Impact Investment scene setting

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Norma Griffith
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1 Impact Investment scene setting Philanthropy NZ Summit 2017 Adrian Wimmers Partner Deal Advisory 11 May 2017

2 We passionately believe that the flow-on effect from focusing on helping fuel the prosperity of our clients significantly contributes to ensuring that our communities, and ultimately our country and all New Zealanders, will enjoy a more prosperous future. 2

3 State of the global market impact investing Range of social, environmental and development finance instruments, including: Social Impact Bonds Green Bonds (labelled) Development Impact Bonds Impact funds/banks Blue bonds (water) SDG Bonds (issued by World Bank) Climate-aligned bonds Social enterprise financing Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return Source: KPMG Australia, Global Impact Investing Network 3

4 NZ market development features Social Bonds trial Social Investment Agency Integrated Data Infrastructure (IDI) Social enterprise sector growth Rise of (true) outcome contracting Philanthropist appetite to leverage balance sheet Scale public service contestability? 4

5 Barriers to market development, including Cost and complexity of bond products Lack of investable propositions Lack of capacity in measuring outcomes Relevant skills and expertise are scarce Lack of consistent definitions and products 5

6 Trends possible future market development Take Off Social Impact Investment Very early Stage Uncoordinated innovation Disruptive innovators pursue new models in seemingly mature industries Lack of standardization One-off Projects (early stage) Marketplace Building Infrastructure built to lower transactions costs Capturing value of the marketplace More volume of activity Greater specialization More standardization Mature Market Steady state and growth rate slows Source: Based on J Freireich and K Fulton, Investing for social and environmental impact: a design for catalysing an emerging industry, Monitor Institute 2009 p 12, in IMPACT-Australia, Investment for social and economic benefit, KPMG analysis 6

7 Trends possible future market development Take Off Social Impact Investment Very early Stage Uncoordinated innovation Disruptive innovators pursue new models in seemingly mature industries Lack of standardization One-off Projects (early stage) Marketplace Building Infrastructure built to lower transactions costs Capturing value of the marketplace More volume of activity Greater specialization More standardization Impact funds Mature Market Steady state and growth rate slows Source: Based on J Freireich and K Fulton, Investing for social and environmental impact: a design for catalysing an emerging industry, Monitor Institute 2009 p 12, in IMPACT-Australia, Investment for social and economic benefit, KPMG analysis 7

Contestable Public Service Providers Arm s length intermediary Creates shared

8 Possible impact fund mandate Local benefits National benefits Social enterprise finance Climate-aligned finance Social Impact Bonds and finance Contestable Public Service Providers Arm s length intermediary Creates shared infrastructure Bringing scarce expertise together Standardised due diligence and products 8

9 Future NZ impact investing ecosystem? Investment Approach Where to invest Evaluation / Outcome frameworks Were the services effective? Social investment ecosystem How to purchase more effective services Commissioning How can funding be aligned with results? Who can deliver the best results? Impact investment Contestability 9

10 Thank you Adrian Wimmers Partner, Deal Advisory The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. kpmg.com/nz The KPMG name and the KPMG logo are registered trademarks of KPMG International Cooperative ( KPMG International ), a Swiss entity.

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