By Jocelyne Daw
151902402-300x300
This past November I had the privilege of attending the 8th annual Social Finance Conference in Toronto. Social finance is an approach to managing and investing money in organizations (for profit and non-profit) that delivers a social dividend and an economic return. Like Shared Value it uses market forces to drive social AND economic value. As a Canadian I was proud to see so many tangible examples from our country and to learn how this form of community investing is growing and maturing. Here are highlights from the conference. At the heart of the conference was the increasing value of using market forces to drive better good and deeper sustainable value. There is realization that, along with philanthropy and government aid, private enterprise can contribute to solving social and environmental problems. At the same time, a growing number of investors are expressing a desire to take a different approach to community investment. These are impact investors, who seek opportunities for financial investments that produce social or environmental benefits. What is impact investing?
Impact Investing & Social Finance Defined:
impact-investment-figure-one
The Stanford Social Innovation Review defines impact investing as “actively placing capital in enterprises that generate social or environmental goods, services, or ancillary benefits such as creating good jobs, with expected financial returns ranging from the highly concessionary to above market.”Canada’s MaRS Centre for Impact Investing describes social finance as "an approach to managing money to solve societal challenges". This movement, it goes on to describe, covers many different approaches to creating a positive social impact: socially responsible investments, micro-loans, community investments, and more. Grant making and program-related investments also fall under the umbrella of social finance.Impact investing is the growing movement to invest in ventures and initiatives that will create positive impact in their communities and provide a financial return. The tools of social finance can be used for the for-profit as well as not-for-profit and charitable sectors.
The Link Between Impact Investing & Shared Value
As a member of the Shared Value Initiative I was interested to see how many parallel characteristics there are between Impact Investing and Shared Value. Both seek to create measurable social and financial returns; both strive to provide scale to social impact by leveraging profit-generating mechanisms. The biggest difference between the two is in the “how” and “why”.Impact investing provides investors with opportunities to invest in organizations that aim for a financial return and social value. Impact Investors don’t run the initiative; they invest in making them happen and expect to earn a market return as a result.Shared value on the other hand is a management strategy focused on companies creating measurable business value by identifying and addressing social problems that intersect with their business. Shared value enhances business value and competitiveness. Understanding how “Impact Investing” works, improves a companies’ capability to develop their own impact ventures for shared value.
Leading Canadian Examples Bring the Concept to Life
It was exciting to learn about a number of leading Canadian Social Finance examples at the conference. One of the sessions, a Dragon’s Den-like presentation from twelve of Canada’s leading examples showcased how organizations in our country are working to make market or near-market returns by investing in Canadian for-profit businesses and third-party funds that are tackling social or environmental challenges. The session included 90 second pitches from some of the most promising social start-ups from across Canada, representing a range of impact sectors including clean technology, healthcare/medical devices, education, and affordable housing. The following is a brief overview of each of the featured ventures:
CoPower is an online investment platform that makes it easy – and profitable – to invest in clean energy infrastructure.
Arbutus Medical has developed a $400 alternative to $30,000 surgical drills – the first in a portfolio of medical devices for global health.
SolarShare: Earn a 6% return while supporting 100% clean solar energy.
HigherEdPoints.com is the only company where loyalty points (i.e., Aeroplan® Miles) can be converted into funds for higher education.
ECOTIERRA is a developer of environmental & sustainable development projects, utilizing the revenues of carbon finance for the long term benefits of farming communities.
Brighter Investment: Through private investments in their education, Brighter Investment helps talented students in developing countries get a degree.
ECOFIXE Technologies offers innovative solutions in the biological treatment of wastewater.
Riipen is a skill-building assessment platform that provides students with the ability to gain experience through short-term, skill-specific industry projects and challenges.
Komodo OpenLab is the creator of the Tecla Shield, an assistive device that changes the lives of people with physical disabilities who are unable to use touchscreens.
QUIO Learning Map offers the only software that adapts to different teaching styles and addresses the diverse needs of students.
MEMOTEXT provides digital personalized patient adherence solutions.
Potloc: Choose your next storekeepers.
Learning Bird is an affordable, online alternative to private tutoring.
Prospect Madison is advancing the way the world leads.
Cyclica is focused on using the latest big data and applied analytic techniques to increase productivity in pharmaceutical research and development
PathCore brings innovation to the crossroads of pathology and computation.
Forward Vision Games builds games to teach foundational financial skills
Localize is a shelf-labeling program that transforms how grocers label, promote, and source local products allowing shoppers to make quick, educated choices
Smart Greens grows fresh greens in a refurbished shipping container capable of producing over 1,000 plants for harvest each week
Athollo provides affordable and playful way for parents to develop their child’s vocabulary through talking stickers
logo-footer
7EEDE4DA39339A7953ADB5B44B91ABF4
Three pitches were chosen as finalists and each presented to the full conference group. The crowd chose the final winner. The winner - ECOTIERRA, a developer of environmental & sustainable development projects, utilizing the revenues of carbon finance for the long-term benefits of farming communities, won out over its competitors.Impact investing is an exciting new model to address some of Canada’s biggest social and environmental challenges using the power of the market. For more information, please visit: http://socialfinance.ca/