. In the Netherlands I came across the Trueprice initiative by Deloitte, EY and PwC lii which is supported by the Association for Sustainable Development (focused on investment). Concullega (competitor & colleague) KPMG recently launched 'A new vision of Value', Connecting corporate and societal value creation liii.

Green, sustainable or Climate bonds
2014 is definitely the year of Green bonds whereas Social Stock Exchanges reporting the impact of public equity corporations seem to grow in more modest pace liv. But green bonds grew so fast they attracted much attention and followers as this surge already began in 2013 when corporate green bonds suddenly took 20% market share from a market that was traditionally dominated by development institutions and banks. Corporate bonds are expected to grow to 50% market share in 2014, the data set has to be collected and analyzed. The green bond market is expected to grow 150% to 100.000 billion US$ this year.
Green bonds (expectations) became so big in 2014, that 10 major banks defined the green bond principles lv and two green bond indices were launched to track their performance record. First by specialists such as Solactive lvi, but also by big players such as Barclays lvii. 2014 closed off with the announcement of two green bond listings in Oslo. One for (externally) certified green bonds and one for green bonds without external certification. Large multinationals with sustainable track records, such as Dutch-Britisch Unilever (food&personal hygiene) and Dutch-French Unibail Rodamco (property), did not get external certification for there (first) green bonds. But ESG Research bureau Vigeo did take a look at the criteria. 
Maybe the Climate Bonds Initiative lviii certification system was not up to date as it is now, where renowned ESG research bureau's such as Vigeo and Sustainalytics are official verifiers of the green claims in such bonds.
Blogger: Corporate green bonds can be as uninclusive as institutional development bank bonds with a 100.000 Euro denomination. But corporate green bond shows much more promise to move into the retail market with attractive returns and denominations. Thus hopefully attracting a following from other corporations and traditional (development) banks. We have already seen a innovative public equity bond offered by the World Bank and in the Netherlands the Bank for Municipal Councils (Bank Nederlandse Gemeenten BNG) offered a 500 million € bond to support best-in-class municipal bonds lix.

Corporate venturing and CSR 2.0
The green bond surge almost seems an immediate response to the academic proof that sustainable business practice allows for lower capital constraints. Interest in these bonds was overwhelming and practically all were overwritten many times. Some enlarged in the wake of such interest. Thus I was quite surprised to read The Economists Schumpeters piece on the costs of CSR 2.0 lx
As opposed to CSR 1.0 that is about saving energy water, safety, human employee expenses and compliance avoiding costs and fines thus financial viable. Schumpeter closes off: The first wave of sustainability rewarded itself. The new wave will not do that. It is more akin to investing now to have a license to operate in future, when consumers, lobbyists and regulators will be ever more demanding about the way firms behave. That does not mean the new wave will not reward its adopters. But it will boost their long-term competitive position, rather than their short-term profits. Unlike the rewards of the superficial first wave, those of deeper sustainability could take years to sink in.
Blogger: It seems Schumpeter totally missed both the financial crisis of 2008 leading to a stronger demand for long term business management policies balancing stakeholders interests. Or the opportunity to financing CSR 2.0 cheaply through green bonds. The Economist wrote often about green bonds, maybe he should read his own weekly more often.
2014 closed of with the announcement by German energy giant E on that it will be split into a fossil fuel corporation including the closure of nuclear plants (facing divesting campaigns) and a renewable energy corporation attracting sustainable and impact investors. To me that this is very much a sign of the times that ESG integrated and impact investing are shaping the future of finance. Please check out CSR Hub for almost 14.000 companies indidividual scores in 127 sectórs. 

From impact first to sustainable impact investing
In the meantime the culture in the private equity impact investing market market had shifted. The 125 biggest (private equity) impact investors in the world were surveyed by the GIIN and JP Morgan Social Finance in Spotlight on the Market 2014 lxi. One third (Western) European investors and roughly 2 thirds North American. Over half of them reported a shift from impact first to balancing impact and return in impact investing. ''With the remainder of the sample evenly split between “below market rate returns: closer to market rate” (23%) and “below market rate returns: closer to capital preservation” (23%) lxii.
Blogger: To me the upscaling aspect of impact investing is the most important characteristic. It makes truly global implementation of solutions a possibility and seems a more viable answer to growing demands which neither governments or philanthropy can meet. But upscaling capital can only be achieved when impact investing is financially sustainable and reaches market based returns for initial investors and attracts new investors to the market.

