In this video, NDTV speaks to investor Mark Kahn who is the founding partner of venture capital firm Omnivore, specifically focused on investing in agriculture and food technology startups.

3rd April 2017, Hyderabad, India – Spandana Sphoorty Financial Limited (“Spandana”) has raised ~INR 650 crores (over USD 100 million) in equity capital from a Kedaara Capital led consortium including Ontario Teachers’ Pension Plan, and ~INR 1,100 crores (~USD 170 million) of debt capital from IndusInd Bank, Yes Bank and ICICI Bank on March 31, 2017. Spandana, one of the microfinance institutions (“MFIs”) that was severely impacted by the Andhra Pradesh (“AP”) microfinance crisis in late-2010, was referred to Corporate Debt Restructuring (“CDR”) by its lenders in 2011. However, under the strong leadership of its founder Ms. Padmaja Reddy, Spandana has turned around its operations, leading to Kedaara’s investment, and, uniquely amongst its peers, a successful exit from CDR. All 37 of the company’s lenders supported Spandana through the CDR process, and have now had their outstanding restructured loans repaid in full. Unitus Capital was the exclusive financial advisor to Spandana for the equity investment. Spandana was founded by Ms. Reddy in 1998, with the aim to provide unsecured income generation loans, micro-enterprise loans, agricultural family loans, and loans-against-gold to its underserved low-income clients in rural and semi-urban areas of India. Prior to the AP crisis, Spandana was the second largest microfinance institution in India, with a portfolio of INR 4,500 crores (USD 790 million) across 11 states, with AP contributing to a significant part of its portfolio. It was the most profitable MFI in India at the time, with industry-leading operating metrics, and on track for a successful IPO; but like other AP-based MFIs, got significantly impacted by the AP crisis. However, with support from lenders and investors, and through the commitment and leadership of Ms. Reddy, the company was able to continue to grow its operations outside AP, and steadily turn around the business. Driven by best-in-class operational practices, the company has been highly profitable for the last three years, and has built a high quality, well diversified loan portfolio outside of AP. Spandana now operates in 13 states across India, with ~540 branches in various rural and semi-urban areas, and has over 2 million borrowers with a portfolio outstanding of INR 1,325 crores (~USD 200 million), with a target to once again become one of the largest, and most profitable MFIs in the country. The company also leverages its vast distribution network in rural and semi-urban areas to improve its clients’ quality of living by offering other products such as solar lanterns, mobile handsets, consumer durables, etc. Nishith Desai Associates was the legal advisor to the company, AZB & Partners was the legal advisor to Kedaara Capital and Cyril Amarchand Mangaldas was the legal advisor to all 37 lenders. Commenting on the fund raise: Padmaja Reddy, Founder & Managing Director, Spandana Sphoorty Financial Limited said: “This is an amazing turn-around, and we are excited to have Kedaara Capital as our partner in our next phase of growth. This equity infusion from the Kedaara led consortium, along with new debt support from the banks, has helped us to clear all of our debt repayments, exit CDR, and position us to once again become one of the leading MFIs in India. This success is the consequence of the commitment and dedication shown by the entire Spandana team. We are very excited that Kedaara Capital had the vision to see the true capability of the organization, and had the belief in our ability to further build on it.” Sunish Sharma and Manish Kejriwal, Managing Partners of Kedaara Capital added: “This transaction is in line with Kedaara’s focus of investing behind, and taking very large stakes in, high quality businesses with potential to create market-leading positions driven by very talented management. Despite several obstacles post the AP Crisis, Spandana has been able to demonstrate strong recovery, good growth and great profitability over the last three years. We strongly believe in the passion, commitment, dedication and strong leadership of Padmaja and are confident that our partnership will go a long way in building the most credible, transparent, respected and highly profitable MFI in India. We believe this is an opportune time to invest in the MFI sector, with Spandana being especially well-positioned to benefit from the sector tail winds, due to its best-in-class leadership, a geographically well-diversified loan portfolio, and a strong reach across its target geographies.” Abhijit Ray, Co-Founder & Managing Director, Unitus Capital shared: “We, at Unitus Capital, are proud to have developed a strong relationship with a highly credible, immensely efficient and profitable institution like Spandana, led by a dynamic leader – Ms. Padmaja Reddy. With the infusion of capital from Kedaara and leading banks, Spandana can resume its journey of high growth and scale new heights.” This article appeared on Unituscapital.com.

