#upj15 · a primer on impact investment ryan little . 2 what is impact investment? definition...

#upj15

#upj15

Corporate Impact Investing: Neue Finanzierungsmodelle

!  Ryan Little, BMW Stiftung !  Fabian Suwanprateep, Beyond Philanthrophy !  Christophe Poline, Schneider Electric

Moderation Felix Dresewski, HIT-Stiftung

Präsentiert von

UPJ March 19, 2015

A Primer on Impact Investment

Ryan Little

2

What is impact investment?

Definition adapted from WEF, GIIN & FASE

“An investment approach that

intentionally seeks to create both

financial return and positive social

and/or environmental impact that is

actively measured.”

3

What is impact investment?

Source: E.T. Jackson & Associates: „Accelerating Impact Investment“

4

The actors

Adapted from Big Society Capital, G8 Social Impact Investment Taskforce

Pension funds & insurance companies

Corporates (CSR or

“Breakthrough”)

Foundations

Mutual funds (incl. SRI)

Billionaires & Family offices

HNWIs (>€1MM)

Mass Affluent (€100k-€1MM)

Mass retail (<€100k)

Public development banks (KfW)

Banks (proprietary investing)

EU regional development funds (i.e.,

LEPs)

Supply of capital/ investors

Government

2

Intermediaries

3

For-profit social enterprises

Charitable organisations

Recipients

4

Debt

Equity

Transactional banking (e.g. GLS Bank)

SIBs

Financial products

Fund managers (e.g.

BonVenture)

Crowdfunding

Investment readiness

(e.g. FASE)

Angel networks (e.g. ClearlySo, Toniic, Impact Angel Society)

Foundations

Guarantees / risk sharing

Quasi-Equity /Mezzanine

Strategic partners

(e.g. Impact Hub, Taproot)

Current

Mid-Term

Future

5

What it means to the social sector

If every foundation in the US allocated 5% of its endowment to impact investing, it would double the amount of capital that is available to social organisations from total annual grants

-The First Trillion

Traditionally-invested endowments of German foundations

Interest @ 3% - funding available to organisations

Traditionally-invested endowment of German foundations

15% of endowment allocated to impact investments available to organisations

Interest @ 3% - funding available to organisations

Impact capital available to social sector organisations in Germany

…with traditional, grants-only financing …with grants and impact investing

€100 Billion

€3 Billion €3 Billion

€85 Billion

€15 Billion

€100 Billion is an estimate of the Bundesverband für Deutsche Stiftungen 3% is a BMW Foundation internal assumption

If every foundation did what the BMW Foundations are doing, we would increase the at-work capital in Germany from €3 Billion to €18 Billion during any given year

6

Why do investors make impact investments?

Source: GIIN, J.P. Morgan. Based on responses of 47 investors who make impact investments

•  Notice that several of the answers given are purely financially-focussed

•  Increasingly investors are seeing the value of impact investment as simply good business

•  Not to be underestimated: client demand. Imagine if pensison-holders demanded social impact from their pension investments…

•  Over the next years and decades, we could see trillions of dollars put to social use from traditional, corporate investors

Motivations for traditional investors to allocate capital to impact investments

Are impact investments riskier?

Source: KL Felicitas Foundation

KL Felicitas Foundation Global Public Equity vs. MSCI World Index

“...we have come to the conclusion that strong (environmental, social, governance [ESG]) capability today is a predictor of future financial performance; in other words, to predict a company’s financial performance, pay attention to its current ESG capability.

-Gavin E.R. Wilson, CEO, IFC Asset Management Company

Charly Kleissner

Founder, KL Felicitas Foundation

Founder, Toniic

Founder, 100% IMPACT

8

The growth of impact investment

Source: C Clark, J Emerson and B Thornley, A Market Emerges: The Six Dynamics of Impact Investing, The Impact Investor project, 2012

Culumulative number of impact investment funds globally, 1970-2012

Source: Toniic E-Guide, Fall 2013

$4.4 Billion $400 Billion - $1 Trillion

Market size could increase 10-25 x in ten years!

9

What are the challenges?

Source: GIIN, J.P. Morgan; images: Business Insider, World Bank

Multiple challenges to the growth of the impact investing industry

„I say, old chap, where are the deals?“ „Now , where is the funding to scale?“

10

Thank you!

Ryan Little

[email protected] @ryanglittle

1"

Corporate"Impact"Inves0ng"–"An"Outlook"for"Germany"19/03/2015"

Fabian&Suwanprateep&&Projektmanager"Beyond"Philanthropy"–""invest"impact"GmbH"[email protected]""

Jahrestagung&des&UPJ5Netzwerks&engagierter&Unternehmen&&und&Mi;lerorganisa>onen&

2"

02&Overview"Corporate"Impact"Inves0ng"

6"9$

•  The"development"of"corporate"engagement"

•  Corporate"impact"inves0ng"at"a"glance"

•  Comparing"and"contras0ng"corporate"impact"inves0ng"

03&Outlook"for"Germany"

10"12$

•  The"German"Landscape"of"Corporate"Impact"Inves0ng"

01&Beyond"Philanthropy"

3"5$

•  Mission"

•  Services"

Agenda"

3"


6"9$





10"12$



3"5$

•  Mission"

•  Services"

Agenda"

4"

What"is"our"mission?"Ac0ve"Philanthropy"connects"philanthropists"and"social"investors"in"a"safe"space,"Beyond"Philanthropy"supports"businesses,"founda0ons"and"individuals"through"tailored"advisory"services."

