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Toru iwai

  1. 1. TBLI CONFERENCE™ ASIA 2011Workshop 8 – Impact Investing Impact Investment Efforts Iwai Toru September 15, 2011
  2. 2. Contents1. Daiwa Securities Group at a glance (P.2ÿ^ 5)2. MDGs and SRI, Impact Investment (P.6ÿ^ 12)3. SRI & Impact Investment Efforts (P.13ÿ^ 23)4. Conclusion (P24) Appendix (P27ÿ^ 41) This document has been prepared by Daiwa Securities Group (Daiwa) based on information, the sources of which are believed by Daiwa to be reliable, but Daiwa makes no representation nor warranty as to the accuracy or completeness of such information. Recipients of this document must make their own decisions on whether or not to adopt the recommendations discussed in this document, based upon their specific situations and objectives. Any use, disclosure, distribution, dissemination, copying, or reproduction of this document without prior written consent from Daiwa is prohibited. 1©Daiwa Securities Group Inc.
  3. 3. Members of Daiwa Securities GroupInvestment and Financial Services(Holding company, 58 subsidiaries, 6 equity method affiliatedcompanies) 2©Daiwa Securities Group Inc.
  4. 4. Sales Network in Japan Covering Japan  Through 120 Sales Offices and more than 6,000 employees with Japan Securities Dealers Association sales representative qualification, one of the largest sales networks in Japan, Daiwa covers broad range of retail and institutional investors throughout Japan. Daiwa Group’s total customer assets reached JPY42.7 trillion as of March 2011. In addition, “Daiwa Direct” the online brokerage within the Daiwa Securities Group, has over 2.24 million accounts as of March 2011 and maintains a leading position in the online segment. Hokkaidoÿ Tohoku Area 10 branches 120 Sales Offices Nationwide Chubu, Hokuriku Area One of The Largest Online Brokers 19 branches  Online service has over 2.24 mil accounts ÿ i-mode, EZ-web, J-Skyÿ . Kinki Area 18 branches  Daiwa Call service package offers advice on securities investment. Chugoku Area 7 branches ATM alliance with Postal Savings Broad Retail Investor Base Online Trading Accounts ÿ ‘000ÿ 2,400 2,000 Headquarter Retail Sales Office 1,600 Shikoku Area 1 sales office 1,200 5 branches Tokyo 800 26 branches 400 Kyusyu, Okinawa Area Greater Tokyo Area 0 10 branches 24 branches 05/12 06/3 06/6 06/9 06/12 07/3 07/6 07/9 07/12 08/3 08/6 08/9 08/12 09/3 09/6 09/9 09/12 10/3 10/6 10/9 10/12 11/3 ÿ Nme oSle Oicsa oMrch01 u br f a s ff e s f a 21ÿ 3©Daiwa Securities Group Inc.
  5. 5. Global Network Daiwa Capital Markets Europe Limited Daiwa Capital Markets Asia Holding B.V. Daiwa Capital Markets Europe Limited Daiwa Capital Markets Asia Holding B.V. Beijing Representative Office Beijing Representative Office Daiwa Capital Markets America Inc Daiwa Capital Markets America Inc Moscow Moscow Seoul Branch Beijing Seoul Branch Beijing Warsaw Warsaw Moscow Representative Office Seoul Seoul Moscow Representative Office NY Head Office NY Head Office Daiwa SSC Securities Daiwa SSC Securities Shanghais Shanghais = erg w S a g a M er ith h n h i Bahrain Branch Bahrain Branch S rities (D iw:33% ecu a a Chicago Chicago NY NY Bahrain Bahrain Hong Kong Hong Kong o sa f h re) Dubai Dubai Taipei Taipei San Francisco San Francisco Hong Kong Hong Kong Taiwan Taiwan 0· 0· 0ã 0ã 0ü 0ü 0í 0í 0Ã 0Ã 0È 0È Bangkok Rep.Office Bangkok Rep.Office Dubai Branch Dubai Branch Hanoi HanoiSan Francisco BranchSan Francisco Branch Mumbai Mumbai Bangkok Bangkok Manila Manila The Philippines The Philippines = D e v e lo p m en t Hanoi Rep. Office Hanoi Rep. Office B a n k o f P h ili ine s pp According to the M&A division According to the M&A division India India Singapore Singapore h a s 40% o f s h a re ,, another 20% of another 20% of investment for partnership investment for partnership Singapore Singapore Australia Australia Melbourne Melbourne Manchester Manchester London Head Office London Head Office Frankfurt Branch Frankfurt Branch Our company’s stronghold Frankfurt Frankfurt Daiwa Securities Trust Company (US) London London Daiwa Europe Fund Managers (Ireland) Limited Lyon Lyon Zurich Zurich Daiwa Europe Trustees (Ireland) Limited Geneva Geneva Geneva Branch Paris Branch Geneva Branch Paris Branch Paris Paris Special hubs for M&A Milan Milan Milan Branch Milan Branch Acquisition of M&A Advisory Division of Close Brothers Madrid Madrid Barcelona Barcelona and Close Brothers Corporate Finance on Jul. 2009. Overall 26 sites worldwide 4 ©Daiwa Securities Group Inc.
