Second Liechtenstein Impact Investing Forum: opportunities through impact investing

The second Liechtenstein Impact Investing Forum took place in Schaan on February 6. In her third post, Dr. Ingeborg Schumacher, expert on responsible investing, writes about which future opportunities for impact investing are acknowledged by participants at the event. In her opinion, the event, which featured top-class participants, made the concept of impact investing tangible by means of meaningful examples. 

 

Impact investing can close the gap between financially oriented investments and philanthropic donations.  The investments are characterized by pursuing a clear social or environmental objective. This must be measurable and must represent an important part of the strategy. At the Impact Investing Forum 2014, Barefoot Power, which manufactures small, cheap solar lamps, was mentioned as a good example by Julia Balandina, an expert on impact investing. Five million people in developing and emerging countries are already benefiting from clean, cheap light from its lamps.  Compared to the use of kerosene lamps, the purchase cost can be amortized in six months. Users can also avoid the risk of accidents and cancer by using the lamps.

 

Focal points: health, education, energy efficiency…

Impact investments are usually focused on certain topics such as health, education or energy efficiency, and are offered in quite a range of investment categories. At the same time, investments are differentiated into, first, those that generate a return in line with market requirements: “financial first.” In the area of private equity, annual returns of more than 15% are definitely achieved.  Second, there are strategies for which social benefits are the most important factor – “impact first.” Investors here are quite prepared to accept returns that are lower than market. Investments in microfinance, however, are enjoying increasing popularity. In addition to the social effects, the microfinance indices compiled by Symbiotics in Geneva show an attractive, stable return compared to the performance of conventional investments. They also offer opportunities for diversification via conventional investment instruments.

 

How foundations are using impact investing

Canopus Stiftung represents an impressive example of how innovative foundations can have an effect within the framework of their investment policy.  It is able to benefit from both the capital and the expertise of the founder’s investment company. Investments are made in companies in the area of renewable energies and energy efficiency.  In addition to the initial capital, regular earnings from the dividends of the investment company are directed to the foundation.

 

The foundation’s objective is to support rural energy supply companies in developing countries by taking a “solar for all” approach. This is promoted through various means. The foundation has announced innovation prizes that will acknowledge solar ideas. The foundation has established an investment fund for solar companies in Asia and Africa to further develop the participating companies. There is also a credit program to meet the different financing requirements of projects and companies within the context of the purpose of the foundation. Finally, Canopus Stiftung uses a good network and intensive cooperation with like-minded foundations, development banks and technology institutes to successfully implement the various activities.

 

Additional information is available at the following websites:

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