What distinguishes India’s ecosystem from others’ is the existence of 2% corporate social responsibility corpus New Delhi: Sir Ronald Cohen is chairman of the Global Social Impact Investment Steering Group with 13 countries—the G8, India, Israel, Brazil, Mexico and Portugal—as partners. He is in India to attend three round tables in Delhi, Mumbai and Bengaluru to discuss and explore the potential of the impact investing sector in India. The events have been put together by the Impact Investors Council, the industry association of impact investors in India. Ahead of the round table in Delhi where he will meet sector experts, CEOs and foundation heads, Cohen talks about impact investing, and why governments can’t solve all social problems. Edited excerpts from an interview: Connecting capital markets with the social sector—how can one get better traction for that in India? It seems to me, based on the exposure I have had in the last 24 hours, that what distinguishes India’s ecosystem from others’ is the existence of this 2% corporate social responsibility (CSR) corpus. That does not exist anywhere else in the world. It happens to fit in well with what we are trying to do because impact investing is about connecting entrepreneurs who have social objectives with the capital markets in the same way as entrepreneurs who want to make money or who belong to the technology innovation space. The idea that we have been developing in India with the Impact Investors Council is that if CSR money can flow into professionally managed charitable funds whose aim will be to be a (social) Outcomes Fund. But the current CSR law does not allow for this… Creating a social impact bond (a contract in which a commitment is made to pay for improved social outcomes that result in savings) can be the answer to this. The CSR law allows you to commit funds to not-for-profits or charitable organizations. These funds can be a part of an Outcomes Fund. The Outcomes Fund can be structured in a way that it does not make profit but is paying to make the non-profits sustainable. Of course clarifications will be needed if this can be possible. How do we deal with trust deficit between the social sector and investors or even the government? This exists in other countries too. For me this is a question of measurement. The problem arises when you don’t measure and people question whether the money was wisely spent or not. The strength of impact investing is that at its core it is all about measurement. You can’t connect a return to a metric unless somebody has agreed on the metrics and signed off. I think it is a good way of combating the trust issues and in this way the money begins to go to someone who can really deliver the results. Measuring social impact is tough and expensive… It was never that easy to say how much profit is being made earlier either. We have gone through a revolution in accounting since the 1929 crash till today. In the same way that you needed to have financial accounts to raise finance, you need impact accounts to raise impact measurement. It’s part of doing business. We all complain about the cost of financial reporting but we do it. It will be the same with impact. You have previously said that the key to a social revolution will be the young people… In India, like elsewhere, the young people want more meaning than just making money. In the UK and the US, the best and the brightest instead of going to big consulting firms or investment banks want to join the social sector, and it’s not about not getting those jobs. This generation has had enough of the consequences of making just money. They consider that the financial crisis is from greed and they don’t want the same thing to happen. They are inheriting what they consider to be a threatened society and planet. Why do people feel the need to bridge the gap between those left behind and those who have it all? I think something has changed. The one proposition that everyone agrees with is that there is an urgent need to help those left behind. Why? There is a bit of empathy and also there is the sense that the system will just collapse upon itself because of social tensions. It’s just untenable. Start-ups get so much attention, social entrepreneurs do not get the same kind of interest from investors. Why? It’s because today investors have not yet made—they will though—allocations to impact investments. My basic proposition is that we move the world where we used to manage in the 19th century just financial return to the 20th century where we added risk to return to now when we actually measure risk, return and impact. The world has to move to “I want both social and financial returns”. In order for that to happen, pension and insurance funds, and wealthy individuals have to make an allocation to impact investing so that when they see young social entrepreneurs walk in, the people judging them aren’t asking is this as good as say a tech investment? These investors have to ask what is the combination of financial and social return, and does it suit me? They have to be perhaps willing to accept just a 10% financial return because of the 35% social return that the investment will bring. What kind of checks should be in place for impact investing to make sure that the social objective is not compromised for profit? With social impact bonds, it’s easier than it is for profit-with- purpose businesses because in the former you adjust the metrics so that you get results but you can’t get around it. You either deliver the results or you fail. With the latter, I think, you need to lock in the mission, and get the legal mechanism going. In the UK, we are using the Golden Share which has to vote in favour of the change in mission. So the mission remains locked in. If you don’t have a corporate structure like that, investors will worry that you are in it just to make the money. This article first appeared on Livemint.com.