Introducing Inclusive Impact Investing
On the impact investing innovation side two important publications focused on inclusive impact investing. In June Judith Rodin, director of the Rockefeller Foundation published 'The Power of Impact Investing' lxiii. A review of 7 years Impact Investing Programme's. The title of an interview in Forbes lxiv with Rodin is 'impact investing is not just for billionaires'. Rodin stresses the interest in impact investing by retail investors. She is referring to the perception that impact investing is either micro lending through crowdfunding or macro investing by institutional investors, family offices and charities. She points at the 2010 HOPE consultancy survey Money for Good the Rockefeller Foundation supported lxv.

Later that year the EU representatives at the G7 Social Investment Taskforce presented Impact investing for everyone, A blueprint for retail impact investing lxvi Written under the authority Peter Blom CEO of Dutch Triodos bank, a bank with a small market share, but probably the biggest (double digit) growth numbers since the crisis and for it assets management works with one of the major banks ABNAMRO. As the report is written for G7 governments, the report goes mostly into existing investment structures and public policy incentives to make the impact investing market more inclusive.

Chronicle of 2014

A more elaborate chronicle and review of interesting developments in 2014 can be found in Dutch at IINieuws 2014 Annual review: http://impactinvestingnews.blogspot.com/2015/01/jaaroverzicht-2014.html

As every January all ready a lot of exiting things are happening. It is to early to assess the meaning and long term effect on the promotion and development of impact investing so I will not go there. 
I will put down one wish I have for 2015 and that is for catalytic research. In my annual review I suggest an analysis of Impact Investing scenario'sImplications for Strategic Asset Allocation' lxvii. It is inspired by the 2011 Mercer project for 'Climate Change Scenarios'. It gave Dutch institutional investor PGGM insight into the complexity of the effects climate change could have on the risk and return of our portfolio''... The report has inspired many institutional investors according to speakers at the New York pre-Climate Summit. Repeating the exercise for public and private equity impact investing opportunities could accelerate the progress of impact investing tremendously.

The Future
In spite of all the progress made in the last years, the case for impact investing stands firmly:

Market failures create unacceptable paradoxes in basic needs satisfaction, such as the over a billion people being undernourished and another billion people being overweight. Children dying of lack of 25ct diarrhea treatments and access to vaccination programmes and highly expensive cancer treatments available to 'the haves'. I can go on. I wont's it is depressing but there are ways to tackle this globally by upscaling solutions.
Philanthropy and public spending will never be able to fund or finance (upscaling their) solutions to societies needs or accelerate their activities to adapt to growing demand.
The entry of private capital opens floodgates of much needed growth capital and can be an innovation accelerator through venture capital for seed and start up capital. Also the (venture) investing culture cherishes innovation, supply chain collaboration and disruptive change which are effective forces anywhere in the economy, but especially for the more traditional development and social sectors and charities.

As for the future corporate impact venturing I will refer to the work of Dr Maximillian Martin on worldwide developments and mega trends in ''aking impact investible''lxviii describing area's where corporate impact investing can make a difference. Think:
- Basic needs fulfillment and the growing demand at the Base of the Pyramid: the billion poorest people with a 5 Billion US$ budget.
The need for radical resource efficiency for economic growth, cutting carbon emissions and waste and protecting biodiversity. Also in the light of urbanization or underpopulated and 'under' served living area's and the tripling demand for renewable energy;
- Modernizing the Welfare state and public services responding to ageing, financing this and growing demand in cure and care sectors;
- The rise of LOHAS: the Lifestyles of Health and Sustainability consumers preferring sustainable lives and modest consumption.

I will end with suggestions and affirmations for: 

Charities to clearly define their impact and overcome their wariness of profit making activities to achieve scale, to consider impact investing in their asset management, as a means for fund raising for income generating activities and give grants as seed and start up capital for social entrepreneurs.
Philanthropists to search for goals whilst realizing some peoples and needs will never be income generating or profitable and need gift support. But that there are needs out there than can be helped with tools, instruments and advice like the fisherman that got a net, maybe a boat and knowledge about better fishing in stead of fish for a day. And then there are people out there doing things that can make differences for many maybe for all of us and that they need all the support we can give them.

