positive impact initiative … · of strategy 9 - sdg finance improving current business models new...
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P O S I T I V E I M P A C T I N I T I A T I V E
R E T H I N K I N G I M P A C T T O F I N A N C E
T H E S D G S
3 R D & 4 T H S E P T E M B E R 2 0 1 8
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Positive Impact Manifesto – the need for an impact-based paradigm
Principles for Positive Impact Finance –moving towards a common language
Tools & guidance for holistic impact management
UNEP FI’S POSITIVE IMPACT INITIATIVE
How to address
the financing gap
for sustainable
development?
RETHINKING IMPACT TO FINANCE THE SDGS
A POSITION PAPER & CALL TO ACTION
• What do we mean by an impact-based paradigm?
• What are the implications for the finance sector?
• What about other stakeholders?
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1. WHAT IS “THE FINANCING GAP”?
Global financing gap: US$2.5 Tn, of which US$1.3 Tn in Africa,
mainly in infrastructure
Figure 1: SDG financing gap - Advanced vs Emerging & Developing countries vs Africa
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Advanced countries Emerging markets &
developing countries
Africa
ODA DFIs MDBs
SWF
FDI (greenfield)
REMITTANCES
MICROFINANCE
PRIVATE EQUITY
CROWDFUNDING
INSTITUTIONAL INVESTORS
FOUNDATIONS
THE SDG FINANCING GAP IS FIRST AND
FOREMOST A BUSINESS MODEL GAP
• Limitations in public
and private financing
• Current private-public
partnerships are not
enough to overcome
these limitations
Figure 2: SDG Financial Flows Relative to SDG Investment Needs
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2. POSITIVE IMPACTS CAN BECOME PART OF
BUSINESS MODELS
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Client / Client
Needs
Free
services
For profit
services
New
servicesData
Figure 3: Business Model Evolution
• 4th industrial revolution: moving from product centred
strategies to multi-service strategies
• Client and client needs are the new value generators
• SDGs = fulfilling needs = creating positive impact
> Positive impacts as carriers of financial value, rather
than externalities
EXAMPLE: THE MULTI-IMPACT LAMP-POST
Figure 4 The multiple impacts of a lamp-post
Security, health & mobility:
CCTV, traffic monitoring
air quality, etc.
Communication:
Wi FI relay
Energy & Communication:
Charging mobile devices
Energy, Mobility, Air quality &
Health: Charging electric vehicles
Security and mobility:
Street lighting
Security:
Emergency calls
Energy:
Solar panels
Business & culture:
Advertisement
Security & Mobility:
Loudspeakers
Culture & well-being:
Esthetics, decorations
(e.g.Christmas), etc.
Biodiversity:
Bird nests
Mobility:
Street signs
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• Repayment of investment via multiple service contracts (less
exposure to counterparty risk)
• Reduction of cost-to-impact ratio
EXAMPLE: THE GLOBAL SERVICE COMPANY
FOR ENERGY EFFICIENCY
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• Integration of the impact value chain means the positive impact
(energy efficiency) can become the driver of the business model
and enable significant growth
• Reduction of cost-to-impact ratio
Passive Energy Efficiency
Manufacture Distribution Installer ESCO
Artificial Intelligence
Connected Object
Big Data Crunching
ESCO
Global ServiceCompany
Global Integration of services:2,3,4,5 & 6
6Active Energy
Efficiency
5Public Utility
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Energy Supply
Client Database
Telecom Company
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Telephone Services
Client Database
Billing
Internet Business
2
Internet services
Client Database
Billing
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Figure 5 Impact value chain – Energy Efficiency
3. UNDERSTANDING & DRIVING CLIENTS’ &
INVESTEES’ POSITIVE IMPACTS IS A MATTER
OF STRATEGY
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- SDG FINANCE
IMPROVING CURRENT BUSINESS MODELSNEW BUSINESS
MODELS
No consideration
of impacts
Consideration of negative
impacts
Consideration of positive
impacts
Holistic consideration
of impacts
Impact-based
business
+ SDG
FINANCE
Figure 6 – The Impact Journey
IN PRACTICE…
«Positive Impact Finance is that which serves to finance Positive Impact
Business. It is that which serves to deliver a positive contribution to one
or more of the three pillars of sustainable development, once any
potential negative impacts to any of the pillars have been duly identified
and mitigated.»
The Principles for
Positive Impact Finance
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Environmental
Social
Economic
NEXT STEPS – TOWARDS A POSITIVE IMPACT
ECOSYSTEM
Improving current business models
Guidance & Tools for the implementation of the Principles
New business models
> Stimulating demand: impact-based programmes / requests for
proposals11
Frameworks
• How to implement holistic impact analysis, building on frameworks currently used by financial institutions’? What is a Principles –compliant product/service?
Impacts
• What impact categories to use to identify potential positive impact in the market and inside portfolios? How to monitor, measure and report on impact?
YOUR QUESTIONS, YOUR FEEDBACK
• What do you make of this new conception of impact-based business
and finance?
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STAY TUNED
• Next PI Webinar: October, focus on implementation
• Release of final position paper and first Principles guidance / tools
at the UNEP FI Global Roundtable, from 26-28 November in Paris.
• Positive Impact Updates: sign up online
http://www.unepfi.org/positive-impact/positive-impact/
Consultation open until 15 September.
• Paper & feedback form available for download:
http://www.unepfi.org/positive-impact/rethinking-impact/
• Twitter: #PositiveImpactNews
• Linked-In:
https://www.linkedin.com/feed/update/urn:li:activity:642787491518091
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THE MORE FEEDBACK THE BETTER:
HELP US SPREAD THE WORD
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THANK YOU
unepfi.org/positive-impact
Steering Group
• Andrew.Parry@hermes-
investment.com
Secretariat