By helping Social Enterprises in Asia gain access to capital, Durreen Shahnaz believes it will help them play a greater role in the global fight against climate change. Through Impact Forum and the planned “social enterprise stock exchange”, IIX and Shujog see that a challenge of this scale can only be tackled with the understanding of the intrinsic link between societies and their natural environment. Read More
By Forbes (29 April 2012):
Singapore’s Social Enterprise Stock Exchange to Launch Soon
For impact investors and social enterprises looking for ways to link up, the ultimate dream is to have a stock exchange aimed solely at mission-driven companies.
That’s a difficult feat to pull off, to put it mildly. You need a critical mass of investors and stock-exchange ready companies, not to mention the wherewithal to meet all manner of red tape and regulatory hurdles, as well as establish the technology capable of supporting the venture.
But such an exchange is well underway in Singapore.
It’s the brainchild of Durreen Shahnaz, a former social entrepreneur and banker. About a year ago, she launched Impact Partners, a private marketplace that connects accredited investors with social enterprises making $5 million or less in revenues looking to raise $1 million to $7 million; the median is $2 million. The venture has raised about $70 million of capital, lists about a dozen companies, and has about 140 investors, with four or five more signing up every week, according to Shahnaz.
Impact Partners, however, was part of a larger plan to form a public stock exchange for social enterprises called Impact Investment Exchange Asia, or IIXA. And Shahnaz says she plans to launch it officially at a forum to be held June 25 to 26 in Singapore called Igniting Capital Markets for Social Good. That, in itself, is an ambitious event, with Jonathan Greenblatt, head of the Obama administration’s Office of Social Innovation, as the key note speaker.
Because Singapore regulators insist that the exchange not be open to retail, it will be for accredited investors only, at least initially. But companies will have to meet social, as well as financial, parameters, with general listing criteria such as having a social and/or environmental goal as their main focus and regularly publishing assessments of their social impact. Trading will take place online through a partnership with PhillipCapital Group, the largest brokerage firm in Southeast Asia, according to Shahnaz. As she puts it: “We’re taking their existing platform and white labelling it into our own exchange.”
Still, don’t expect this to be up and running July 1. The launch is more an announcement that the IIX will be open for business soon. For example, there aren’t any companies actually listed yet, although Shahnaz expects some of the investors involved in Impact Partners will migrate to IIX. “This is about opening IIX up to the world,” says Shahnaz.
In the meantime, Impact Partners will continue to provide fuel for IIX. According to Shahnaz, many of the social enterprises that want to participate in the private marketplace need a lot of help before they’re ready for prime time. Many are firmly founded on admirable ideals, with less grounding in financial rigor. So, there’s a lot of work on financials and business plans.
More important, Shahnaz is developing a pipeline, of sorts. Recently, she teamed up with a former Silicon Valley entrepreneur who, after selling his company, moved to Singapore and is looking to give back. Now, she regularly pitches companies–mostly technology startups with, say, systems for water purification or for providing energy to rural areas that are off the grid– to him to receive seed funding. Then, once those companies are ready for their next rounds of funding, Shahnaz hopes they can move to the private marketplace and, after that, perhaps the public stock exchange.
“In the U.S., there’s this whole ecosystem where there’s venture capital funding and a system through which organizations can grow,” she says. “That’s what we’re trying to do here.”
IIX and Impact Partners aren’t the only marketplaces out there aimed at social enterprise. For example, there’s Social Venture Exchange in Ontario, which links accredited investors with companies making $100,00 to $25 million in revenues. Founder Adam Spence hopes to turn that into a public exchange eventually. Similarly, Mission Markets in New York aims to build a hub linking stock exchanges globally. And there’s been an effort underway in London for several years to build a regular, retail social stock exchange.
Still, IIX seems to be the furthest along. And, for Shahnaz, even if there’s still a ways to go in getting the exchange up and running, just making it this far means a lot for the future of impact investing and social enterprise. “It has done a tremendous amount for creating a social capital marketplace,” she says.
IIX & Shujog
To share our pioneering achievements thus far, IIX and Shujog are hosting the biggest Impact Forum to date in Singapore on June 25 and 26. The event will coincide with the launch of Impact Exchange – Asia’s first social stock exchange.
A global conference focusing on the latest developments in Impact Investing and Social Enterprise in Asia Pacific, Impact Forum will bring together Impact Investors, Social Entrepreneurs, academics, high government officials and Ecosystem Partners from across the globe and provide a unique opportunity for learning, engaging, and deepening relationships across the Impact Investing and Social Enterprise spaces.
