Beyond the Margin: Redirecting Asia’s Capitalism 35th ADFIAP Annual Meeting, 25th April 2012
Yvonne Li, Avantage [email protected]
Asia based
Supports key development sectors in Asia Pacific which address the most pressing challenges and opportunities of our times.
committed to addressing social & environmental challenges
long term investments of USD2 to 5 million
Early exposure to investments in socio-economic solutions underpinning Asia’s development
To create a sustainable future for everyone in Asia
Avantage Ventures
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Regional Trends in Asia
Ageing Population
Social Marginalization
• Longer lifespan• Falling fertility rates in China• Policy-driven demographic changes (e.g. single
child policy in China)
• Income inequality leading to worsening wealth gap• Large communities are economically left behind• Under-provision of public services for groups at
the margin
• Elderly homes and residential care services
• Training geriatric care workers
• Special needs education and vocational training
• Affordable housing• Employment designed for
disenfranchised communities
Limited Resources
• Consumption demand of 4.2bn Asians• Emerging middle-class driven consumptions• Persistent industrialisation and urbanisation• Concerns with food and water security
• Sustainable agribusinesses• Recycling facilities• Waste management
Climate Change
• Environmental challenges in water, air and ecological conditions
• Global imperative to cut greenhouse gas emission• Governments adopt low carbon growth strategy
• Affordable clean energy• Energy efficiency• Water management
Beijing LangLang School
Qingdao Yanguang Elderly Home
Big Tree Farm
Spectrum of Social & Financial Objectives
ESG (environmental, social and governance) is a generic term used in capital markets and used by investors to evaluate corporate behavior and to determine the future financial performance of companies. They are a subset of non financial performance indicators that includes sustainable, ethical and corporate governance issues such as managing the company’s carbon footprint and ensuring there are systems in place to ensure accountability.
DFIs and Impact Investing9
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Traditional DFI Investments Impact Investing
Profit Maximisation Profit and social impact maximisation in social enterprises
Invests in theme based funds such as SMEs, clean technology, infrastructureOverlay with ESG principles
Invests in social enterprises - SMEs with positive externalities and with an explicit social mission through innovative business models
Track financial performance as key indicator
Track social and environmental performance on top of financial performance
Development Finance Institutions10
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Uniquely placed to spur private sector dollars to finance:•Global public goods – climate change remedies/micro energy efficient solutions•Narrowing income divide in frontier countries•Strengthening financially successful social enterprises•Building healthcare and education infrastructure and networks
DFIs can achieve this by:• Changing the risk perception of social enterprises in Asia Pacific by providing
“stamp of approval”• Knowledge sharing through linkage programmes• Integrating social enterprises into global supply chains• Leveraging field experience and knowledge of intermediaries to further
investment and outreaching to social enterprises who offer sustainable and innovative solutions to social and environmental issues
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Market Size and Opportunity
JPMorgan November 2010 report classifies impactinvesting as an emerging asset class globally. Theirreport looks at impact investing opportunities at BOPand estimates a potential market of $400 billion to $1trillion.
Avantage Ventures September2011 report estimates aninvestment opportunity ofbetween $52 billion and $158billion within Asia-Pacific’ Refer to ‘Beyond the Margin: Redirecting Asia’s Capitalism’.
Market Size of Impact Investing in Asia
Source: Avantage Ventures Analysis 2011
Social /Environmental Impact
Financial Impact
Triple Bottom Line
Enhance local communities’ livelihoods
Community empowerment
Promote sustainable agricultural practices
Preserve scarce natural resources
Use clean energy and reduce harmful greenhouse gases
Balance financial returns with social and environmental ones
Grow sustainably Generate profits to
scale impact Create disposable
incomes thereby stimulating vibrant local economies
“If social enterprises are nurtured and their
activities and investments allowed to grow both
in scope and reach, societies are likely to
change their views about how business and
investment can be best used for the betterment
of the entire population. In this way, investors
can directly shape the course of progress in the
Asia-Pacific region.”
Yvonne Li