The European Investment Fund invests EUR 10 million in an experiment aimed to find jobs for 2,500 immigrants in Finland within three years, while helping employers find the skilled labour they need. In the experiment, implemented by the Ministry of Economic Affairs and Employment, the employment of immigrants is promoted through private investment. The SIB (Social Impact Bond) model of impact investing is to be used in the experiment. – What is new in the SIB model is that the activity is financed by the investors who also bear the financial risk. The public sector pays for the proven outcomes only – that is, when an immigrant finds a job, says Jari Gustafsson, Permanent Secretary at the Ministry of Economic Affairs and Employment. – The Investment Plan for Europe and the European Fund for Strategic InvestmentS (EFSI) included in it are innovative tools to get investment moving in Europe. Today’s contract is indicative of the growing role of EFSI in promoting societal projects, in this case concerned with the integration and employment of immigrants. The project is the first of its kind in Europe, and we will follow its impact very closely as we hope it may serve as a model for others. I wish the best success to all who benefit from the education, training, apprenticeship and employment opportunities offered by the project, says Jyrki Katainen, European Commission Vice-President responsible for jobs, growth, investment and competitiveness.

Customised training for specific jobs

Immigrants’ unemployment has for years been 2 to 5 times higher than that of the native population, and it takes much more time for them to enter the labour market. In the experiment the employment of immigrants is facilitated by bringing training to workplaces and customising it according to what is needed to do the job. – Immigrants who find employment strengthen the viability of municipalities and Finland’s economic growth. With the growing numbers of immigrants, it is even more important than before to facilitate their entry to the labour market, Permanent Secretary Gustafsson says. The companies participating in the experiment represent sectors that have difficulties in finding workforce, such as the manufacturing industry, building, trade and services. The experiment is first carried out in Uusimaa and Southwest Finland, and it will be extended to regions where there is a shortage of labour as considered necessary. – Valmet Automotive is currently recruiting large numbers of employees. In this situation it is important to find people who are motivated and committed to their work. Immigrants are one of the groups of people where we have found such employees, and I believe we will find more of them in the future. The SIB project improves the basis employment skills of immigrants to facilitate their entry to working life. The way we see it, we also have an important role in supporting the integration of immigrants by employing them, says Tomi Salo, HR Director of Valmet Automotive.

Impact investing model used in the experiment

The Social Impact Bond model was brought to Finland by the Finnish Funding Agency for Innovation Sitra. In the SIB project the performance objectives are specified in great detail, both for the wellbeing set as the target and for the economic benefit. The achievement of the targets is measured on a regular basis. – The experiences gained from the Integration SIB project will also be used in the future Employment SIB project, specifically aimed to promote the employment of the young and long-term unemployed, Permanent Secretary Gustafsson says. The Government decided on the Employment SIB project in the mid-term policy review, and it is to start in the autumn.

The Finnish investment field appears to have adopted responsible investment as a part of the basic principles of investment activities, but impact investment still poses challenges for capital investors. This was the result of a recent study commissioned by the Finnish Innovation Fund Sitra and the Finnish Venture Capital Association (FVCA), and carried out by Deloitte Ltd. Currently, the impact – i.e. the effect of such investing – is primarily evident as a by-product of long-term investment activities and it is not necessarily used as a part of the marketing or investment strategies. This is largely due to the development stage of the impact investment ecosystem in Finland. According to the study, the transition to impact investing is gradually occurring through responsible investing. Responsible investing merely considers social, environmental and ethical issues in investment decisions, but impact investing has a goal of generating a beneficial impact on the world along with a financial return. Impact can be seen as an extension of responsibility, which is supported by both the interviews of institutional investors and the survey results conducted on capital investors. The survey indicated that the majority of capital investors are currently operating in the area of responsible investment, but are moving towards being impactful. Sitra regularly interacts with a wide variety of investors in order to ensure that the development of the investment market in Finland is as balanced as possible where increasing their knowledge and, in turn, making impact investing decisions are concerned. The main results of our collaborative impact investing study are presented in the slide set below.