Policy makers to make sure that impact investing keeps a focus on impact on peoples basic needs and the environment. That it does not drift away on a privatization path where (capital) efficiency rules and easy task are prioritized and more complicated tasks are outsourced or 'left' out of the contract. To create incentives and accelerators for impact investing by facilitating regulation, being an impact investor and sharing experiences.

Institutional Impact Investors to undertake an analysis of Impact Investing scenario's Implications for Strategic Asset Allocation' following the 2011 Mercer project for 'Climate Change Scenarios' and to keep up the good work :)
All Impact Investors to be clear about their ambitions in making sure investments have (measured) positive impact. To be aware of strategic choices such as impact or finance first, balancing Impact & Finance or Catalytic Impact Investing and how it is reflected and revolving in the portfolio(s).
Impact investment funds to use standardized metrics and rating systems to increase transparency in impact investing strategies results and developments
Social Enterprises to avoid mission drift and stay competitive, innovative, true to their nature, but most of all ambitious. You are changing the world as we speak.

Asset managers and Investment advisors to explore impact investment opportunities and developments to fully serve their clientèles interests and preferences for social investing (the Millennials are coming!).
Companies to guard both the impact and return of all activities, aim for sustainable finances and organic growth and ambitions to be translated in both here&now improvements and long term planning for innovation.

(Dutch) media to follow impact investing with interest and enthusiasm, to put high profile cases in perspective with sectoral or thematic trends and progress and the sector as a whole.

Thank you for your interest and attention, if you have questions, remarks or would like to exchange ideas please contact me at impactinvestmentnews@yahoo.com
Signing off I will quote Cato the Elders affirmation
I believe in the future of inclusive impact investing

For a pdf of this article please got to: 
Slideshare.net/alcanne/the-past-the-present-and-the-future PDF

ii Accelerating Impact: Achievements, Challenges and What's Next in Building the Impact Investing Industry, E.T. Jackson&Associates, Karim Harji and Edward T. Jackson (juni 2012, 86 pag). Link: (pdf) http://www.rockefellerfoundation.org//uploads/images/fda23ba9-ab7e-4c83-9218-24fdd79289cc.pdf or Accelerating Impact: Achievements, Challenges and What's Next in Building the Impact Investing Industry of The Executive Summary Review In Dutch http://impactinvestingnews.blogspot.nl/p/gelezen-bronnen-2013-2010.html). 

iii Catalyze platforms for collective action that enable leading impact investors and intermediaries to coordinate efforts; Support the development of scaled intermediation vehicles that help absorb impact investments at a scale; Build industry-wide infrastructure that enables broader and more effective participation in the impact investing industry; en Support research and advocacy efforts that promote an analytical understanding of the impact investing industry Link http://www.rockefellerfoundation.org/our-work/current-work/impact-investing/our-strategy

iv The GIIN is operating under the fiscal sponsorship of the Rockefeller Philanthropy Advisors (RPA) for its 501(c)3 charitable status under US law and collects fees from its diversified members structure.

v Investing for social and environmental impact: A design for catalyzing an emerging industry', Monitor Institute (2009) Link http://monitorinstitute.com/downloads/what-we-think/impact-investing/Impact_Investing.pdf (pdf, 86 pag.)

vii 'Spotlight on the Market 2014' door theGIIN en JPMorgan Social Finance. Link: theGIIN.org/research Report: Spotlight on the market, the Impact Investor Survey2014 (pdf, 52 pag.) Review In Dutch http://impactinvestingnews.blogspot.nl/p/gelezen-bronnen-2013-2010.html 'Insight into the Impact Investment Market, An In-Depth Analysis of Investor Perspectives and over 2,200 Transactions'. JP Morgan Social Finance & the Global Impact Investing Network (14dec11, update of the 2010 report) Link http://www.thegiin.org/cgi-bin/iowa/download?row=334&field=gated_download_1
JP Morgan (global research) 'Impact Investing: an emerging asset class'. 1100 investments (2010). Link http://www.thegiin.org/cgi-bin/iowa/resources/research/151.html Review In Dutch http://impactinvestingnews.blogspot.nl/p/inlezenin-impact-investing.htm

xi Russia's participation  is suspended.

