Progress Report:

Tracking Taskforce Recommendations

Social Impact Investment Taskforce established by G8Plenary Session

Stephen Brien, 9th July 2015

22

Social Impact Investment Ecosystem

33

Social Impact Investment Ecosystem

Set measurable impact objectives and track their measurement

• UK – Inspiring Impact Programme & Impact Readiness Fund

• Japan – Dormant bank account fund bill mentions Impact measurement as important task of distributor of the fund

• US - Duke University to track and publish progress of $1.5bn commitments made June 2014

• Australia - Outcomes focus and impact measurement is focus of recommendations to the Australian Treasury

• Italy - "Impact Investing Lab" launched by Bocconi to develop impact investing knowledge

44

Social Impact Investment Ecosystem

Investors to consider three dimensions: risk, return and impact

• France– Citizen Capital and AlterEquity, have successfully closed new impact funds backed by large institutional investors. 90/10 solidarity-based funds growing by 12% to €4.14bn

• Italy- New impact fund with match funding of European Investment Fund: "Oltre II”.

• US - GIIN and Cambridge Associates partnering to provide high quality data on financial returns in impact investing

• UK– Research undertaken on risk /return characteristics of over 400 social investments; Barclays platform to analyse risk return and impact characteristics of HNWI

• Germany- Survey of foundations, HNWI and family offices attitudes towards SII.

55

Social Impact Investment Ecosystem

Clarify fiduciary responsibilities of trustees to consider social as well as financial return

• UK– Legislation underway to grant charitable trustees a specific power of social investment

• Australia- Australian prudential regulator indicated impact can be taken into account as well as risk and return.

• France– Foundations are still working on clarifying eligible investable assets in regard to mission-related investments.

• Japan- Meeting with institute associated with GPIF(Government Pension Investment Fund) to discuss social impact investment

• Germany- Creation of a "Mission-related-investing" working group in the German Association of Foundations.

• US – Discussions under way with Labor Dept re ERISA regs

66

Social Impact Investment Ecosystem

Streamline pay-for-success commissioning / adapt ecosystems to support impact

investment• UK– 31 SIBs, commissioned by Central and Local Government; and

600 entry unit-cost database developed

• US– 7 active deals channeling over $80 million of private capital; and bills being re-introduced for $300 million federal Incentive Fund

• Canada- First SIB launched (by govt of Saskatchewan) - to keep children of supported mothers out of foster care; SIB launched for prevention of strokes.

• Germany- Rollout of SIB for employability of disadvantaged youths in Augsburg.

• Australia- NSW Govt strategy includes two transactions p.a. & disclosure of more unit cost data

• Other SIBs launched in Benelux & India (Rajasthan)

77

Social Impact Investment Ecosystem

Establish an impact investment wholesaler funded with unclaimed assets

• UK– BSC committed £159m, with £210m matching, a total of £359m of new capital available through 36 investors

• Japan- Legislation initiated to use dormant bank account funds to create a wholesaler influenced by BSC

• Italy– A proposal to create a fund of funds for the Social Sector is being considered by the Government.

• Australia- Initial work on vision, mission and mandate to underpin a $350M Australian Social Impact Fund has been completed

• Canada- The MaRS Centre for Impact Investing commissioned a research paper on the current state of unclaimed assets

• France - Bpifrance lauched a €100m fund of funds aiming at leveraging equity and quasi equity

88

Social Impact Investment Ecosystem

Establish grant programmes for social sector capacity-building

• Japan- Included the idea of capacity building into the draft law for dormant bank account fund

• UK – £60m committed over the next decade for capacity building programmes to a new social investment foundation (Access Foundation)

• Australia- $1m Investment Readiness Fund launched to enable social enterprises to access advice to help secure investment

• Canada- Ontario introduced a $4M Social Enterprise Demonstration Fund to provide growth financing for social enterprises

• Germany– Several foundations backing capacity-building programmes aimed at social impact investment

99

Social Impact Investment Ecosystem

Provide appropriate legal forms or provisions to secure social mission

• Japan- Ministry of Economy, Trade, and Industry has proposed new legal form for social enterprises

• US–Idaho and North Carolina pursued benefit corporation legislation, potentially joining 28 states and DC

• Australia- B Corp Australia registered 63 B Corporations including listed entities.