Effective, impact-based investments in well-being are under way.

The Finnish government decided that it will use the performance-based SIB model (Social Impact Bond) for employment trials and for decreasing the exclusion of youths, among other things. This is great news, as the current scarce economic situation forces both the government and the municipalities to develop new tools for the improvement and funding of well-being. The SIB, which was introduced in Finland by Sitra, is one of these tools. It connects the public sector, investors and service providers so that everyone benefits. “The SIB agreement doesn’t just acquire goods and services; it acquires results and impact. In addition, it provides the government and municipalities with opportunities for risk-free funding external to the budget,” emphasises Sitra Impact Investment Project Director Mika Pyykkö.

Objective: decreasing youth exclusion

The Finnish government’s objectives are especially to reduce the number of young NEETS (Not in Employment, Education or Training) and to promote the employment of youths. One of the methods of achieving this goal is the SIB project to support youth employment and to decrease exclusion. The project will be prepared during the spring and summer of 2017 by the Ministry of Economic Affairs and Employment, Sitra and municipalities that are interested in the project. (See the government memorandum, Section 12, link in Finnish) The memorandum states that the current system to support the well-being, education and employment of children and youths is too complicated, and that the effectiveness of measures is decreased by lack of coordination and collaboration. However, the SIB model will enable support for youths and families which is more effectively timed and tailored specifically to their situation and needs.

Trials to promote employment

The government plans on, for example, procuring novel, diverse service concepts for youths in challenging labour market positions from private sector service providers. The projects will be privately funded through the SIB model and the service procurements will be realised using innovative procurement practices and performance-based agreements. (See the government memorandum, Section 14, link in Finnish)

Target-oriented investments in well-being

An SIB agreement defines the measurable objectives for increasing well-being. Institutional and private investors fund the services that promote well-being and assume the risks associated with the provision of these services, while the public sector only pays for the results that fulfil the objectives. In other words, the government or the municipality do not have to pay until the results have been verified. “Impact investment is a method to solve problems through carefully planned, consistent and front-loaded investments,” says Pyykkö. SIBs are already being trialled in Finland in two projects. The first of these enhances occupational well-being in the public sector and the other, a project headed by the Ministry of Economic Affairs and Employment, accelerates the employment of immigrants. There are approximately 30 municipal SIB projects planned in different parts of Finland, including Vantaa, Hämeenlinna, Lahti, Lappeenranta, Tampere and Oulu. The objectives of these projects range from the well-being of families, children and youths to promoting the independence and employment of senior citizens. The value of the public sector’s procurements reaches approximately 35 billion euros annually. Therefore, the purchase of impact also means the more productive use of billions of euros in tax revenue.

By doing modeling you are already answering the question about the Theory of Change: How a strong social welfare system can use the best of the private sector by articulating a successful Social Impact Bond (SIB) model.

I recently went to Finland to discover a very interesting case of when and how SIBs can be used to solve social problems. As a German Chancellor Fellow who is researching social impact investing initiatives in Germany and other parts of Europe, the first thing I learned was that SIB is not the solution to all social problems. Furthermore, the question of how to use SIBs can at times be very challenging.

The reason why Finland is developing SIBs so quickly is mainly because of Sitra´s role. Sitra is determined to accelerate SIBs in Finland, acting like a middle man in charge of the most difficult job, which is educating the public sector how to use SIB models to tackle specific issues.

