This report builds on the work of the IIPC over the last five years, to provide information and analysis on policy innovation as a critical tool to grow impact investing markets globally. This first-of-its-kind report broadens the conversation from what public policy could enable, to what public policy is actively addressing in so many different markets.
The report includes a compilation of articles and case studies focused on issue-areas relevant to impact investing, including: conceptual pieces on the development and mapping of the policy system for impact investing; examples of specific public policy that have supported market development in different countries; and insights from private firms into how impact investing intersects with other key market areas, such as international development and infrastructure investment.
It is hard to believe that it has been five years since Pacific Community Ventures (PCV) and the Initiative for Responsible Investment (IRI) joined forces to initiate a global conversation about the role that policy can and should play in enabling impact investing to scale. Together we founded the Impact Investing Policy Collaborative (IIPC), and its network platform, the Global Learning Exchange on Social Impact Investing, which jointly form a global community of impact investing practice that has touched policymakers, investors, entrepreneurs and other stakeholders in over 140 countries.
PCV is an impact investing practitioner, investing directly, building the capacity of impact enterprises (especially in disadvantaged communities) and evaluating social impacts for investors; the IRI is a university-based research project. We share the belief that there are opportunities to direct more private investment, and direct it more effectively, towards a goal of creating healthy, sustainable, and vibrant communities. Striking the balance between social goals and investor needs – across a wide range of impact objectives and investment strategies – is a complex undertaking for which sound public policy is essential.
As is true for virtually every business, industry and market, policy plays a formative, shaping role, whether by mandate, fiat, incentive, prohibition or permission. Even when there is a lack of policy, that gap itself plays a role in shaping markets. The same is doubly true in impact investing, which is often framed as a way to do things that conventional financial markets are not doing by themselves. Our work has focused on asking, how do policymakers know when private investment is the right answer to achieving their social goals? And what sorts of policies best integrate social goal into financial market activity?
Impact Investing Policy in 2014: A Snapshot of Global Activity is a result of the research, convenings, and partnerships we have developed over the last five years. The authors in the report – drawn from the IIPC network – examine the role of public policy in growing and shaping impact investing activity in various contexts. In this report, the IIPC provides brief summaries of policy innovation across themes, sectors and countries, broadening the conversation from what public policy could enable, to what public policy is actively addressing in so many different countries and markets.
The articles in the report are framed around either a country or a thematic point of focus: ranging from conceptual pieces on the development and mapping of the policy system for impact investing, to examples of specific public policies that have supported market development in different countries, and insights from private actors into how impact investing intersects with other key market areas such as international development and infrastructure investment. The policies showcased are not meant to highlight best practice; the purpose of these articles is to show the range and depth of policy experimentation underway in different countries, and in some cases, initiate a discussion on the scope, scale and impact of these policy efforts. We recognize that the potential and need for policy development differs in each market. Our hope is that through the countries represented and policies discussed, the report provides a glimpse into the diversity of approaches that governments are undertaking.
This year has been especially significant for impact investing policy and market activity – with the reports by the Social Impact Investment Taskforce, and the affiliated National Advisory Boards and Working Groups. We welcome the work these groups have done, along with the several other private and public sector actors even beyond the G8 countries who have been introducing and driving these conversations in their own markets.
We hope that this report contributes to the discussion on the role of policy more broadly, not just among policymakers, but by practitioners across the private sector and civil society who are committed to developing innovative models and partnerships to enhance the impact of private sector capital.