• Canada- Nova Scotia allows businesses to be designated as CICs, with characteristics of both businesses and non-profits

• Italy– Third Sector Bill recognizes measurement of social impact as a distinguishing feature of social enterprises, and allows for capped return to investors (c. 2%)

1010

Support Impact Investment's role in international development

• Italian Agency for International Cooperation includes a “financial arm” to facilitate the development of social impact funds for international cooperation.

• Canada to establish a $300 million Development Finance Initiative to provide financing, technical assistance and business advisory services to the private sector to facilitate and encourage investments in developing countries.

• French Development Agency allocated €100m 2-year envelope to social impact investment with a focus on measurable outcomes. Among other strategies such as early stage equity investments, DIBs will be experimented in French overseas departments and Africa.

• The French private equity professional organization (AFIC) recently created an "Africa" working group, with specific focus on impact investing.

• Exploring opportunities with the Center for Global Development to modernize and reform US and multilateral development finance and impact investing vehicles

• The UK Department for International Development and CDC working on a business case to support the market for DIBs.

• $1b Outcomes Fund proposed to support Sustainable Development Goals

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Appendix

1212

Set measurable impact objectives and track their measurement

UK

• ‘Inspiring Impact’, a ten year sector-led programme launched to build a coordinated and consistent approach to impact measurement.

• Impact Readiness Fund launched to help organisations showcase their impact.

• Nesta developing "standards of evidence for impact investing".

Germany

• Creation and strengthening of Social Reporting Standards, Phineo evaluating impact and building up expertise in the realm of social impact investing.

France

• February seminar on impact measurement held at the Caisse des Dépôts raised profile.

• Finansol implemented industry-wide framework to monitor solidarity-based finance– Metrics cover both retail

90/10 solidarity-based investment funds and solidarity-based bank savings accounts.

US

• Duke U’s Center for Advancement of Social Entrepreneurship to track and publish progress of $1.5bn commitments made June 2014

• Laura and John Arnold Foundation launching a new Evidence-Based Policy and Innovation Division to support rigorous analysis of social programs

Japan

• Fundraising Association introduced impact assessment tool for social enterprises

• Draft law for the dormant bank account fund mentions Impact measurement as an important task of the distributor of the fund

Italy

• Polytechnic University of Milan launched Observatory on Social Impact Finance– In order to track the Italian

impact investing ecosystem.

• SDA Bocconi launched the "Impact Investing Lab" to develop impact investing knowledge.

Canada

• Interest in measurement of impact in the context of social impact bond from governments, foundations, investors, and non-profits.

• Measurement of impact on the part of impact investment funds, profit-with-purpose businesses, and impact investors continues to vary on a deal-by-deal basis.

Australia

• Outcomes focus and impact measurement is focus of recommendations to the Australian Treasury

• Survey of non-profit CFOs being undertaken

• Benchmark survey of investors is in design

• Financial System Inquiry supported impact investment

1313

Investors to consider three dimensions: risk, return and impact

UK

• BSC has committed £159m matched by further £210m

• First social investment tax relief fund launched by UBS

• Barclays analyzing risk return and impact characteristics of investors

• Research undertaken on risk /return characteristics of over 400 social investments

Germany

• Survey of foundations, HNWI and family offices attitudes towards SII.

• Workshop with German banks to gain knowledge on current practice & challenges

• Recommendations on how to strengthen retail-SII to be published in autumn 2015

France

• Citizen Capital and AlterEquity, have successfully closed new impact funds backed by large institutional investors.

• Retail impact products up 13.6% y/y to €6.84bn

• 90/10 solidarity-based funds growing by 12% to €4.14bn

• Government-backed SRI label is on its way

US

• GIIN and Cambridge Associates partnering to gather and provide high quality data on financial returns in impact investing for developed and emerging markets – Includes more detailed

analysis on return characteristics of impact investing funds by sectors, geographies and themes.

Japan

• Awareness-raising seminars, symposium and meetings held with institutional investors, pension funds, and foundations

Italy

• New impact funds and social bonds have been developed.

• New impact fund is born in Italy with match funding of European Investment Fund: "Oltre II”.

• "Investimenti Sostenibili" is another impact fund has been launched by Banca Sella on Jenuary 2015.

Canada

• Impact venture fund with $1m seed capital from Virgin Unite Canada and Mindset Social - For early-stage for-profit companies with core social /environmental mission, measurable positive impact and potential for strong financial returns.

