Transition to Impact Economies a Global Overview

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Transition to Impact Economies a Global Overview Transition to Impact Economies A GLOBAL OVERVIEW SUPPORTED BY: Transition to Impact Economies A GLOBAL OVERVIEW SUPPORTED BY: C Contents INTRODUCTION 1 ACRONYMS 2 COUNTRY PROFILES Argentina & Uruguay 6 Italy 73 Australia 10 Japan 77 Bangladesh 14 Kenya 81 Brazil 18 Mexico 85 Canada 22 Netherlands 89 Central America 26 New Zealand 93 Chile 30 Nigeria 97 Colombia 34 Norway 101 Costa Rica 38 Portugal 105 EU 42 South Africa 109 Finland 45 South Korea 113 France 49 Spain 117 Germany 53 Sweden 121 Ghana 57 UK 125 Guatemala 61 USA 129 India 65 Zambia 133 Israel 69 ACKNOWLEDGMENTS 137 1 Introduction To navigate the complexity of achieving a future where no one lives in poverty and the planet thrives, we need a simple unifying principle: that it is the role of all actors in society to examine how their actions affect the public and the planet. It is only when these actors consider social and financial impact in equal measure – while allocating resources – that we will witness the transition to Impact Economies. The growth of a vibrant Impact Economy will be evidenced by business, investment, policy and consumption decisions that deliver tangible improvements in outcomes for people and the planet. This booklet contains brief descriptive profiles of those countries in which the National Advisory Boards (NABs) have taken the lead in facilitating this transition. It includes current snapshots of impact investment ecosystems, significant initiatives undertaken by key actors, and an overview of the emerging priorities across 22 different countries. In compiling this data, we found that a large number of countries are well on their way to the development of Impact Economies, with momentum underway across the political, business and social spheres. While this progress is encouraging, much work needs to be done if a complete transformation is to be achieved by 2030. This will require key stakeholders to come together, agree on priorities and deliver concrete action. This is the first time that a country-by-country overview tracking the progress of 22 countries towards the onset of a new economy is being published. The effort will be replicated year-on-year, to ensure that accurate, up-to-date, and comparable data is available to those seeking to better understand the development of Impact Economies. Methodology The data for this report was collected mainly through secondary research which included grey literature, academic papers, news websites and published materials. We sought input from NABs to verify the data gathered through desk research, resolve discrepancies, fill the data gaps and gather more up-to-date information which might not be publicly available. 2 Acronyms AAB Australian Advisory Board GRI Global Reporting Initiative AIF Alternative Investment Funds GSB Graduate School of Business AIFFP Australian Infrastructure Financing Facility for IAF India Aspiration Fund the Pacific IBA Indigenous Business Australia AUM Assets Under Management ICO Instituto de Credito Oficial AWIF Asia Women Impact Fund ICT Information and Communication Technology BA fund Business Angel fund IDA International Development Association BB Bangladesh Bank IDP Inter-American Development Bank BBBEE Broad-Based Black Economic Empowerment IFC International Finance Corporation BOP Base Of the Pyramid IIA Impact Investing Australia BRAC Bangladesh Rural Advancement Committee IIBA Impact Investing and Business Alliance CDFI Community-Development Finance Institutions IIIC Indian Impact Investors Council CEDIF Community Economic Development Investment Funds ILO International Labour Organization CEF Caixa Economica Federal IMK Impact Management Korea CHP Community-Housing Providers IMM Impact Management and Measurement CITR Community Investment Tax Relief IMP Impact Management Project CSR Corporate Social Responsibility JSE Johannesburg Stock Exchange CSV Creating Shared Value KPI Key Performance Indicator DFAT Department of Foreign Affairs and Trade LAC Latin America and the Caribbean DFC Development Finance Corporation LDC Least Developed Countries DFI Development Finance Institution MRI Mission-Related Investments EaSI Employment and Social Innovation MSME Micro, Small and Medium-sized Enterprises EDP Energias de Portugal NAB National Advisory Board EFSI European Fund for Strategic Investments NAFIN Nacional Financiera EIB European Investment Bank NBS Norm-Based Screening EIF European Investment Fund NDP National Development Plan ESG Environmental, Social and Governance NHIF National Housing Infrastructure Facility ESUS Solidarity Enterprises with a Social Purpose NII National Insurance Institute ETF Exchange-Traded Fund NPO Non-Profit Organization FSA Financial Services Agency NPS National Pension Service