The other differential for me is that Sitra knows exactly how to act in a new scenario of big government and municipality reforms and is pragmatically answering the questions of the Theory of Change in this new context. Here are some key considerations I would like to make of their model:

• Together with partners, Sitra defines specific targets and incentives. All sectors (public sector, start-ups, big for-profit corporations, non-profit organizations) learn how to work together in a new collaborative way and share common goals.Investors realize the key role they need to play and that is why they accept lower returns to keep the value of the impact purpose. There is a maximum cap return rate agreed with investors, and the surplus of the return goes to the government. 
• With the recent changes in Finland´s public administration, the customers will have more freedom of choice to choose services among more private enterprises. Consequently, the government will work diligently on measuring the impact of these service providers making sure the quality of services will be preserved. 
• Conflicts between long-term SIB investment and 12-month governmental budget cycles are addressed with long term contracts and commitments between service providers and government (municipalities), considering their tasks. 
• Finland is very data driven and has a recognized engineering culture. This is a competitive advantage because of the experience and knowledge to create complex mathematical models.

Finally, the fact that the government is leading this change is the most important guarantee that impact investing, and especially SIBs, is a priority for them. This makes me confident to say that Finland will have very good examples of impact models to show to the world in the future.

Sitra’s Impact Accelerator has provided more than a dozen companies and organisations with tools for demonstrating the benefits of their activities to society. The third accelerator has started this autumn.

So far, the Impact Accelerator has provided more than a dozen companies and organisations from different parts of Finland with tools for demonstrating the benefits of their activities to society. The third accelerator, with ten new participants, has started this autumn. Companies use impact as a competitive advantage, because customers, investors and other funders are all interested in the impact that a company can produce. By impact we mean the longer term results provided by a certain service or product. For example, providing a home for a young person in danger of exclusion not only opens the door to his/her own home but also a metaphorical door to employment, study, society and well-being. “We must be able to clarify the added value of impacts and make it concrete. The well-educated customer and investor of today wants facts,” says Heidi Humala, a coordinating advisor for Sitra’s Impact Accelerator activities. Sitra’s education and mentoring programme is meant for companies and organisations whose services support well-being in Finland. From among about 50 applicants for the third accelerator, eight companies and two organisations were selected. These work to promote the well-being of children, families with children and young people, the independence of elderly people and well-being at work or in general life. The participants are Global Learning Innovations Oy, Health Revolution Oy, Intelles Informatica Oy, Lifted Oy, Nicehearts ry, Lauste Family Rehabilitation Center, Sininauha Oy, SOS Children’s Villages, Vibemetrics Oy and Helsinki Deaconess Institute’s VAMOS services. The selection panel included experts from Sitra, Fiban, Vertical, xEtu and Arvo-liitto Association, and the following criteria were applied to the applications: demonstrating that an impact chain exists, potential for scaling, team expertise, preparedness and the need to invest. “The selection from among many good applicants was not easy. In addition to the selection criteria, we tried to evaluate how the needs of the applicants and the contribution of the Impact Accelerator programme would meet. Another aim was to ensure that we could assemble a team that was compatible and provided possibilities for peer learning and cooperation”, Humala explains.

New investment targets for the impact investing markets

Impact investing helps to promote the common good in terms of targets and productivity. Most often, the investments target a company whose activities enable the desired change, be it prevention of exclusion of young people, the education of immigrants or the promotion of well-being at work. “Impact investing is not charity nor maximisation of profit: it is situated between these two extremes. It seems this form of investment is striking a chord with more and more investors. Striving for economic profitability and societal impacts in many ways produces positive results for building the future,” according to Mika Pyykkö, the head of Sitra’s impact investing team. The concept covers many kinds of instruments, from loans to equity instruments and to results-based financing agreements known as SIB (social impact bond) agreements. For companies, identification of impacts thus opens doors to new forms of financing and new sources. Impact investing is still a novel subject both in Finland and around the world. For markets to really take off, good investment targets are needed, that is, companies whose impact has been verified and who can communicate this to investors. One of the aims of the Impact Accelerator is to improve the preparedness of the participants for investment and financing. “This is the golden thread in all of our undertakings,” says Heidi Humala. “The training reaches its climax in an event where the participants pitch their companies to potential investors.” The implementation of the training days is the responsibility of Impactor Consulting, Vaikuttava yritys, Suomen Säätiötilipalvelu and Etula Group together with Sitra’s experts. Municipalities and the state are also paying more heed to what they want to accomplish with the 35 million euros that are channelled every year to public procurements in Finland. Procurements based on results are of interest, because the improved well-being achieved through them can be verified. This then will enable efficient targeting and use of tax revenues, among other things. Mika Pyykkö emphasises that “a company which can show by calculations that its services function well and that it can reduce the need for social services has an advantage over a company whose major selling points are based on assumptions and arguments.” The third accelerator will continue until December 2016 and will be the last for the time being, because Sitra’s impact investing project will end next summer. “Next we are planning an accelerator of accelerators to ensure that the impact aspect will tie in as a natural part of the expertise and contents of other Finnish accelerators. It has also been wonderful to see how interested other accelerators have been in this subject,” says Humala.