• CAD $3.5 million (£1.8m) has been raised via SVX to date – platform to expand to California

Australia

• Many organizations coming together to collaborate on initial platforms and breakthroughs

• Financial System Inquiry supported impact investment.

• Engaged with the Prime Ministers Business Community Partnership to include impact investment in the framework

1414

Clarify fiduciary responsibilities of trusteesAllowing trustees to consider social as well as financial return

UK

• Legislation underway to grant charitable trustees a specific power of social investment in order to remove uncertainties trustees may have had

• Consultation on changes to investment regulations relating to pension funds, specifically relating to stewardship and fiduciary duty, including aspects on social investment.

Germany

• Creation of a "Mission-related-investing" working group in the German Association of Foundations.

• Setting up of a "Mission-related-investing" fund to invest in the educational sector in Germany.

• Replication of MRI-Fund (planned) in other target areas.

France

• Foundations are still working on clarifying eligible investable assets in regard to mission-related investments.

US

• NAB continues to be part of a growing coalition in conversation with US Secretary of Labor Tom Perez to reform the Department of Labor's ERISA guidance governing pension fund investments..

Japan

• Meeting held with the research institute associated with GPIF(Government Pension Investment Fund) to discuss social impact investment

Italy

• N/A

Canada

• Communications with provincial governments to advance NAB recommendations will continue.

Australia

• Financial System Inquiry recommended clarification of superannuation Trustee duties

• Australian prudential regulator submission indicated impact can be taken into account as well as risk and return.

• Submission made to the Federal Treasury on operationalising recommendation.

1515

Pay for success commissioningStreamlining pay-for-success and adapting ecosystems to support impact investment

UK

• The UK now has 31 SIBs, commissioned by Central and Local Government

• Unit Cost Database covers over 600 government services

• Commissioning Academy has developed a specific module for outcome based commissioning

• Social Value Act review included awareness raising

Germany

• Rollout of SIB for employability of disadvantaged youths in Augsburg.

• Awareness raising in municipal governments for SIBs as a financing and governance tool.

• Planning creation of systematic SIB-feasibility analyses across different fields and municipalities

France

• "Social and Solidarity Economy" Bill comprises rules to foster local public procurement with social clauses.

• A €40m Social Innovation Fund, managed by Bpifrance, officially announced in December 2014. – Aims at granting loans to

"socially innovative projects addressing unmet social needs”

US

• 7 active deals channeling over $80 million of private capital

• Bipartisan bills are being re-introduced for a $300 million federal Incentive Fund

• Legislation related to PFS proposed in 20+ states and passed in seven states

• CNCS Social Innovation Fund awarded 40 PFS grants

Japan

• Three pilot SIB projects with local governments.

• Ministries of Regional Revitalization, Economy, Trade and Industry and Health, Labour, and Welfare showed interests in SIB

• Council on Economic and Fiscal Policy has proposed to enhance SIBs.

Italy

• The Ministry of Education, University and Research is about to define a call for proposal "Social Impact Finance – Una Rete per la Ricerca" to grant 1 million euro to a national research network in order to develop new models of funding based on a pay-for-success logic

Canada

• First SIB launched (by govt of Saskatchewan) - to keep children of supported mothers out of foster care

• Pilot launched by Employment and Social Development Canada to determine market viability and optimal conditions required for social finance models to improve literacy and essential skills

Australia

• NSW Govt strategy includes two transactions p.a. & disclosure of more unit cost data

• Other state governments investigating pay for success

• Work underway to make more transparent fiscal cost of social issues and what performance metrics toward outcomes achievement should look like.

1616

Establish an impact investment wholesaler funded with unclaimed assets

To drive development of the impact investment sector

UK

• Big Society Capital (BSC) was established in 2012. Strategy is to promote investment in SME charity finance, mass participation, innovation and scale.

• £104m has been drawn down by charities and social enterprises, £359m of new capital has been made available across 36 investors

Germany

• N/A

France

• Bpifrance and Caisse des Dépôts are playing the social investment wholesaler role

• Bpifrance lauched in December 2014 a €100m fund of funds aiming at leveraging equity and quasi equity

• Although several MPs are supporting the project, a strong coalition has yet to be built.

