Two cracking articles today devoted to the general issue of impact investing as well as the issue of impact exchanges themselves. Interesting as they do, er, ‘impact’ on SIBs…
Impact investing is a way of investing with the implicit intention of generating positive social impact with a return on capital. It ends the old dichotomy, which saw business as simply a way to make profit, while social progress was best achieved through charity or aid.
Instead, impact investment sets out to harness the power of business to tackle social challenges – for example, by providing the funding to scale up great ideas like solar lanterns. Businesses that provide low-cost but innovative goods and services for the poor, such as solar lighting, can sometimes be seen as too risky by traditional investors. But risk-taking impact investors have given d.light – a leading US manufacturer and distributor of solar lanterns – the opportunity to prove its business case, transforming itself from a small-scale operation to a thriving global enterprise. D.light produces half a million solar lanterns every month. They are already providing safe and reliable lighting to over 20 million people worldwide and aim to increase this number five-fold by 2020.
D.light is just one of the many success stories that impact investing is producing across the world, in developed as well as developing countries.
It is why David Cameron hailed impact investing as “a great force for social change” and put it high on the agenda of the G8 summit, which the UK hosted last year. But we have only touched the surface of what can be achieved.
The Future Of Impact Exchanges
As part of the first cohort of the Social Innovation Research Group (SIRG), I’ve had the chance to research methods of injecting social capital into social ventures. The convenient overlap of my research with the recent buzz on sprouting social stock exchanges in Toronto and Singapore provided me with the opportunity to interview Adam Spence – of the Social Venture Connexion (SVX) in Toronto – and representatives from Asia-IIX and Shujog – in Singapore – in hopes of answering two key questions.
1. How are these platforms different?
2. How are they approaching the challenge of growing social capital markets from their respective corners of the planet?