Finance for good
Today we had the absolute pleasure of hearing the amazing Jacqueline Novogratz, founder of Acumen, speak at an event in Guernsey. The event, titled Finance for Good, was hosted by the local PWC office and our very own advisor, Justin Sykes, also played a key role in facilitating the event.
First of all what is meant by finance for good, impact investment or a term used by Acumen of patient capital?
When you look at the global challenges we face and the UN millennium development goals, they are not going to be solved through charity or aid alone. This is where impact investment can play a vital role. With two-thirds of the world’s population still living in poverty, with over 1.5 billion without access to clean water we need a new approach to finding new solutions that can scale to maximise impact.
Global Impact Investing Network (GIIN) definition of Impact Investment is a good starting point; “Impact investments are investments made into companies, organisations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.”
It is about the private sector being a force for good and playing a critical role in providing access to capital needed to solve some of the biggest problems we face in the world today. That capital comes with an expectation of possible returns and more importantly a clear focus on positive impact and the intention to generate measurable social or environmental impact.
So what is the opportunity for Guernsey and does it matter?
Guernsey has the opportunity to position itself as one of the leading jurisdictions for impact investing and being a conduit in providing capital for social and environmental good.
Looking at the numbers, at the end of 2015 Guernsey’s investment funds industry sat at £226.7bn. Imagine if Guernsey finance organisations began to speak to their clients about impact investment opportunities and focusing on social and environmental benefits alongside financial returns?
This opportunity does matter. If we are going to make any sort of dent in the worlds problems of poverty, healthcare, disease, education and climate change for example then we will need the involvement of the private sector and access to capital to make real, sustainable change happen.
Why does it matter to us as a Charity?
Our vision is to help empower as many people as possible overcome extreme poverty in a sustainable way. Our foundation for achieving this is by implementing Savings and Loans Groups, which provide an environment for people to access small loans to develop income generating activities. Most of the people in our groups join us living on less than $2 a day.
As our group members develop their small businesses and increase their income some will go on a ‘graduation journey’ where, over time, they will require access to more formal financial services and larger capital. As a charity we have access to thousands of small business owners in Africa, many of which will be entrepreneurs with aspirations and ideas for bigger and better things for their communities. The people and small businesses could be the perfect customer for impact investment.
From our viewpoint we have much of what we already need.
- Are we a trusted international finance centre? Yes
- Do we have strong and effective regulation? Yes
- Do we have access to funds? Yes
- Do we have access to Government to ensure they support the finance for good opportunity? Yes.
- Do we have local organisations that can assist with impact investment projects on the ground? Yes. (That’s where we come in!)
- Do we have passionate and knowledgeable people in this area? Yes.
So what is holding us back from setting out on the road to being an island that delivers financial services that help solve the worlds biggest problems?
Guernsey has the opportunity to avoid focusing only on making more money, and set it sights on making money more…more impact, more purpose, and more effective at delivering social and environmental change around the world.