More people in Asia making impact investments
SINGAPORE: Investing with a social cause has caught on in Asia. Some 400 participants gathered in Singapore for an inaugural forum on impact investing. The forum, co-hosted by Singapore-based social enterprise Impact Investment Shujog and Impact Investment Exchange Asia was supported by the Rockefeller Foundation and the Asian Development Bank.
The participants in the forum include social entrepreneurs, as well as investors – who are keen to do good for society while making a profit.
Lending to businesses which create jobs for the poor, and funding irrigation infrastructure to help rural folks boost crop yield – these are some examples of investing for social returns, or impact investing.
Wolfgang Hafenmayer, managing partner at LGT Venture Philanthropy, said: “I think we will agree that we will not find a lot of people who’ll say: ‘I want to destroy the environment’, ‘I want to destroy the social fabric’, ‘I want to destroy society by investing for financial profit.’
“Then we should all agree that impact investing should be the only kind of investing that should be allowed, and that we need frameworks which don’t allow people to externalise the negative consequences of our investments.”
Many impact investors tend to be wealthy philanthropists, but an increasing number of institutional investors are getting involved. This, according to speakers at the Impact Forum.
Grameen Capital India for example, helps generate financing for micro-finance institutions from banks by acting as a guarantor. Since its launch four years ago, it has facilitated debt and equity capital worth US$180 million.
Royston Braganza, CEO of Grameen Capital India, said: “So really, we’re a bridge builder in some sense, to be able to make the connections, make the connectivity, make the links so that liquidity flows from mainstream capital markets to the bottom of the pyramid.
“One of the traditional worries that we’ve had is if we only look at donor money or subsidised money, then we cannot build scale – and we need scaled models to serve the opportunities and the population that’s there in the bottom of the pyramid.”
Ordinary investors can get exposure to impact investing by putting money in a social enterprise, and this could happen soon. Singapore-based non-profit Impact Investment Exchange Asia said it is in talks with regulators to roll out a stock exchange for social enterprises.
Durreen Shahnaz, founder of Impact Investment Shujog and Impact Investment Exchange Asia, said: “This is where it’s coming together very, very quickly. Now, we’re not only looking at organisations who are doing good here or not doing evil, but really companies at the core who are doing good.
“They’re actually making a lot of social impact, doing great work for the poor, for the elderly, for the disadvantaged, and also doing great work for the environmental side as well.”
According to a report by JPMorgan and the Rockefeller Foundation, the impact investment market is expected to grow to about US$1 trillion by 2020. Experts said it can also generate as much as US$667 billion in profits.