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Redirecting Capitalism for Responsible Wealth Management TBLI Europe, November 2011 Yvonne Li  (yli@avantageventures.com)
Standing at 7 billion  <ul><li>Sustainability issues in:  </li></ul><ul><li>Food  </li></ul><ul><li>Water </li></ul><ul><l...
The ‘Dark Side’ of Capitalism <ul><li>Short term shareholder value by firms </li></ul><ul><li>Maximise profit with little ...
Perception of Finance in 2011 Euro debt woes Financial meltdowns Volatility  in food and resource commodities Financial mi...
5 Impact Investing Investments intended to create positive impact beyond financial return
7 Spectrum of Objectives
11 Missing Middle Finance
Social Finance
6 Why Social Enterprises matter Social/Environmental Impact    Enhance local communities’ livelihood    Community Empowe...
Why Asia matters <ul><li>A key growth region for any investment portfolio </li></ul><ul><li>Demographics:  </li></ul><ul><...
Demographic Challenge: Getting old before getting rich
Bed-to-elderly-population  Ratio in China OECD countries average ratio: 4.35%
Market Size Estimation for Elderly Care
Potential Market Size in Asia Refer to AV’s report  Beyond the Margin: Redirecting Asia’s Capitalism Large demand but not ...
Impact Investing and Wealth Management <ul><li>Impact investing can be integrated into a balanced portfolio, and regarded ...
Rational for Responsible Wealth Management <ul><li>Uncorrelated asset class, reduce volatility  </li></ul><ul><li>Reasonab...
<ul><li>create a sustainable future for Asia </li></ul>Avantage Ventures Asian based Support   entrepreneurship   and  loc...
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Yvonne li

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TBLI CONFERENCE™ EUROPE 2011- London - United Kingdom

TBLI CONFERENCE™ is the prime annual global networking and learning event on Environment, Social, Governance (ESG) and Impact Investing.

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  • Profound impact on our Society and Environment Climate change Natural resources under more severe pressure of demands Occupy Wall Street is becoming a global movement Fast growing Asian cities suffer from a multitude of environmental problem Air pollution Deforestation Access to safe drinking water Environmental degradation costing Asian economies 8% of growth (ADB 2002)
  • IMPACT INVESTING Significance: unlock substantial for-profit investment capital to complement philanthropy in addressing pressing social challenges. ( Rockefeller Foundation )
  • SMEs account for 90% of Asia’s businesses and 60% of its employment, providing critical services to underserved populations across the region.
  • Social enterprises are important because: Financially sustainable, for-profit making Creating social and environmental impacts through its commercial activities of ethical and sustainable practices A successful enterprise has to achieve two primary objectives: impact and scale. Impact refers to the positive externalities to the society and environment while scale refers to the size of impact being multiplied through growth and replication Unlike commercial enterprises, social enterprises seek financial sustainability not as a end to itself but as a means of pursuing the bigger agenda of a sustainable future for the environment and the poor who comprise the great majority in Asia This is a unique opportunity for investors looking to invest in and empower social enterprises across Asia in tackling systemic social and environmental problems through sustainable and innovative business models Investors in this opportunity will be enablers of a social and business evolution, becoming role models for sustainable development in the region and globally
  • ADB predicts by 2030 that Developing Asia’s annual consumption will reach USD32trillion
  • Where can you create impact, where are the needs? The population growth in the region, an increased middle class and the global economic growth have created a myriad of needs in Asia Pacific, which are even more pronounced and existential because of the developing country nature of many parts To put some numbers to this: in 1990 the “middle class” in Asia accounted for only 21%, it increased to 56% by 2008 (Asian Development Bank) – the demands this rising class is putting forth in terms of affordable housing, higher quality food, medical care and quality education is often not met by governments and other sources need to step in At the same time, the gap between poorest and upper middle class continues to widen. About 1 billion people in developing Asia have access to less than $1.25 a day (Asian Development Bank) 50% of China’s population are still in this poorest class.
  • Avantage Ventures believes that the principal target for investors looking for new business opportunities should be “social enterprises”, or small and medium-sized enterprises (SMEs) that have explicit social missions and development strategies. Our research has identified six key sectors that would particularly benefit from impact investing. We estimate that between now and 2020, the total amount of investment needs for social enterprises in these six sectors will be between USD44 billion and USD74 billion. If invested, that money could unlock a market demand of between USD52 billion and USD158 billion. We believe that the necessary investment can be found from a particular segment of the investing world: Asian high net worth individuals (HNWIs). HNWI assets invested in the Asia-Pacific now stand at USD8.6 trillion, or 22% of total assets held by HNWIs globally. If Asian HNWIs were to redirect just 1% of all their investments to social enterprises, these businesses would have all the financial resources they need to grow. At the same time, companies that have invested in or are looking to invest now in the Asia- Pacific cannot ignore the immense social and environmental trends in the region; instead, they must become more engaged. By investing in and supporting social enterprises, they can seize the opportunities within the region to move beyond traditional notions of giving and make a real difference. The amount of foreign direct investment (FDI) destined for Asia in 2010 stood at USD274.6 billion. If 1% of these total inflows – or USD2.75 billion – could be used towards impact investing in the Asia-Pacific, it would satisfy the investment need of social enterprises. In doing such, companies can build new local markets, attract new customers, align selected business strategies with the priorities of Asian governments, generate profits based on fair social and environmental costs, and simultaneously generate enormous positive social and environmental impacts.
  • Avantage Ventures is an Asian-based social investment company that supports entrepreneurship and local economic development as key drivers of poverty alleviation in the region. We have identified a gap for a new asset class or what we call the ‘missing market finance’, these are organisations that need small investments of between USD0.5 to USD3 million; and they are committed to addressing social and environmental needs through innovative social businesses. Our focus is to provide capital and management support to local entrepreneurs, as well as nurture their organisations so they can work towards financial sustainability as a means of pursuing their bigger agenda, to create a sustainable future for poor and marginalised groups in Asia.   As a pioneer in Asia, Avantage Ventures’ unique investment approach seeks to deliver a set of returns that balances social outcomes and financial performance. As a company (and not a fund), Avantage Ventures offers investors the opportunity to co-invest alongside us and other like-minded investors. We have identified education, healthcare, rural development and energy as key sectors which represents the most pressing issues as well as economic opportunities of our time. By adhering to the highest professional standards, Avantage Ventures intends to be an enabler to inform, connect and advise stakeholders so capital deployment in the future has a meaningful societal purpose.  
  • Transcript of "Yvonne li"