Planting the idea.

DONATES PROFITS

Nourish the idea and let it flourish.

non-profit for-profit

Ac>ve&Philanthropy& Beyond&Philanthropy&

5"

In"which"areas"does"Beyond"Philanthropy"operate?"Beyond"Philanthropy"supports"clients"in"the"process"of"formula0ng"an"idea"and"implemen0ng"it."

Conducting research

Formation

Selecting initiatives

Developing strategies

Managing projects

Establishing structures

Evaluation

Support"the"process"of"crea0ng"social"impact"organiza0ons"(founda0ons,"social"purpose"organiza0ons"etc.)"

Finding"the"suitable"strategic"direc0on"for"a"philanthropic"commitment"and"social"investments"

Developing"organisa0onal"structures,"analysing"and"reviewing"areas"of"interest"for"funding/inves0ng"

Examining"poten0al"projects"for"funding,"connec0ng"sponsors"and"projects"

Accompanying"the"implementa0on"of"selected"projects,"including"communica0ons"and"monitoring/repor0ng"

Conduc0ng"project"evalua0on"for"the"purpose"of"impact"assessment"

6"


6"9$





10"12$



3"5$

•  Mission"

•  Services"

Agenda"

7"Source:"modified"from"Impact"Economy"2014,"“Driving"Innova0on"through"Corporate"Impact"Venturing:"A"Primer"on"Business"Transforma0on“"2014"

The"development"of"corporate"engagement"In"the"development"from"a"compliance"centered"approach"towards"value"crea0on,"corporate"impact"inves0ng"could"have"the"poten0al"to"be"a"new"tool"in"corporate"engagement,"innova0on"and"value"crea0on"

Compliance"

Corporate"Philanthropy"

Strategic"CSR"

Responsive"CSR"

Corporate"Impact"Inves0ng"

Integra>

on&in&core&bu

sine

ss&

Compliance&vs&Value&Crea>on&

Focus"on"responsibili0es" Focus"on"value""

Sustainable"venture"

Unsustainable"venture"

8"

Social/Environmental&&+&Financial&Return&

Impact&Inves>ng&

Strategic&+&Financial&Return&

Corporate&Venture&Capital&

Corporate"impact"inves0ng"at"a"glance"The"emerging"trend"of"corporate"impact"inves0ng"(CII)"combines"elements"of"impact"inves0ng"and"corporate"venture"capital"(CVC)"

Corporate&Impact&Inves>ng&

Social/Environmental&+&Strategic&+&Financial&Return&

9"

Comparing"and"contras0ng"corporate"impact"inves0ng"The"table"below"illustrates"the"commonali0es"and"differences"between"the"three"different"concepts"

Impact"Inves0ng" Corporate"Venture"Capital" Corporate"Impact"Inves0ng"

Investor" Funds,"founda0ons,"individuals" Companies,"corporate"fund"or"a"designated"investment"en0ty" Companies"and"their"employees"

Investee" Impact"inves0ng"funds"and"social"enterprises"" Innova0ve"external"companies""

Starteups"and"spineoffs"with"environmental"and"social"goals"/"afributes,"impact"inves0ng"funds"

Financial"investment"form"" Equity,"debt,"quasi"equity" Equity Equity,"debt,"quasi"equity"

Nonefinancial"investment"(0me,"talent"and"trust)" !" ! ! Expected"financial"return" !" ! ! Expected"strategic"return" x" ! ! Expected"environmental/social"return"

!" x" !

10"


6"9$





10"12$



3"5$

•  Mission"

•  Services"

Agenda"

11"

An"Outlook"for"Germany"While"several"major"German"companies"have"established"corporate"venture"capital"companies,"only"Tengelmann"has"in"addi0on"a"corporate"impact"inves0ng"vehicle"

Company& Corporate&Venture&Capital& Corporate&Founda>on& Corporate&Impact&Inves>ng&

BMW&i&Ventures&Seeks"starteups"with"the"poten0al"to"create"a"las0ng"impact"in"the"area"of"mobility"services"

Robert&Bosch&Venture&Capital&GmbH&Invests"in"starteup"companies"either"directly"or"via"a"venture"capital"funds"on"a"worldwide"basis"

Siemens&Venture&Capital&Iden0fies"and"finances"young"companies"worldwide"during"their"starteup"phase"

T5Ventures&Supports"fastegrowing"companies"from"the"first"growth"phase"un0l"market"success"

Tengelmann&Ventures&Focus"on"early"and"later"stage"investment"in"consumer"internet"companies,"internet"marketplace"and"technology"ventures"

???&

???&

currently&&under&considera>on&

???&

n.a.&

12"

""

PROJECT"MANAGER"

Beyond"Philanthropy"e"invest"impact"GmbH"Monbijouplatz"2"D"e"10178"Berlin"T"""+"49"[0]"30"240"882"4e23"F"""+"49"[0]"30"240"88"24"10"[email protected]"www.beyondphilanthropy.eu"""

Fabian"Suwanprateep"

Thank"you"very"much!"