US

• N/A

Japan

• The group of politicians to initiate the legislation of the dormant bank account fund is promoting the wholesaler model based on the case of big society capital.

• The draft law will be submitted to the parliament shortly

Italy

• A proposal to create a fund of fund for the Social Sector is at the study of the Italian Government.

• A resolution on Social Bonds has been presented in the Parliament to endorse Cassa Depositi e Prestiti to match national and international impact funds.

Canada

• MaRS is developing a strategy for engaging with finance and government sector stakeholders to explore the possibility of using unclaimed assets to support impact investment market

• The MaRS Centre for Impact Investing commissioned a research paper on the current state of unclaimed assets

Australia

• Initial work on vision, mission and mandate to underpin a $350M Australian Social Impact Fund has been completed

• Work has commenced on governance, structures and tax and business / financial model

• Assessment of Australian position on unclaimed assets undertaken.

1717

Establish grant programmes for social sector capacity-building

UK

• Investment Readiness Programme well established

• £60m committed over the next decade for capacity building programmes to a new social investment foundation

• Access foundation now consulting on design of those capacity-building programmes.

Germany

• Several foundations backing capacity-building programmes aimed at social impact investment (investablility, mission-related-investing, SIBs, etc.)

France

• Longstanding dedicated capacity-building organizations such as Avise

• Programmes / incubators backed by local authorities and private foundations

• Foundations are increasingly seeing capacity-building for social entrepreneurship as a top priority

US

• N/A

Japan

• Included the idea of capacity building into the draft law of dormant bank account fund as one of the investment areas.

Italy

• N/A

Canada

• Employment and Social Development Canada will implement a social finance accelerator initiative to help promising social finance proposals become investment-ready,

• Ontario introduced a $4M Social Enterprise Demonstration Fund to provide growth financing for social enterprises.

Australia

• Investment Readiness Fund launched at initial $1 million with the purpose of enabling social enterprises to access advice to enable them to secure investment

• NSW Government established pro bono advice bank with over 2000 hours committed and first round to launch shortly

1818

Provide appropriate legal forms or provisions to secure social mission

UK

• Government actively exploring the recommendations around governmental support for 'profit with purpose' businesses

• B Corps launching in Sep with at least 50 certified UK B Corps.

• Hogan Lovells developing a guide to how golden shares can lock in social mission for social enterprises raising capital.

Germany

• Financing agency for social entrepreneurs strengthening investability for social enterprises and approaching investors - currently working around the issue of mission lock / alterations to corporate law

France

• "Social and Solidarity Economy" Bill allows for for-profit social enterprises to be labelled “solidarity-based enterprises with social impact”, provided stringent statutory rules are met on equity capital and distribution of profits if any.

• 2 French companies recently announced they were adopting the B-Corp status.

US

• B-Corps well established

• In 2015, the States of Idaho and North Carolina pursued benefit corporation legislation, potentially joining 28 states and the District of Columbia that have passed similar legislation authorizing new social-enterprise enabling corporate forms.

Japan

• The ministry of Economy, Trade, and Industry has been proposing the new legal form for social enterprises.

• The comprehensive strategy for regional revitalization will be published in this year and may include the new legal form for social enterprises

Italy

• Third Sector Bill, allows for capped return to investors and recognizes measurement of social impact as a distinguishing feature of social enterprises.

• Law enables equity investments in social businesses as well as the remuneration of capital in the same percentage as provided by the Italian cooperative model (around 2%)

Canada

• Nova Scotia allows businesses to be designated as community interest companies, with characteristics of both businesses and non-profits.

• British Columbia allows for a hybrid corporate form: Community Contribution Company (C3)

Australia

• B Corp Australia registered 63 B Corporations including listed entities. Also planning advocacy for policy change.

• Shared Value Initiative Australian arm gaining significant corporate support.

• Community Business Partnership considering options for corporate form.

1919

Conclusion

• 1) What has happened in impact investment.

• a. Canada – Foundations’ impact investments

• b. France – Pension funds

• c. UK – Development of BSC

• d. Japan – Work on unclaimed assets

• e. US – SIBs at scale

• f. Pipeline of SIBs to date – mapped across countries.

•

• 2) What has happened in the impact investment ecosystem.

• a. UK – Tax relief legislation

• b. Canada – Charities investing in limited partnerships

• c. Italy – Legislation around definition of social enterprises

•