Impact investing is about a very simple idea: markets and money for good. Impact investing is built on the belief that financial tools can play a powerful role in solving the massive global challenges of our day, and that capital markets should work for good as well as profit. This vision is realized through investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.
Every month, PCV will give you a roundup of what’s new in the field, what conversations are taking place, and how you can get involved. Here are some highlights from July:
Potential Game Changer As Gets CalPERS Closer To Divesting From Coal
There was a key vote in the campaign to get California’s state pension funds to divest from coal this past month. The California Public Employee Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) are the US’s largest pension funds, holding a collective $500 billion in assets, and have been to known to lead the way in pension fund investments. Read more.
A Failure In The Social-Impact Bond Market
Green bonds have grown into a more than $40 billion annual market, while social-impact bonds are relatively new on the scene. One early growing pain came this month. The failure of a New York City project, launched in 2012 to reduce the rate at which juvenile offenders go back to jail after release from Riker’s Island, followed last year’s report that the Peterborough, England, the first social impact bond-financed project, failed to meet the 10 percent recidivism-reduction targets needed to repay investors. More detail here, and some takeaways here.
From The Mergers And Acquisitions Desk
Goldman Sachs has recently agreed to buy Imprint Capital Advisors an asset-management firm that advises clients on investing based on their environmental, social and governance views. The bank expects to complete the deal in the next few months. San Francisco-based Imprint Capital has more than $550 million of assets under advisement. In its eight-year history, Imprint has worked with its clients to make more than 120 investments across asset classes, geographies, and impact themes as diverse as education, health care, food and agriculture, energy and the environment, and the economic development of low wealth communities. Read more. And: is this the first of other acquisitions?
SRI Climbs To $4.3 Trillion In 2014
Socially-responsible investing (SRI) in the US has nearly doubled in the last few years, growing from $3.47 trillion AUM in 2012 to $6.57 trillion at the beginning of 2014 according to the Forum for Sustainable and Responsible Investment’s (US SIF) most recent biannual report. That includes $6.20 trillion invested in funds that use environmental, social and governance (ESG) issues as part of security selection and $1.72 trillion in funds that filed ESG issues at publicly held companies (with some overlap).There were also major divestments in that time from fossil-fuel companies and arms manufacturers. Read more.
Green Bonds Take Off In China
China’s first green bond has raised $300 million, as the world’s largest emitter of greenhouse gases seeks new funding sources to help raise about $1.6 trillion over five years to help fix its environmental problems. China is scrambling to lift environmental standards in a country where only eight out of 74 cities met air quality minimum standards and only 25 percent of drinking water achieved national quality standards, according to latest government data. Read more.
Five-Year Review On The Potential And Limitations Of Impact Bonds
While we’ve seen progress over the past decade in some indicators of well-being, the gravity of the social challenges the world continues to face today requires innovative ways to finance and deliver services more efficiently and cost-effectively. Impact bonds bring together elements of these strains of thinking and policy action into one instrument. Over the past five years, since the first social impact bond (SIB) was implemented, an exponential growth in the number of deals has occurred, providing grounds for cautious optimism. Read more.
GIIN and Cambridge Associates On The Impact Investing Benchmark
Impact investors are a tough crowd. For years, proponents have called for more data on impact fund performance and comparable returns to give investors better visibility into the real results of investments intended to generate social and environmental as well as financial benefits. Following the release of the first ever impact investing benchmark the Global Impact Investing Network (GIIN) and Cambridge Associates discuss their approach to creating the benchmark and why this information is important for the field’s continued development. Read more.