Investing for greater good, Part 2
As discussed last week, impact investing offers an opportunity for institutions or individuals, including family businesses, to generate positive societal or environmental benefits for selected sectors, while at the same time, getting good financial returns.
Southeast Asia has been attracting investor interest in the past several years. According to the nonprofit Global Impact Investing Network (GIIN), almost a third of impact investors already invest in Southeast Asia, and 44 percent plan to increase allocations in 2019.
“Development Finance Institutions (DFIs) invest in enterprises and projects that improve socioeconomic outcomes and catalyze the flow of commercial capital to sectors that otherwise would not receive investment,” reports the GIIN.
“The International Finance Corporation is the largest … contributing to almost 70 percent of all deals and more than 65 percent of all capital … in the region.”
From 2007 to 2017, Indonesia and the Philippines have received the most impact investments, with 2016 being a banner year “with over $1 billion deployed through 12 deals in the energy sector alone.”
DFIs have deployed $2.3 billion through 43 direct deals in the Philippines, but private investments have also increased to a total of $107.2 million through 54 direct deals.
Clean energy, such as solar or geothermal power, has received the most impact investments from both DFIs and private investors.
According to the GIIN, for private investors, “workforce development and agriculture are promising sectors, with many deals in recent years.”
DFIs have also invested in “commercial banks that work to expand financial inclusion and provide loans to small-and-medium enterprises, [with] health care, education and tourism [as] up-and-coming sectors.”
Gender lens investing is also on the rise, with five private impact investors deploying $40 million in more than 30 deals targeted to improve the lives of women in the Philippines, Indonesia and Vietnam.
GIIN CEO Amit Bouri is optimistic about impact investing in Southeast Asia.
“However, much remains to be done, and I encourage those not yet engaged in impact investing to get involved and consider the impact value of your investments,” he tells me.
“Your capital has the power to have a positive impact on the world.”
RS Group, a family office in Hong Kong, is certainly making an impact. In 2008, founder and head Annie Chen attended a conference where she realized the financial crisis stemmed from the sole pursuit of profit at any cost.
Chen has since resolved to use money to benefit society, not as an afterthought, but front and center. RS Group is helping Hong Kong’s Social Ventures in social innovation and entrepreneurship and Seattle’s Landesa on land rights for the rural poor, particularly in China. Mitigating climate change and building Hong Kong’s ecosystem are also priorities.
“We recognize the great privilege and responsibility in managing wealth,” says the RS Group on its website. “We aim to make all RS Group’s capital work for good through creating positive financial, social and environmental value. We believe if our world is to change course and develop more sustainably, we can no longer approach our problems in a bifurcated way where we invest with the aim of only financial gain and use a small amount of the profits for social good.”
Their approach is not for the short-sighted or faint-hearted, but in the long run, everyone benefits.
“We can invest seed capital in a startup company which requires us to be patient before we see any results and we can balance that with a liquid, publicly listed investment which provides us with our operating capital.
“Focusing on the bigger portfolio and managing for financial performance with impact means each investment balances another.”
Wishing you a joyful and peaceful year ahead!
Visit the GIIN at http://theginn.org.
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