xvii The Impact of Corporate Sustainability on Organizational Processes and Performance by Robert G. Eccles, Ioannis Ioannou and George Serafeim Link http://www.hbs.edu/faculty/Pages/item.aspx?num=47307

xviii Explanatory blog by Chan: http://www.ssireview.org/blog/entry/the_responsible_hand_overcoming_the_shortcomings_of_impact_investing article by Chan I could not find his article online but I have it for you. Recently Chwodry, davies and water worked on this concept Intensivizing Impact Iinvesting 32 pdf http://issuu.com/bhagwanchowdhry/docs/iii or http://www.anderson.ucla.edu/faculty/bhagwan.chowdhry/iii.pdf

xix http://www.corporate-engagement.com/research/93 A stairway to successful innovation (pdf, 131 pag.) Ex Sum pag 10-15. Review in Dutch in http://impactinvestingnews.blogspot.com/2013/06/impact-investing-nieuws-1juli-2013.html

xxii Catalytic First Loss Capital, the Global Impact Investing Network (Oktober 2013) Description: http://www.thegiin.org/cgi-bin/iowa/resources/research/552.html Report: http://www.thegiin.org/binary-data/RESOURCE/download_file/000/000/552-1.pdf (pdf, 36 pag.)

xxiii Dr Martin's academic work can be found on http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=794432. His consultancy is Impact Economy, based in Geneva, Switzerland: http://www.impacteconomy.com His consultancy publications, such as conference presentations can be found here http://www.impacteconomy.com/en/publications.php PS He speaks 6 languages, even Dutch (!).

xxvi https://www.actiam.nl/en/product-services/microfinance-funds Again for institutional investors. Note that SNS AM was renamed ACTIAM in mid 2014.

xxix In Dutch: https://www.nsgk.nl/doe-een-aanvraag/aanvraagprocedure-lening/indienen2 Nederlandse Stichting voor het Gehandicapte Kind.

xl I will describe the work of the KL Felicitas Foundation and it asset manager Sonen Capital in the Present paragraph.

xli Cheng, Ioannou and Serafeim: The Impact of Corporate Social Responsibility on Investment Recommendations. We investigate whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance. We hypothesize that better access to finance can be attributed to a) reduced agency costs due to enhanced stakeholder engagement and b) reduced informational asymmetry due to increased transparency. Using a large cross-section of firms, we find that firms with better CSR performance face significantly lower capital constraints. Moreover, we provide evidence that both of the hypothesized mechanisms, better stakeholder engagement and transparency around CSR performance, are important in reducing capital constraints. The results are further confirmed using an instrumental variables and a simultaneous equations approach. Finally, we show that the relation is driven by both the social and the environmental dimension of CSR Link http://www.hbs.edu/faculty/Pages/item.aspx?num=43095 March 2014.

Eric Beinhocker, alumnus of McKinsey’s Washington, DC en London, at present executive director of the Institute for New Economic Thinking at the Oxford Martin School, University of Oxford. Nick Hanauer is an entrepreneur, venture capitalist and author. Video Interview & Presentation at the Aspen Institute (1 hour) Youtube.
xlvii Ibidem 10 trillion Euro s the total in the from most left column in the table on page 21. Ibidem

liii http://www.kpmg.com/ES/es/ActualidadyNovedades/ArticulosyPublicaciones/Documents/a-new-vision-of-value-2014.pdf (pdf, 116 pag.) Description http://www.kpmg.com/global/en/topics/climate-change-sustainability-services/pages/a-new-vision-connecting-corporate.aspx

lix http://www.bng.nl/smartsite.shtml?id=74626 Unfortunately BNG has removed all relevant documentation from its website. If have downloaded relevant pdf's. impactinvestmentnews@yahoo.com Review in Dutch in http://impactinvestingnews.blogspot.com/2014/10/impact-investing-nieuws-15-oktober-2014.html

lxii Idem Executive Summary page 5.

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