Impact Investing in Brazil

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April Lawrence
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1 Impact Investing in Brazil Frédéric Kuonen Former Impact Investing Platform Coordinator Oikos Presentation April 2014

2 Impact Investing Our understanding of Impact Investing Investments that intend to generate positive impact 4 beyond financial return. Provide capital Expect financial return 4 Transactions currently tend to be private debt or equity investments More publicly traded investments to emerge Business designed with intent The business (fund manager or company) into which the investment is made is designed with intent to make a positive impact Investments with unintentional positive social or environmental consequences are not Impact Investments 2 The investment should be expected to return at least nominal principal Donations are excluded Market-rate or market-beating returns are within scope to generate positive social and/or environmental impact Positive social and/or environmental impact should be part of the stated business strategy and should be measured as part of the success of the investment 3 Source: JP Morgan (2010) 1

3 Impact Investing A categorization of Impact Investing Source: Monitor (2009) 2

4 Impact Investing in Brazil A categorization of Impact Investing Philanthropy Priority is social/environmental support and change through charitable donations Impact Investing Main goal is social/environmental change combined with moderate financial return Sustainable Investments Main goal is maximized riskadjusted return via sustainability trends Trust & foundations Venture philanthropy Investment in Social Enterprises Value-based investing Investments with ESG screening process Sustainability thematic products as defined by megatrends Charity (Social Return) Profit (Financial Return) Source: Credit Suisse (2012) 3

5 Impact Investing Asset classes and sectors Sectors Source: WEF (2013) 4

6 Impact Investing Business model Source: WEF (2013) 5

7 The HSG Impact Investing Research Platform The platform aims to support the critical industry transformation in Brazil Vision: Act as a leading academic player in the development to maturity of the Brazilian Impact Investing Industry over the next decade Main Objective Support building a functioning marketplace/ecosystem for the Brazilian Impact Investing Industry Why Impact Investing? Creating a new perspective and mindset complementing the traditional finance industry Key Values Academic, neutral and cooperative, aiming to bring together all participants of the industry Source: 6

8 Impact Investing in Brazil Main obstacles to emergence of the Brazilian Impact Investing industry Challenges in Impact Investing* Lack of documentation of proven business models Lack of transparency in the investment process Lack of standardized metrics for impact measurement Lack of a legal framework for investors *as identified by Impact Investors in the second Impact Investing Conference organized by the Hub Source: 7

9 The HSG Impact Investing Research Platform Academic network to support your thesis... Academic Network Wolfgang Reichenberger (Platform Steering Committee) Juergen Bruecker (Platform Steering Committee) Angélica Rotondaro (Platform Delegate) Dietmar Grichnik (HSG Entrepreneurship) Peter Sester (HSG Law & Economics) Rolf Wüstenhagen, Christoph Birckholz (HSG Sustainability) Yvette Sanchez (HSG Latin America Studies) Christa Binswanger (HSG Gender Inclusion) Ernst von Kimakowitz (Humanistic Management) Thomas Zellweger, Frank Halter (HSG Family Businesses) Timo Meynhardt (HSG CVLS) Sergio Lazzarini (INSPER Strategy) Objectives Academic Network Propose research topics and develop projects Develop academic papers Supervise and guide Bachelor, Master and Doctoral thesis Participate in conferences and round-tables Source: 8

10 The HSG Impact Investing Research Platform Current researchers PhD researchers Christoph Birckholz, Impact Investing in Colombia (R. Wuestenhagen) Mariana de Castro, work in progress (P.Sester) Thorsten Helms. Renewable Energies in impact investing (R. Wuestenhagen) Jessica Aschari-Lincoln. Relation between social financial sources and their social beneficiaries. (U. Jaeger, U. Fueglisttaler) Bachelor level researchers Angelo Boutalikakis, Comparative analysis of Impact Investing Funds (E. von Kimakowitz) Nikki Böhler, Facilitating the establishment of social impact bonds in developing countries. (E. von Kimakowitz) Johannes Boch, in the area of measuring impact (T. Dyllick) Paulina Widmer, in the area of microcredit and gender inclusion. Master level researchers Estelle Tanner, Decision making factors on Biomass projects in Brazil (R. Wuestenhagen) Fabian Oppenheimer, Decision processes on portfolio selection of Impact Investing Funds in Brazil (R. Wuestenhagen, C. Birckholz) Laurent Mager, Social Entrepreneurs and Impact Investors: Managing uncertainty in Impact Mediation (C. Birckholz) Frédéric Kuonen, Post-deal involvement of Impact Investors (D. Grichnik) Esther Altorfer. Comparing post-investment of venture capitalists and impact investors: cases in clean technology Objectives Researchers Generate knowledge for the platform Support solving of practical problems in the industry Develop an Impact Investing pilot project in Brazil Source: 9

11 The HSG Impact Investing Research Platform Fellowship-program preliminary draft Impact Investing industry challenges and areas of proposed research Business model Investment process Impact measurement Legal framework Impact Investing Fellowship Program one PhD student for one year two master students for six months Third-party Fellowship Impact Investing Fellowship outcomes Mentor Thesis Academic article Case-study Evaluates research fellow Academic Network Partner Network Gives constant feedback and support Supervises and gives feedback to thesis of fellows Supports the writing of an academic article Promotes the presentation of results at conference Provides casestudy opportunity Supports casestudy field-trip Source: 10

12 The HSG Impact Investing Research Platform Research projects in Brazil - examples of past research projects Pilot research projects a. Structuring a business model for Investing in Education including social bonds, pay-forperformance tools, and measuring impact through RTC b. Research about Meeting Users Needs in Integrated Reporting Integrated Reporting Initiative (IR). c. Impact Investing Funds Mapping in Brazil d. Investors report for a organic soybeans business in Parana Developed by Frederic Kuonen as part of his fieldwork project in Brazil Potential case-study 11

13 The HSG Impact Investing Research Platform Past projects Investor report and business plan update for an organic soybean producer Source: 12

14 The HSG Impact Investing Research Platform Internships in Brazil CooperativeLab Past internships Requirements Fluent in Portuguese (!) Time 6+ months Cultural awareness Excellent personal record Source: 13

15 Backup FYI Source: 14

16 The HSG Impact Investing Research Platform The second Impact Investing Conference in August 2013 Conference Facts Topic: Enhancing Impact Investing in Brazil In cooperation with Insper, Swisscam, ICE, Artemisia and Endeavor 200+ participants: investors, family offices, accelerators, entrepreneurs and academia 12 top-class speakers Panel discussion with accelerators and family offices on how to establish better cooperation for Impact Investing projects Three round tables for Investors and Entrepreneurs on the topics Education, Social Housing and Financing Objective: communicate recent research results and identify challenges in the Impact Investing industry Source: 15

17 The HSG Impact Investing Research Platform Recent developments on facebook, blog and newsletter URL: Facebook: Impact Investing Brazil Source:

18 Contact In case of inquiries or further requests Av. das Nações Unidas, São Paulo São Paulo, Brazil Phone +55 (11)

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