  6. 6. Stakeholders & Corporate Principles Customers Shareholders Building Trust Building Trust Earning Sound Profits Earning Sound ProfitsTrust from the clients is the foundation Trust from the clients is the foundation Improve corporate value by developing aa Improve corporate value by developingof our business. of our business. healthy business. healthy business. Employees Society Valuing Human Valuing Human Contributing to Society Contributing to Society Resources Resources Contribute to the community and Contribute to the community and economic development through finance economic development through financeEmployees are the source of our Employees are the source of our and capital markets. and capital markets.competitiveness. competitiveness. 5 ©Daiwa Securities Group Inc.
  7. 7. Stakeholder Concerns Po g h n Business Ri ma Shareholders Customers; Clients Improve SCM Partners ve ts y Hu n tio rtFr w; la i e s’ gu om ’v r re to rs me the ac s il e m to g to us sin t iv e n har C llob Cl ob us c ea e r c ing by liim all t s eh GG s m aW te n ha o l ric hte tion att W a St eig ta re de e ar e ar H ien h o rs C m Governance Ch m or ha iin ld an ng er ng g Compliance s ge e Stakeholders’ domain to give influence to the organizationDiversity Local Community; Citizens Employees From lifetime employment Strengthening monitoring to performance-base; of the enterprise; Aiming to be a Company Social business professional 6 ©Daiwa Securities Group Inc.
  8. 8. MDGs (Millennium Development Goals) Goal 1: Eradicate extreme poverty In addition to $57 billion of ODA in & hunger 1999, another $40-60 billions p.a. Goal 2: Achieve universal primary are needed to achieve the MDGs . education Goal 3: Promote gender equity and empower women %Additional fund necessary to; ÿ inlud u co c edo utÿ ble n ÿBU ÿ il. SD Goal 4: Reduce child mortality rates P overt y Eradicat ion 39 ÿ^ 54 Goal 5: Improve maternal health Educ at ion 10 ÿ^ 25 Goal 6: Combat HIV/AIDS, Healt h care 20 ÿ^ 25 malaria and other diseases Goal 7: Ensure environmental Emvironmen t 5 ÿ^ 21 sustainability Source: The World Bank, “The costs of attaining the millennium development goals.” Summary of World Goal 8: Develop a global Bank Policy Research Working Paper, “Development partnership for development Goals: History, Prospects and Costs,” by Shantayanan Devarajan, Margaret J. Miller, and Eric V.Swanson.ÿ MDGs logos were created by 0 Don’t let it be – world poverty0 ÿ 7 ©Daiwa Securities Group Inc.
  9. 9. ODA Trend (10Q USD ) Billion 0É 0ë35.0 Official Development0nc¨ yû (e/ Qú } ˜M 0Ù0ü0¹ by G7 N;‰•côR© Vý 0nODA[Ÿ ~> Assistance )30.0 |s Vý 0Õ0é0ó 0¹ 0É0¤ 0Ä25.0 ‚ñ Vý USA eå g,20.0 0« 0Ê 0À 0¤ 00ê ¿ 0¢15.0 13.5 13.1 11.1 J ap a n10.0 9.8 9.3 8.9 8.9 7.7 9.6 9.5 5.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (Qú Qx)OECDÿeDAC (lè 1)gq 0J 0s k 0ˆ SRimVý 0Q ~> 0’ –d 0O T [Ÿ 0 (f¦ ^t ) Source: website of Japan’s MOFA 8 ©Daiwa Securities Group Inc.