Social enterprise and climate change
Even with rapid reductions in greenhouse gas emissions, changes in the climate system will continue to unfold over the coming decades. The scientific community has established that the poorest regions will be the most severely affected. Owing to rapid economic growth, developing countries are also likely to become the next biggest contributors to global warming.
For many companies, the risks associated with climate change will be enough to drive action. For others, opportunities for current or future business activities will be an added incentive, but this hasn’t necessarily been beneficial to the most vulnerable populations. For Social Enterprises (SEs), this means sizing up the market opportunities and finding innovative ways to help those most in need.
SEs do not tackle climate change in a ‘silo’. There are two main ways in which SEs play a role in the fight against climate change, while creating positive social impact. First, SEs help reduce greenhouse gas emissions by bringing low carbon energy sources to the disadvantaged population and by encouraging sustainable farming practices. Some SEs help preserve forests as livelihood and ‘carbon sinks’ while others help to change the behaviours or locals and encouraging energy conservation.
Second, SEs help the most disadvantage populations adapt to the impacts of climate change. SEs are closest to the local challenges and can bring about innovative, affordable and much needed services such as flood defence, weather resilient crops, healthcare and micro-insurance instruments to help farmers cope with changing weather patterns.
A recent report from the UN Framework Convention on Climate Change (UNFCCC) estimated that the global cost of adaptation could range from USD 49 to 171 billion per year globally. So far, most private sector efforts have been initiated by large corporations. By helping SEs in Asia gain access to capital, IIX and Shujog plan to help them play a greater role in the global fight against climate change. IIX and Shujog believe a challenge of this scale can only be tackled with the understanding of the intrinsic link between societies and their natural environment.
Online Platforms Link Impact Investors and Triple Bottom Line Companies
Social stock exchanges and match-making services aim to address a gap in a growing market.
By Anne Field for Cisco (12 March 2012):
On the one hand, there’s a burgeoning interest in a brand-new asset class. Called impact investing, it focuses on for-profit companies with a social mission. Enterprises from J.P. Morgan Chase to the Rockefeller Foundation, which estimate the market could grow to as much as $1 trillion over the next 10 years, have been trying to develop the area for several years now. And, by some accounts, there are thousands of so-called double- and- triple- bottom- line companies–businesses with a financial, social and /or environmental mission – – in operation worldwide.
On the other, however, matching impact investors with social enterprises – – another term for these companies – – is another matter entirely. There have been few effective platforms for linking up the two sides. (Social enterprises include anything from companies selling wind farm technology to organizations providing micro-finance to villagers in India.)
That is, until now. Recently, a growing number of efforts, from London to Singapore to New York, have sprung up to address that gap, many incorporating online systems into their platforms. “It’s social technology for social change,” says Adam Spence, founder of the Social Venture Exchange (SVX), a Toronto-based platform aiming to launch later this year. “Technology is the enabler.”
Closer to becoming a reality is Impact Investment Exchange Asia , better known as IIX. It started about a year ago, when social entrepreneur Durreen Shahnaz launched a private online marketplace in Singapore with the intention of using it as a stepping stone to creating a public exchange. Called Impact Partners, so far it’s raised $70 million of capital, listing 12 social enterprises with $5 million or under in revenues raising $1 million to $6 million , and “more than 100 in the pipeline,” according to Shahnaz, and more than 120 investors. “It’s allowed us to get our feet wet,” she says.
But later this year, she plans to launch IIX as a public exchange through which actual trading will happen online. IIX is working with an exchange partner that has an already up and running platform it can leverage. Due to regulatory restrictions in Singapore, the exchange will be open only to accredited investors initially. But, eventually, according to Shahnaz, once it’s a proven concern, the platform will be opened up to the general public. Says Shahnaz: “This represents a fundamental step in a big, global movement.”
Social enterprises need to create success yardstick
Measurement model has to balance flexibility and standardisation
By Timothy Loh for The Business Times (26 June 2012):
As social entrepreneurship gains traction in Asia, one issue that keeps popping up is that of assessing social impact. Unlike traditional business concerned only with financial return, social enterprises (SEs) seek double or triple bottom-line returns, which are not easy to quantify.
According to speakers at Impact Forum 2012, the onus is on the SE sector to create a culturally relevant model of measuring SE success that finds the balance between flexibility and standardisation.
“As we started looking at it, we found there were issues and concerns that were very much (part) of impact measurement in the West, which really were not relevant here in Asia,” said Durreen Shahnaz, co-founder of Impact Investment Exchange Asia and Shujog.