On the “hardcore” side of impact investing is the concept where the core of the business itself is generating an impact and the cash flow is directly connected to it.

The blog was first published at ArcticStartup.com. The phrase “impact investing” can often be heard in the investment community. It features in most new funds’ marketing communications and many claim their investment activities have some form of impact or another. In a way this is true. All investments do have an impact. When money leaves an investor’s pocket it will always set in motion a chain of events that leads to an impact. The impact can be small or big, positive or negative, intentional or unintentional. However, the form it takes and how big it actually is/was is rarely fully understood. But there will always be an impact and this is sometimes causing confusion when talking about impact investing. Many investors think impact investing is the same as following ESG (environmental, social and governance) guidelines. Following ESG guidelines is the minimum requirement for a business to be called sustainable. One could argue that ESG is about minimising the harm done to society and if no harm is done, then it must be good. But to actively pursue a positive and measurable impact with investing is something that should really be called impact investing – and sustainable investing. A further step is a goal of measuring and maximising the positive impact achieved with any invested euro. On the “hardcore” side of impact investing is the concept where the core of the business itself is generating an impact and the cash flow is directly connected to it. The impact has been monetised and will provide incentives to both the entrepreneur and the investor. This can be accomplished for example with payment-by-results contracts combined with impact-value- sharing investor agreements. Impact investing can be seen as a spectrum where ESG-compliant investing is at the one extreme and monetised impact is the other, with several variations in between. Financial instruments do not necessarily have to be complicated. Social impact bonds (SIBs) are often tailored and require a certain amount of complexity by default. However, impact investing can be done with the normal set of financial instruments available to any investor: equity, loans and convertibles. The impact can be built into the instruments (financial returns depend on measured impact) or into the governance of the company through impact clauses in shareholders’ agreements or financing agreements. There are studies that show strong financial performances of impact investment funds. In some cases, they have already outperformed conventional funds. This is actually quite easy to understand as impact investment funds invest in companies that address problems that are found in our society. And it is usually a good thing financially if one is able to meet a customer’s needs. Many fund managers have already noticed this opportunity. Impact investment assets worth some $77 billion were under management at the end of 2015, according to the Global Impact Investing Network’s (GIIN) annual survey. Social impact investing is seen as a huge market opportunity for the future. When compared to other fields where impact investing is emerging – environmental and development aid for example – social impact investing has one advantage from an investor’s perspective. The public sector is struggling with budget deficits and social challenges that cause huge direct and indirect costs for taxpayers. Solving these challenges means actual monetary savings and new opportunities for social impact investing. Just to get an idea of the business potential in Finland alone, public procurement is worth about 35 billion euros per year. It is a huge market.

A national body will help channel private money towards improving well-being in society.

