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Wd nicole alix - Social impact as a driver or as a base for payment?

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Wd nicole alix - Social impact as a driver or as a base for payment?

  1. 1. Nicole Alix The Mont-Blanc Meetings – International Forum of the Social and Solidarity Economy Entrepreneurs Social impact as a driver or as a base for payment? The experts’and the public authorities’responsabilities 1 Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm
  2. 2. 2 Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm 1: Data based decisions: reporting, rating GIIN, GIIRS, IRIS)+materiality IFRS 2: Portfolio approach, capital risk approach, ROI 3: Quantitative/qualitative data, random methods 4: Definition by social impacts => labels /status; norms/legal frameworks; 5: New asset class?, private equity, venture capital, credit 6: Metrics/evaluation, theory of change Context ‘‘NEW ‘FINANCINGNEW ‘FINANCING Social impactSocial impact investmentinvestment Venture philanthropy,,Venture philanthropy,,  impact investors,impact investors,  Social impact bondsSocial impact bonds Asset managers,Asset managers,  Banks, cooperative banks,Banks, cooperative banks,  Microfinance institutionsMicrofinance institutions SOCIAL ENTREPRISESSOCIAL ENTREPRISES Social and solidaritySocial and solidarity economy (groups of persons),economy (groups of persons),  Profit-with-purposeProfit-with-purpose companiescompanies 1 EVALUATIONEVALUATION METHODSMETHODS  Auditors,Auditors, BBusiness schools,usiness schools,  World bank, USAID..World bank, USAID.. 5 24 6 3
  3. 3.  No contradiction between « social » and « market » scaling up, on the contrary: new wave of impact investors.  Social enterprises (small, scarce money) should learn from business, especially from ‘entrepreneur-led companies/venture capital’ tandems, taking on growth risks in order to confront more social problems;  They will progress through defining social impact objectives in accordance with ‘impact investors’ (impact =/= outcome).  The sum of these impacts will be beneficial for society and will finance social investments when public funding become rarer.  Impact investing « social risk » = a cost/normal return which has to be refunded by public resources or philanthropy. Higher performance higher return for the investor.  Social impact to be measured, according to data: distance, time Main assumptions Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm 3
  4. 4.  From social impact as a driver for evaluation to  Social impact-based allocation of public resources for: • Social enterprises (those which have a « positive and measurable » social impact) • Social impact investors (those which take risks in social investments, accepting some costs = loss compared to « normal » return on investment) new public/private partnerships = from procurement to impact contracting, for services or for investments. Investing/payment decisions will be taken according to data, in a impact investment market (experts, asset managers). New orientation and decision-making for allocation of resources 4 Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm
  5. 5.  What kind of measurement/allocation of resources for : • not measurable (non tangible, personal…), non market = no prices = prices have to be invented and audited by experts • innovations, where methods > results (ex ante measurement?). • long term investments in social infrastructures having greater capital requirements (hospitals, …) or social transformations (education…) • intrinsically interwoven effects and collaborative economy: how to determine « one effectone cause »; avoid payment for « competing claims for effects » or for neglected causes?  What about enterprises with negative social impacts? Should they contribute to the ‘eco-system’? Towards a ‘social impact market’ to exchange positive and negative impacts (see carbon market )? Questions (1): About tools/methods 5 Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm
  6. 6.  When is a market (‘duties and rights to impact’) a better regulation than taxes or laws and norms?  Could general interest be the sum of « social impacts » contracted with private investors? what about long term?  If social impact is higher and rewarded, who should benefit: the social enterprise, the public budget or the investor? If the investor who takes the risk gets the return, can he speculate on social performance?  What are the respective objectives of the ‘industry’, cooperative banks and microfinance ? Do they use the same ‘impact measurement’ method? What about costs? Questions (2): About « Social impact markets » 6 Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm
  7. 7. The methods designers’ responsability (1)  Clarify in what fields social impact measurement could be relevant as a driver/ as a payment : • Do not mislead in assuming that every social field can be based on a allocation of resources for social impact. • Focus on social transformation: reporting and rating lead to champions and conformation; adverse selection => exclusions. Human experience = unpredictability. • Create a reliable/sustainable system: Theory of change? Actors’ capacity to produce data? No data rather than false data, specially for « reading stake- holders »? Is « materiality » like in IFRS relevant? 7 Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm
  8. 8. The methods designers’ responsability (2):  Learn from other experiences: • Social responsability investment and private equity: too many criteria are a brake; costs. • Hospital funding schemes according to the nature of the activity: psychiatry=/=surgery=/=elderly. • Carbon market, market in rights to pollute.  Favour a fair and open source system/market of data: • For positive AND negative social impacts enterprises • Think about the way people use the tools and their costs • Decentralised, bottom-up open source system/data sellers and auditors; ‘intelligent sensors’? 8Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm
  9. 9. The public authorities’responsability (1)  Choose their social policies, how to: • Select funding systems: no single system (procurements, subsidies, grants…; bank credits), for operating account and for investment. • Implement: laws, norms, taxes or market? Control or self- regulation? Ask for an evaluation of carbon market? • Guarantee social cohesion, long term and social transformation: − Promote general interest beyond investors’ private interests − Select activities and actors (empowerment, not/for profit) − Finance economy in the long run: services of general interest • Promote diversity: − Tests before generalizing, evaluate the evaluation − Promote « counter-cyclical » alternatives, decentralised and open data solutions=> expert group, social and economists? 9 Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm
  10. 10.  Regulate the social investment market where relevant: • Determinate a maximum of compensation for « social impact »investor? The surplus coming from social performance to be reinvested in the social eco-system? • Asset Class? Costs, intermediaries, calibration of the risk (EIOPA)  Organize a level playing field: ‘comply or explain’? • Promote proximity financial actors/asset class managers • Social/non social entreprises: compensation of positive externalities which cost to investors = taxes on negative externalities which benefit to investors • Prevent ghettos for social impact/speculation and intermediaries on the « social impact» market (cf carbon market) The public authorities’responsability (2) Measuring social impact: why and for whom? OECD LEED 24 April 2014 Stockholm 10
  11. 11. Alix N., Baudet A., 2013, « Impact investing: a factor of transformation of the  social  sector  in  Europe », 4th International CIRIEC Conference, Antwerp, www.ciriec-ua-conference.org nalix@confrontations.org www.rencontres-montblanc.coop Thank you for your attention

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