And such a model is needed here, because investors in the region are “much more critical (than those in the West) in terms of the SEs and how they should perform:, she added, something that Shujog found “sobering”.
For one, Asian investors tend to be more qualitative.
She said: “They want something simple, to the effect of ‘Give us a number, or give us one indication if we should invest in this or not’.”
Another issue is sorting out the balance between flexibility and standardisation.
On one hand, because different SEs tend to serve different communities, all of which have unique needs, impact assessment has to take a flexible approach. On the other hand, without a standardised tool, there will be no basis for comparison between different SEs.
Currently, many success measurement models exist. For example, Impact Finance Management, of which Fabio Malanchini is the managing director, has its Kharmax Impact Monitoring System, which divides the indicators that it uses into general, sector-specific and project-specific.
The challenge ahead is to come up with a unified standard for social impact assessment in the region, an effort would take both time and money, the panel cautioned.
“The Generally Accepted Accounting Principle (GAAP) took 50 years to come to where it is today, and we’re just starting on the social side,” said Ms Shahnaz. She is optimistic about the Impact Reporting and Investment Standards (IRIS), created by the Global Impact Investing Network. It marked the first time that an accounting principle was created for the social sector.
It is also important to invest funds to come up with an assessment model, said Sanjay Sinha, managing director of Micro Credit Ratings International.
Laura Callanan, consultant and head for Social Impact Initiative at McKinsey & Company, advocated a learning-based approach as the SE sector moves forward in creating a unified model for social impact assessment.
The model for social impact assessment is also being created in the hope of bringing retail investors, not just institutional investors, into supporting the SE sector.
It has to be easy to understand, and “good enough to allow people to communicate their financial results across the world”, concluded Jeremy Nicholls, CEO of the Social Return on Investment Network.
With much pride I read the front page article in the International Herald Tribune recently about Bangladesh, which was once known as a land of disaster is now known as a land of success. Yes, my country still has its share of problems and hurdles, but the tireless work of many NGOs coupled with effective public policies and private sector initiatives has resulted in the country being a front runner in sustainable development and women’s advancement in South Asia.
This pride of mine spills over to the fantastic work that Social Enterprises are doing across Asia and the role impact investing is playing in helping them grow. Many of the NGOs of the past are the Social Enterprises of today and they are continuing to forge ahead with their work in sustainable growth and development. In order to help Social Enterprises more effectively raise capital from Impact Investors, we recently launched Impact Partners 2.0. If you haven’t yet, please do check out Impact Partners 2.0 which makes it even easier for investors and Social Enterprises to connect.
Our work at IIX and Shujog of the past few years is culminating into our largest gathering yet in Impact Forum 2012. With the theme of ‘Igniting Capital Markets for Social Good’, Impact Forum is gearing up to be an exciting amalgamation of Social Entrepreneurs, Impact Investors, Public Policy Makers and the Eco System Partners. Our special thanks go to our supporters Asian Development Bank, Singapore Tourism Board, National University of Singapore Entrepreneurship Centre, Bloomberg Media, SASA, Prestige Magazine, and the list continues…
I look forward to your comments on Impact Partners 2.0 and to lively discussions at Impact Forum 2012!
From a very, very warm Singapore,
Founder, IIX & Shujog
Durreen Shahnaz, Founder and Chairwoman
Durreen is the Founder and Chairwoman of Impact Investment Exchange and Founder and Managing Director of Impact Investment Shujog. Durreen is Adjunct Associate Professor at the Lee Kuan Yew School of Public Policy. She has a track record as a successful banker, media executive and social entrepreneur. She founded, ran and sold the social purpose business oneNest in New York. She also headed up the Asia operations of Hearst Magazines International, Reader’s Digest Asia, and Asia City Publishing Group. Durreen began her professional career as an investment banker at Morgan Stanley (New York), followed by stints at Grameen Bank (Bangladesh), World Bank (Washington, D.C.), and Merrill Lynch (Hong Kong). She holds a BA from Smith College; an MBA from Wharton, University of Pennsylvania; and an MA from the School for Advanced International Studies at Johns Hopkins University. Durreen was a TED 2010 Fellow and Asia Society Asia 21 Fellow. She is an appointed member of the World Economic Forum’s Global Agenda Council on Social Innovation for 2011 and on the advisory board for CASE i3 at Duke University’s Fuqua School of Business. Durreen is also the Social Entrepreneur in Residence for INSEAD’s Social Entrepreneurship Catalyst Program.