Impact Investing’

Towards a Plural History of ‘Impact Investing’ by Jennifer Callahan A thesis presented to the University of Waterloo in fulfillment of the thesis requirement for the degree of Master of Environmental Studies in Sustainability Management Waterloo, Ontario, Canada, 2018 © Jennifer Callahan 2018 Author’s Declaration I hereby declare that I am the sole author of this thesis. This is a true copy of the thesis, including any required final revisions, as accepted by my examiners. I understand that my thesis may be made electronically available to the public. ! ! ! ii Abstract Conceived in 2007, ‘impact investing’ is an activity whereby investors intentionally pursue social and/or environmental return alongside financial return. It has attracted increasing interest, including from transnational financial institutions, and proponents offer it as a means to help tackle historically underfunded sustainable development initiatives. The mostly positive reception for impact investing in the literature, however, tends to neglect both the North-South tensions that characterized global financial governance over the previous five decades and the recent emergence of South-South cooperation. Utilizing a critical realist approach, this thesis seeks to interpret the phenomenon of impact investing and understand why it has become popular. I use a framework partially derived from the concept of transnational neopluralism and perform a thematic analysis of written texts about the sector. Though originally nurtured by philanthropic organizations, the results show that impact investing became a central component of a new posture adopted by many Northern governments with respect to developing nations, especially after the 2008 financial crisis. This shift was reinforced by structural economic changes that altered the profit prospects for many transnational corporations based in the North; these included, but were not limited to, a growing emphasis on the management of the environment and natural resources. By connecting the phenomenon to a broader political context, this project adds to the nascent body of academic literature about impact investing and contributes to the institutionalization of the field. ! iii Acknowledgments First and foremost, I want to extend my sincere gratitude to my advisor, Dr. Sean Geobey, who offered significant support and guidance throughout my time at UWaterloo. Your dynamic intellect and generosity greatly improved the quality of this work and were a meaningful portion of the joy I derived from being in the sustainability management program. My deepest thanks also to Dr. Michael Wood, whose generosity and encouragement were very important to the development of this work. This was not just during the time as my committee member, but consistently over the course of these last two years. I also want to thank Dr. Neil Craik for his generous service as reader, and for his insightful and thought-provoking consideration of this work. To my family and friends, thank you thank you thank you for all of the support, and to my parents especially, I very much appreciate the warm hospitality provided during my trips home. Lastly, to the people of Canada, I am grateful for having been welcomed into your country and for the indulgence granted while I learned to pronounce Mississauga. ! iv Table of Contents AUTHOR’S DECLARATION .................................................................................................... ii Abstract ....................................................................................................................................... iii Acknowledgements ..................................................................................................................... iv List of Figures ............................................................................................................................ vii List of Tables ............................................................................................................................ viii Chapter 1: Introduction ............................................................................................................. 1 1.1 Background of the Problem .............................................................................................. 1 1.1.1 Brief History of Sustainable Development .............................................................. 4 1.1.2 Sustainable Development and Investment ............................................................... 7 1.1.3 The Start of ‘Impact Investing’ ................................................................................ 9 1.2 The International Investment Regime ............................................................................. 12 1.2.1 Neopluralism and Corporate Power ....................................................................... 14 1.3 Problem Statement .......................................................................................................... 16 Chapter 2: Literature Review and Framework ..................................................................... 18 2.1 Introduction ..................................................................................................................... 18 2.2 Globalization ................................................................................................................... 18 2.3 Financialization ............................................................................................................... 21 2.3.1 Financial Flows and Development ......................................................................... 24 2.4 A Neopluralist Perspective ............................................................................................. 25 2.4.1 Differing Contexts of Power .................................................................................. 27 2.5 Impact Investing .............................................................................................................. 28 2.5.1 Gap in the Literature .............................................................................................. 30 2.6 Conceptual Framework and Hypotheses ........................................................................ 34 2.6.1 Null Hypotheses ..................................................................................................... 35 Chapter 3: Methodology ........................................................................................................... 36 3.1 Introduction and Research Question .............................................................................. 36 3.2 Research Paradigm ......................................................................................................... 37 3.2.1 Applying a Research Method ................................................................................ 40 3.2.2 Additional Relevance of Professional Experience ................................................ 42 3.3 Data Set .......................................................................................................................... 43 3.3.1 Data Selection ....................................................................................................... 43 3.3.2 Factiva’s Intelligent Indexing ............................................................................... 45 3.3.3 Bounding the Data Sample ................................................................................... 51 3.3.4 Validity of the Search Phrase ................................................................................ 56 3.4 Data Collection Process ................................................................................................. 58 3.4.1 News Searches ...................................................................................................... 61 3.5 Data Analysis ................................................................................................................. 62 3.6 Limitations and Theoretical Assumptions ..................................................................... 63 ! v Chapter 4: Results and Discussion ......................................................................................... 66 4.1 Introduction .................................................................................................................... 66 4.1.1 Overview of Findings ........................................................................................... 67 4.2 Hypotheses Results ........................................................................................................ 68 4.2.1 Hypothesis 1a ........................................................................................................ 69 4.2.2 Hypothesis 1b ........................................................................................................ 74 4.2.3 Hypothesis 2 .......................................................................................................... 77 4.2.4 Hypothesis 3 .......................................................................................................... 80 4.2.5 Hypotheses Summary ........................................................................................... 83 4.3 Thematic Analysis ......................................................................................................... 83 4.3.1 Contested Development ........................................................................................ 86 4.3.2 Complementary Corporate

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