  10. 10. Private money for Social Issues ÿ ÿ Backgroundÿ Backgroundÿ   Fiscal condition of each country grows increasingly severe (policy makers’ side) Fiscal condition of each country grows increasingly severe (policy makers’ side)   Reflect on the financial crisis (investors’ side) Reflect on the financial crisis (investors’ side)   world’s financial assets = $178 trillion in 2008 (world’s GDP is $58 trillion) world’s financial assets = $178 trillion in 2008 (world’s GDP is $58 trillion)   Not only Donations/ODA, but also Investments are required to solve social issues Not only Donations/ODA, but also Investments are required to solve social issues% GIIN (Global Impact Investing Network) GIIN is a not-for-profit organization created to “increase the scaleand effectiveness of impact investing.” It was inaugurated at Clinton Global Initiative in Sep. 2009, to measure growth andincrease of the social investment, ‘Impact Investment’, in which is more direct and has animmediate result compare to conventional SRI. Representative examples of investment products: vaccine bonds of IFFIm, GenerationInvestment Management of Al Gore, former US Vice President. Main investment target: poverty & hunger; global warming; water, food and energy;medical care, health, welfare; community development, education 9©Daiwa Securities Group Inc.
  11. 11. Household Financial Assets Japan United Kingdom France United States 4% 6% 3% 7% 3%3% Others 17% 9% Mutual 11% 29% 29% 18% 7% funds Germany Currency Shares 1% & 16% Mutual 20% deposits Currency funds Insuranc and e& 55% 38% deposits27% Pension 54% 8% 40% Insuranc e& Shares Pension 30% 34% D ee p p o c k e t s e e k in g q u a lit y 32% Currency and deposits Life insurance and pension fund reserves Shares and other equity Mutual funds and securitis other than shares Others Billions of dollars, as of the end of 2009 Japan* United Kingdom* Germany* France* United States (%) (%) (%) (%) (%) Total Financial Assets 15,638 100.0 6,709 100.0 6,688 100.0 5,388 100.0 44,510 100.0 Currency and deposits 8,592 54.9 1,913 28.5 2,560 38.3 1,553 28.8 7,756 17.4 Life insurance and pension fund reserves 4,228 27.0 3,615 53.9 2,241 33.5 2,126 39.5 13,191 29.6 Shares and other equity 1,104 7.1 744 11.1 523 7.8 879 16.3 13,972 31.4 Mutual funds and securitis other than shares 1,047 6.7 218 3.3 1,315 19.7 504 9.4 8,135 18.3 Others 668 4.3 218 3.3 49 0.7 327 6.1 1,457 3.3 Total Financial Liabilities 4,085 26.1 2,474 36.9 2,193 32.8 1,864 34.6 14,068 31.6 Net Financial Assets 11,553 73.9 4,235 63.1 4,495 67.2 3,524 65.4 30,442 68.4 * converted into US dollars based on the year-end exchange rates of GBPUSD=1.62, EURUSD=1.43, USDJPY=92.90 Primary sources: Japan: Bank of Japan, Flow of Funds Accounts , June 17, 2010 United Kingdom: Office for National Statistics, Financial Statistics No 580, August 2010 Germany: Deutsche Bundesbank, Financial Accounts for Germany 1991 to 2009. France: Banque de France, Financial Accounts and Financial Balance Sheets, June1, 2010. United States: Federal Reserve Statistical Release, Flow of Funds Accounts, June10, 2010. 10 ©Daiwa Securities Group Inc.