Impact investing facilitates the systematic creation of well-being – even in economically difficult times. The idea is to steer private equity towards projects aimed at benefiting society as a whole. Representatives of investors, the public sector, organisations and research institutes were invited to join the national steering group set up in support of the new investment and funding model. The steering group is fostering the model’s introduction and development in Finland. Impact investing is aimed at achieving a positive and measurable social impact as well as a financial return. It is an ideal form of investment for activities that boost well-being and prevent problems. The first projects were launched in Finland this autumn, and new ones are being planned in several municipalities. “New methods are needed to stabilise the public finances and finance well-being,” says Pentti Pikkarainen, Director General of the Financial Markets Department at the Ministry of Finance and chair of the national steering group on impact investing. “The funding of public services in Finland is currently focused not on foresight, but more on remedying the prevailing problems.” “Impact investing will help to expand the public sector’s funding base and slow the growth of the national debt. The model will also provide guidance to the state and municipalities in results-based purchasing,” Pikkarainen points out. The steering group members were announced at the Impact Investing 2.0 seminar at the Korjaamo Culture Factory in Helsinki in December. Pentti Pikkarainen, Director General of the Financial Markets Department at the Ministry of Finance, was invited to chair the group. Its members are Tom Liljeström, Managing Director of LocalTapiola Asset Management (vice chair); Teri Heilala, CEO, FIM Group; Antti Savilaakso, Chairman of Finland’s Sustainable Investment Forum; Ulla Nord, Managing Director, Me-säätiö; Risto E.J. Penttilä, CEO, Finland Chamber of Commerce; Jari Vaine, Senior Adviser at the Association of Finnish Local and Regional Authorities (Kuntaliitto); Vertti Kiukas, Secretary General, SOSTE Finnish Society for Social and Health; Sirpa Kekkonen, Head of Government Strategy Secretariat at the Prime Minister’s Office; and Anni Huhtala, Director General of VATT Institute for Economic Research. Sitra is represented by Timo Lindholm, Director, and Mika Pyykkö, who leads Sitra’s Impact Investing focus area, is secretary to the steering group. Deputy members are Veli-Mikko Niemi, Director-General, Ministry of Social Affairs and Health; Esko Torsti, Director, Ilmarinen Mutual Pension Insurance Company; Heikki Nystedt, Credit Portfolio Manager/Head of Fixed Income, Partner at Taaleritehdas Group; Jaakko Salminen, Chairman, Finnish Business Angels’ Network; Ilona Herlin, Kone Foundation, Vice Chairman of the Board; Kimmo Lipponen, Managing Director of Arvo-Liitto; Teemu Japisson, Secretary General of the Finnish Sport Confederation Valo; Taina Kulmala, Counsellor, Prime Minister’s Office; and Otto Toivanen, Professor, Aalto University.

Mission and return all in one

One of the available impact investing instruments is the Social Impact Bond (SIB), which is a performance-based funding contract. Based on the SIB, institutional and private investors finance activities that promote well-being, while bearing the financial risks. The public sector pays only for measurable outcomes. “For investors, SIB provides the opportunity to have an impact on the societal issues closest to their hearts. SIB is an innovative combination of return, risk and social impact, an investment target that particularly appeals to institutions, foundations, families and private investors seeking a higher motive than mere profit in their asset management activities,” says Mr Pikkarainen. An increasing number of investors want a sense of mission as well as a financial return. No wonder then that the largest global asset management companies – such as BlackRock, Goldman Sachs, JP Morgan and Merrill Lynch – are active in the international impact investing markets, which are worth an estimated 55 billion euros in invested capital. “The national steering group will provide Finland with a doorway to joining the G8 of leading industrialised countries in its international development of impact investing,” says Mika Pyykkö of Sitra. On the United Kingdom’s initiative, in 2013 the G8 launched the Impact Investing Taskforce to prepare reports and issue recommendations on the promotion of impact investing.

Two SIB projects published

For more than a year, Sitra has been building an impact investing ecosystem in Finland, preparing the first pilot projects in co-operation with various stakeholders. Much has happened in that time: the first ever Social Impact Bond (SIB) has been launched in Finland and the Nordic countries, and several new ones are being planned. The Impact Accelerator, which empowers businesses and organisations in the well-being sector, has also been launched. Finland’s first SIB aims to improve occupational well-being in the public sector. In the first phase, it will cover 1,300 public sector employees in Lounais-Suomen Maistraatti, Savon koulutuskuntayhtymä and Aleksia-liikelaitos (Nurmijärven kunta). Sitra, Me-säätiö, and a private financial investor will be the first anchor investors. The Ministry of Employment and the Economy and Sitra recently announced that they are preparing a SIB project to promote the employment and work-based integration of immigrants. Other SIBs planned around Finland are focused on preventing the social exclusion of children and their being taken into care, and easing the employment of people in a difficult market position. The Finnish Innovation Fund Sitra is a future-oriented organisation that promotes Finland’s competitiveness and the well-being of the Finnish people. Under the New working life and sustainable economy theme, Sitra is promoting the reform of working life and the sustainable economy through innovative practices and financing models. www.sitra.fi