From global commitment to personal involvement

As the Global Specialist in Energy Management and Automation™

25 billion € revenue (FY 2014)

44% of revenue in new economies (FY 2014)

170 000+ employees in 100+ countries

~5% of sales dedicated to R&D

A large company, with a balanced geographical footprint and a commitment to sustainability

Confidential Property of Schneider Electric 3

Understanding the world we are living in Sustainability as a megatrend

vs

Energy demand CO2 emissions

The facts The need

Energy efficiency and resources efficiency are a must

for the planet ... and the bottom-line

The energy dilemma* The energy gap**

Find business solutions for long-term development

collaborating with public and private actors

The rise of awareness

Culture and values

Customer & public

Regulation & ratings

Build a culture and a comprehensive disclosure on

environmental, social and governance data

not only to comply but make it a competitive advantage and

transformation driver

Billion people have no access to energy

Million people live in fuel poverty in Europe

Sources: * IPCC report / IEA World Energy Outlook ** IEA World Energy Outlook / Ashoka poverty study 2013


Confidential Property of Schneider Electric

Fostering energy access

Solutions for the energy gap

People Fighting fuel poverty

Providing an answer that has an impact

A measured commitment: The Planet & Society Barometer > Communicated quarterly > Audited annually

Contributing to solve the energy equation With…

A recognized commitment •  Presence in the DJSI since 2002 •  Presence in the CDP since 2011 •  #10 of Global 100 most sustainable corporations

Solutions for Efficiency

Active Energy efficiency, Energy management & Sustainability services

Smart cities

Smart grid

Business practices

Products and sites

Employees

Communities

Ethics & Responsibility

Innovation

People

Business


employees committed with Schneider Electric Foundation actions, during 2013

employees on mission to support the BipBop program through Schneider Electric Teachers NGO

sustainability fellows sharing sustainability best practices & actions through the Company’s Social Network

Employees inFrance have invested in the Access to Energy Saving Plan

Engaging all our employees to fuel our sustainability journey

top managers have performance incentives linked with sustainability

3693


Since 2009

Fostering access to reliable, affordable and clean energy

people supported to be trained in energy

investments in France, Africa and India

million households gained access to energy

A combined approach of business and philanthropy: Business, Innovation & People at the Base of the Pyramid

Partners & collaboration to succeed

11 2 More than 50 000

P

IBBOP

P

IBBOP



The Schneider Electric Foundation Highlights

16 years

118 Foundation delegates

+ 38,633 colleagues involved

+700 partners

77 countries

Training in the energy field

Fighting fuel poverty Awareness to sustainable development

3 main programs:

8

You can bring your contribution & make the difference!!

9 Confidential Property of Schneider Electric

How to get involved?

Schneider Electric Teachers volunteers 319 missions Q2 2014 www.teachers.schneider-electric.com

Employees on secondment in ONG ≈ 30 applications since the launch in Oct. 2013 www.schneider-initiatives-entrepreneurs.com

Volunteers involved whithin the annual campaign 38,633 people involved in 2013 www.foundation.schneider-electric.com

Foundation’s delegates 118 delegates covering +100 countries www.foundation.schneider-electric.com

Schneider Energie FCPE


A dedicated “impact” investment fund: Schneider Electric Energy Access - SEEA

Support the creation of companies dedicated to tackling fuel poverty issues

Promote the development of business that provide energy access in rural areas

Support the deployment of innovative energy access solutions that use renewable energies for the Base of the Pyramid

Europe International

Creation: July 2009 Current size: € 5M ● Schneider Electric: €3M ● Schneider Energie Sicav Solidaire: 1.700K€ ● Others 200 K€

Return objective: 2-5% In France: Euribor + 100 Internationally: 5 à10%

Investment time: 5 - 7 years


Ses caractéristiques

Chiffres clés: 3 700 Collaborateurs souscripteurs et 8 M€ investis 5 M € aujourd’hui disponibles pour les projets BipBop 0, 82 % taux de rentabilité 2014 du SE FPCE

Schneider Energie FCPE


International Investments Mars 2015


Investments in France : Inclusive social businesses providing low rent and energy efficient housing

Foncière Chênelet

LVD Energie

#upj15 · a primer on impact investment ryan little . 2 what is impact investment? definition...

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