  12. 12. Extremely Low in Japan S R I ^ X4‰ • j! ÿ 1 0 Ql ion Euro0í ÿ Bil 0æ 0 ü SRI Market size 6 ,0 0 0 4 ,9 8 6 5 ,0 0 0 4 ,0 0 0 3 ,0 0 0 2 ,1 4 1 2 ,0 0 0 1 ,0 0 0 405 58 4 0 Europe k ] Þ US | s Vý Canada 0« 0Ê 0À Œ jAus/NZ ] Þ 0û N Z JPN eå g, (2 0 0 9 ) (2 0 1 0 ) (2 0 0 8 ) (2 0 1 0 ) (2 0 0 9 ) Sourceÿ0 European SRI Study 20100; based on Eurosif publication and SIF-J material, compiled by Daiwa Securities Group. Exchange rate as of Dec 31, 2009 11©Daiwa Securities Group Inc.
  13. 13. SRI Issues in Japan1. Inadequate regulation and guideline to promote SRI.2. Less interests in SRI among labor unions, religious groups or private organizations which have a mission of social contribution.3. Weak self-awareness in exercising a big impact on social development through financing and investing.4. Fewer opportunities in school education that teaches how the investment behavior can have social impact.5. SRI product and service development & offerings 12 ©Daiwa Securities Group Inc.
  14. 14. CSR at Daiwa Securities Group CSR Activities (Implementations) Objective $` Core Business 1ÿ Daily business Sustainable Society/Community 2ÿ Developing & offering SRI/ESG products $c ÿ -Eco fund; SRI fund; microfinance fundMarket WLB, Info disclosure, external appraisal Sustainable Enterprise -Vaccine bonds; microfinance bonds, etc. CSR Management 3ÿ Enlightening activity for SRI & Impact Investing 4ÿ Releasing SRI/ESG research $aSocial Engagement 0û2010^t Signing the UN Global Compact (GC) 0û2006^t Signing the UN Principles for Responsible Investment by Daiwa Asset Management (PRI)Non-market 0û2004^t Signing the UNEP Finance Initiative (UNEP FI) & Carbon Disclosure Project (CDP) $bCorporate Citizenship 1ÿ Social Business College ÿ Daiwa Eco Fundÿ ÿ 2ÿ Civil Society Initiative Fund (Daiwa SRI Fund) 3ÿ Daiwa Securities Group – Tsunami Reconstruction Fund 13 ©Daiwa Securities Group Inc.
  15. 15. $` -1) Daily business: RetailsBillion Yen Sales and Distribution Amount by Product Category Foreign Bond Mutual Fund ¥2.9 Trillion (In FY2010) 14 ©Daiwa Securities Group Inc.
  16. 16. $` -2) SRI product: Mutual funds SRI Funds %Ï D aiw a SRI Fund Domestic Equities %Ï D aiw a Ec o Fun d Domestic Equities distributed by Focus on integrity & Economy & Ecology transparency of the enterprise Daiwa Securities Creatorÿ Daiwa Asset Management Creatorÿ Daiwa Asset Management Formulatedÿ March 9th, 2006 Total net asset Formulatedÿ May 20th, 2004 ÿ Redemption dateÿ Feb. 22nd, 2016ÿ ÿ Redemption dateÿ May 9th, 2014ÿ As of April 28th, 2011 of 15 products As of April 28th, 2011 Basic priceÿ 4,814Q† Basic priceÿ 6,837Q† Total net assetÿ 89.20Q Q† åÿ 92.8Billion Total net assetÿ 24.73Q Q†%Ï Russ ell Wor ld Env ir onm ent %Ï D aiw a Ene r gy T ec hn ology Fun d %ÏnirnetaBineF do Evom l u ss fr n s un T ech nology Fund Domestic Equities NtGeao e e rti n x n Foreign Equities Focus on the Domestic Equities environmental technology of each Focus on alternative energy Economy & Ecology which nation global demand is estimated to increase Creatorÿ Russell Investment Creatorÿ Daiwa SB Investment Creatorÿ Daiwa Asset Formulatedÿ May 1st, 2008 Management Formulatedÿ Feb. 27th, 2009 ÿ Unlimited termÿ Formulatedÿ Dec. 25th, 2008 ÿ Redemption dateÿ Feb. 26th, 2014ÿAs of April 28th, 2011 ÿ Redemption dateÿ Jan. 14th, 2014ÿ As of April 28th, 2011Basic priceÿ 8,560Q† Total net assetÿ 143 As of April 28th, 2011 Basic priceÿ 9,840Q†Q Q† Total net assetÿ 10.13Q Q† Basic priceÿ 10,127Q† 15 ©Daiwa Securities Group Inc. Total net assetÿ 38.92Q Q†
  17. 17. Daiwa Microfinance Fund% Major Characteristics The first microfinance mutual fund in Japan Minimum investment unit is 1,031 yen, you can pursue both social and financial return Direct lending in local currency to MFIs (currency risk free to MFIsÿ 16 ©Daiwa Securities Group Inc.