FSC Financial Services Commission NSW New South Wales GDP Gross Domestic Product NYSERDA New York State Energy Research and GHG GreenHouse Gas Development Agency GIIN Global Impact Investing Network OPIC Overseas Private Investment Corporation GPIF Government Pension Investment Fund PRI Principles for Responsible Investment 3 RAB Regional Advisory Board SIIF Social Impact Investment Foundation RGGI Regional Greenhouse Gas Initiative SIMI Social Impact Measurement Initiative RIAA Responsible Investment Association Australasia SME Small-to-Medium Enterprise SAHF Social and Affordable Housing Fund SRF Sector Readiness Fund SDC Swiss Agency for Development and Cooperation SRI Socially Responsible Investing SDG Sustainable Development Goals SSE Social and Solidarity Economy SEBI Securities and Exchange Board of India SVF Social Venture Fund SEND Social Entrepreneurship Network Deutschland SVSF Social Value Solidarity Fund SFF Sustainable Finance Forum TASE Tel Aviv Stock Exchange SFI Social Finance Israel TDI The Difference Incubator SIA Social Impact Acceleration UCT University of Cape Town SIB Social Impact Bond UNPRI UN Principles for Responsible Investment SII Social-Impact Investment VC Venture Capital 5 COUNTRY PROFILES Argentina & Uruguay EU Japan South Korea Australia Finland Kenya Spain Bangladesh France Mexico Sweden Brazil Germany Netherlands UK Canada Ghana New Zealand USA Central America Guatemala Nigeria Zambia Chile India Norway Colombia Israel Portugal Costa Rica Italy South Africa 6 Argentina and Uruguay Market Overview Argentina’s economy is among the largest in Latin America and In Argentina while the current administration appears open to impact the Caribbean (LAC). Its territory contains vast natural resources, investment, highly fertile lands and great potential for renewables. The country it has not yet implemented necessary regulatory changes (e.g., is a leading agricultural and livestock producer, with significant allowing foundations to invest in SIBs or other impact investment manufacturing opportunities and innovative high-tech services. initiatives, or enabling companies to be registered as social enterprises). Uruguay is a highly egalitarian society by regional standards, with a Market Builders high per capita income, low inequality and poverty levels, and little extreme poverty. Both countries are among the region’s leaders on In 2016, regional market builder Acrux Partners joined the IADB and international indices measuring well-being.1 IMF to launch a call for proposals for the first regional impact fund for Argentina, Paraguay and Uruguay. It also helped create Argentina’s first SIB. IMPACT INVESTMENTS HIGHLIGHTS Argentina and Uruguay are home to relevant organizations such Supply of Impact Capital as Social Lab, the Seed Capital Fund for Impact Entrepreneurs in Multilateral organizations such as the IADB, FIM, CAF, UNDP and Argentina, the NAVES program and B Labs. Other regional entities such the World Bank have provided financing in both countries. as Socialab, NXTP Labs and Startup Chile are also active, along with In 2017, the IADB’s Multilateral Investment Fund invested international accelerators such as Techstars, ANDE and 500 Startups. USD 5mn in NXTP Labs, an early-stage impact-investment fund. In 2018 it invested in Argentina’s first Social Impact Bond.2 Governments in both Argentina and Uruguay, through their IndicatorsA AR UR Ministries of Development (ANDE), innovation (ANII, Secretaría GDP total (2011 PPP $ billion) 838.2 71 de Planeamiento Estratégico BA) and Production (SEPYME), Total Population (millions) 44.3 3.5 have greatly contributed to the supply and intermediation of capital towards impact investment. With changes in government GINI Index 42.4 39.7 beginning in 2020, it is unclear if the progress made by the HDI 0.825 0.804 previous administrations will be continued and enhanced. MPI N/A N/A Intermediation of Impact Capital EPI 59.30 64.65 In Argentina, between 2013 and 2017, eight impact investors struck 16 deals worth USD 7.4mn.4 In 2018, the Argentinian government launched FONDECE, a venture KEY PLAYERS capital fund focused on market intermediaries. The fund uses Asset Owners Asset Managers Impact Entrepreneurs ESG criteria as a part the selection process, and agreed to open Organización Román NXTP Labs Arbusta / Njambre the fund to Impact investment funds during the second round in 2020. In October 2019, FONDECE opened a soft credit line for IRSA Potencia Ventures Arquelite impact entrepreneurs. IFC Elevar Equity (AR) Agua Segura In both countries, the largest deals are led by regional and Potencia Ventures Thales Lab (UR) Mamotest (AR) international investors such as NXTP Labs, Elevar Equity, Endeavor IADB Lab Tokai Ventures (UR) Afluenta (AR) Catalyst and TPG Rise, followed by private investors. Other
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