    1. 1. Redirecting Capitalism for Responsible Wealth Management TBLI Europe, November 2011 Yvonne Li (yli@avantageventures.com)
    2. 2. Standing at 7 billion <ul><li>Sustainability issues in: </li></ul><ul><li>Food </li></ul><ul><li>Water </li></ul><ul><li>Healthcare </li></ul><ul><li>Natural Resources </li></ul><ul><li>Education </li></ul><ul><li>Energy </li></ul><ul><li>Environment </li></ul>
    3. 3. The ‘Dark Side’ of Capitalism <ul><li>Short term shareholder value by firms </li></ul><ul><li>Maximise profit with little disregard for externalities and costs to society and the environment </li></ul><ul><li>Causing imbalances in global economies and trade </li></ul><ul><li>Unmitigated pollution </li></ul><ul><li>Remember Foxconn </li></ul><ul><li>Industry lobby groups </li></ul>
    4. 4. Perception of Finance in 2011 Euro debt woes Financial meltdowns Volatility in food and resource commodities Financial mismanagement Ponzi Schemes Speculation Derivatives Financial engineering
    5. 5. 5 Impact Investing Investments intended to create positive impact beyond financial return
    6. 6. 7 Spectrum of Objectives
    7. 7. 11 Missing Middle Finance
    8. 8. Social Finance
    9. 9. 6 Why Social Enterprises matter Social/Environmental Impact  Enhance local communities’ livelihood  Community Empowerment  Promote sustainable agricultural practices  Preserve scarce natural resources  Use clean energy and reduce harmful greenhouse gases Financial Impact  Balanced set of financial returns  Generating profits to scale impact  Create disposable incomes thereby stimulating vibrant local economies
    10. 10. Why Asia matters <ul><li>A key growth region for any investment portfolio </li></ul><ul><li>Demographics: </li></ul><ul><ul><li>by 2050, Asia will have 5.4 billion people, constituting 53% of the world’s total population </li></ul></ul><ul><ul><li>Rising inequality with record numbers of UHNW joining the global elite, growing middle class with 1b still living on less than USD1.25 per day </li></ul></ul><ul><li>Major socio-economic trends </li></ul><ul><ul><li>An ageing population </li></ul></ul><ul><ul><li>Untapped mass “Bottom-of-the-Pyramid” Market </li></ul></ul><ul><ul><li>Environmental concerns compounded by climate change and consumption challenges </li></ul></ul>
    11. 11.
    12. 12. Demographic Challenge: Getting old before getting rich
    13. 13. Bed-to-elderly-population Ratio in China OECD countries average ratio: 4.35%
    14. 14. Market Size Estimation for Elderly Care
    15. 15. Potential Market Size in Asia Refer to AV’s report Beyond the Margin: Redirecting Asia’s Capitalism Large demand but not necessary investable
    16. 16. Impact Investing and Wealth Management <ul><li>Impact investing can be integrated into a balanced portfolio, and regarded as a prominent emerging market strategy. </li></ul><ul><ul><li>Provides investments in line with personal and family values </li></ul></ul><ul><ul><li>An investment into key social and environmental trends </li></ul></ul><ul><ul><li>Aligning investments with priorities of Asian governments, generate profits on fair costs whilst generating positive social and environmental impacts. </li></ul></ul><ul><li>22% of total assets held by HNW are invested in Asia Pacific to the tune of USD8.6 trillion . </li></ul><ul><li>A 1% allocation is what it would take to allow social enterprises to scale. </li></ul>
    17. 17. Rational for Responsible Wealth Management <ul><li>Uncorrelated asset class, reduce volatility </li></ul><ul><li>Reasonable returns with reduced risk </li></ul><ul><li>Sustainable investing taking into account of triple bottom line </li></ul><ul><li>Long term investing </li></ul><ul><li>Ultimate emerging market investment strategy </li></ul><ul><li>Investing in the most important businesses of the future </li></ul>
    18. 18. <ul><li>create a sustainable future for Asia </li></ul>Avantage Ventures Asian based Support entrepreneurship and local economic development as drivers of poverty alleviation committed to addressing social & environmental needs Missing Middle finance; critical investments of USD0.5 to USD3 million ensure FINANCIAL SUSTAINABILITY as a means of pursuing their bigger agenda
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