  18. 18. Daiwa Microfinance FundPursuing financial return as well as social return  Taking Currency risk, Interest rate risk and Credit risk  Reducing risks by deversifying portfolio %Investment Universe % Model Portfolio Loan users BOP Reviewed by DWM* 300 MFIs ÿ Over ÿ 10,000 MFIs Sourceÿ Daiwa Microfinance Fund prospectus (available only in Japanese) (E) Return *Developing World Markets 17©Daiwa Securities Group Inc.
  19. 19. $` - 2 ) SRI product: Bonds Major Impact Investment Bonds Impact Investment Bond Sales Date of ÿå Sales Billion ÿå ÿ SAQ† ÿ Billion Q Volume at Daiwa Securities Name of the Products Issuance Volume 2010^t 4g 16eå Water Bonds 60.4 0Annual Sales Trends0 2010^t 5g 21eå Ecology Bonds 32.6 2010^t 6g 15eå Microfinance Bonds 8.7 Latin America Child 2010^t 7g 15eå Education Support 13.9 Bonds 2010^t 8g 30eå Africa Education Bonds 11.8 2010^t 9g 22eå Microfinance Bonds 29.0 2010^t 11g 12eå Ecology Bonds 9.8 Domestic share of the bonds Sourceÿ Daiwa Daiwa Securities ; Only for Individual bond 69ÿÿ Mar.2008-Mar.2011ÿ T ot al app ro x.: ÿå 4 8 2 .4 B illion 18 ©Daiwa Securities Group Inc.
  20. 20. MDGÿS & Impact Investment Bonds d Imc InetmtBn p t vs e od a n Fun ion e uct i con sunam anc in A tion a fin fric ne str MG Ds te T uca en ter ma ro cci Gr e Mic Wa Ed Cli Va Re G oa l 1 : E ra dic a t e e xt re m e po v e rt y & h un ge r %Î %Î %Ë G oa l 2 : A c h ie v e u niv e rsa l prim a ry e duc a t io n %Ë %Î %Ë %Ë G oa l 3 : P rom o t e ge n de r e qu it y a nd e m pow e r w om e n %Î %Ë %Ë %Ë G oa l 4 : R e duc e c hild m o rt a lit y ra t e s %Î %Î G oa l 5 : Im prov e m a t e rn a l h e a lt h %Ë G oa l 6 : C om ba t H IV / A ID S , m a la ria a nd ot he r dise a se s %Î %Î G oa l 7 : E nsu re e n v iron m en t a l sust a ina bilit y %Ë %Î %Î %Î G oa l 8 : D e v e lop a globa l pa rt n e rship for de v e lo pm e n t %Ë %Ë %Ë %Ë %Ë %Ë 19©Daiwa Securities Group Inc.
  21. 21. $` -3ÿ Enlightening Activities Communication via the Internet 20©Daiwa Securities Group Inc.
  22. 22. $` -3ÿ Enlightening activity: Forum Daiwa Africa Forum 2010Date: July 21st, 2010Venue: GranTokyo North Tower 18F Conference RoomSpeaker: Mr. Thierry de Longuemar, Vice President Finance, African Development Bank (AfDB) Mr. Pierre Van Peteghem, Treasurer, AfDB Dr. Boukary Savadogo, Manager of the Division of Education, Science and Technology, AfDB Dr. Naoyuki Kawahara, Director, NPO Rocinantes Ms. Keiko Sano, Director, East Africa Division 2, Africa Department, Japan International Cooperation Agency Ms. Agnes Chan, the ambassador of the Japan Committee for UNICEF, a pop singer, a television personalityNo. of Audience: 221 21 ©Daiwa Securities Group Inc.
