Impact investing aims to generate both financial returns and positive social/environmental impacts. It has grown significantly since 2008 to around $250 billion globally across sectors like energy, housing, food and agriculture. A results-based approach ties payments to outcomes or impacts achieved, with commissioners defining desired outcomes, investors providing funding, and service providers developing solutions. Social, environmental, and development impact bonds are examples where private capital funds preventative services, with investors recouping funds and earning returns based on results. Defining and measuring outcomes allows money to be used proactively and data-driven to support well-being in a collaborative, results-focused way.

1. Impact investment and result based finance
Mika Pyykkö, Project Director
Impact Investing
The World Circular Economy Forum 2018
October 22-23, 2018

3. Intentionally (private) investments
to organizations or projects
aimed at creating
financial return and
a positive social and/or environmental impact.
Impact investing

4. Position of impact investing
High
Traditional investing
Impact investing
(= responsible
investment 2.0)
Philanthropy
High
Financial
return
Impact

5. Development of impact investing
– Global movement since 2008
– Market seems to grow quickly year after year; nowadays about USD 250 billion
– Sectors like energy, housing, food and agriculture
– Instruments like private debt, private equity and public equity
– Global Impact Summit 2018, October 8-9, New Delhi by GSG
– About 900 representatives from more than 50 countries (investors, service providers, civil servants etc.)
-> Mr Al Gore: ”potential of sustainability revolution”
-> announcement of Environmental Outcomes Fund USD 1 billion

6. Key players in results/outcomes based approach
Commissioner
Payments by results
Investors
Money with a meaning
Service providers
Innovative models
with greater impact

7. Outcomes based approach
Commissoner
– Determine phenomenon/demand
– Verify qualitative and economic development inside the phenomenon
– Define root causes for the development and opportunities to influence to those
– Define wanted outcomes, positive changes, and economic value of those (in order to achive long
term impact) -> amount of bonus
Service providers
- Develope and run best possible service solutions
Investors
- Funds service solutions
- Gets invested capital back and return based on results; bears the financial risk

8. SIB EIB DIB
Social Environmental Development
Bond = fund = pool of private capital

9. Why outcomes based approach?
Payment by outcomes tax payors money in successful use by
support of private capital
Upfront investments to well-being
in its’ wide meaning
proactive and preventive perspective
Foresight sustainable well-being/development
Data driven management facts, not personal (political) opinion
and/or hype
Population group/ecological issue
in focus
segmentation, structures and processes
for outcome/impact
Service design co-operation/coalitions

10. Sitra’s Impact Investing team:
”Real impact is based on co-creation and collaboration.”
Sir Ronald Cohen / On Impact:
”It is possible to do well and do good at the same time!
Let’s act now, there’s never been a greater need
or a better time!”

11. sitra.fi | seuraavaerä.fi
@sitrafund