  23. 23. Impact Investment Awareness % Do you support Impact Investment? % of financial return or social Which 0 2 4 6 8 1 1 0 0 0 0 0 2 0 0 0 2 4 6 8 10 0 0 0 0 0 return do you care? ÛŒ T0‹ 0Y Yes 97 SÌ e¹ 89 Both 0D0Y 3 Y0k0‹ ÛŒ TStrongly Yes 1 b•0ê0ü ÇŒ 0¿0ó 3 8 Financial Return ÛŒ T0j0 0W 0D No y>O¢Œ s. 3 0 Social return % What social problems are you seriously % What aspect do you most value when 0 2 4 6 8 10 concerned about? 0 0 0 0 0 0 2 4 6 8 101 0 0 0 0 02 0 investing? l4u 0û [ˆ Water 7 9 b` 0L0‹ w‹‰ ¼• 0• • 10 2 Revenue growth §Œ Vð™ 0û ☠Poverty 7 0 y>` 0’–‰ 0W0K OÍ‘ 0_U¶ 0iLYÿ 0F } Râ 0K 8 3 S;Pe vB 0û OÝ Health 6 9 CSR strategy eY Education²€ 5 6 R)0R vÊN0D 0’ 0f 0‹ 6 4 Profit y>OWúvet 3Infrastructure P™ ä 7 h*„• C N;Q 0x 0n 5 2 lPYÕ Climate Change R 33 Dividend ‚ Ts 1 0L 7 0j No interest 0D N‹ j! 1 im 1 •‰ Scale of operation Source: Questionnaire at Impact Investment Forum 2010, September 9th 22 ©Daiwa Securities Group Inc.
  24. 24. $` -4ÿ SRI/ESG Research and Dialogue Research Reports Pondering CSR through dialogue %“Rethinking Growth” http://www.daiwa- http://www.daiwa- In the CSR website, you can find series of dialogue with key figures who play an active role in the front lines of each field. % ESG Research by Daiwa Institute of Research % No. 26 “Cluster Bombs” 8 June 2010 23 ©Daiwa Securities Group Inc.
  25. 25. Conclusion1. A financial institution has a social calling to serve as a mediator between asset management and fund raising for public and private sectors.2. While acknowledging environment, social and governance issues, harmony amongst various stakeholders is required to develop a sustainable community in the 21st century onwards.3. Daiwa Securities Group is implementing its mission by leveraging financial capabilities 24©Daiwa Securities Group Inc.
  26. 26. Contact ÿ Corporate Communication Department e-mailÿ Tel:03-5555-1312 Fax:03-5555-0662 25©Daiwa Securities Group Inc.
  27. 27. Appendix 0ûOur Surrounding Environment ÿ P.27ÿ 0û Paradigm Shift ÿ P.28ÿ 0û ISO 26000 ÿ Publish in Nov. 2010ÿ ÿ P.29ÿ 0û Funding type for Development ÿ P.30ÿ 0û MFI Interest Yield Trend to borrowers ÿ P.31ÿ 0û Cross-border funding landscape to MF ÿ P.32ÿ 0û Impact Investment Bond Uridashi ÿ P.33ÿ 0û Impact investment bond Private Placement to Regional Banks ÿ P.34ÿ 0û Highlights of “Impact Investment Bonds” P.35-36ÿ 0û $` -3ÿ Enlightening Activities ÿ P.37ÿ 0û $a Social Engagement ÿ P.38ÿ 0û $b Corporate Citizenship ÿ P.39ÿ 0û $c Information Disclosure (CSR Report) ÿ P.40ÿ 0û $c-2) Third-party Evaluation ÿ P.41ÿ 26©Daiwa Securities Group Inc.
  28. 28. Our Surrounding Environment0PPP0 W0tt° Xƒ 0ESG0 (Planet/Environment) Nº•“y> O(People/Society) }L n (Pro G vern ) fit/ o ance Oim OS 0ûVã (Enterprise) 27©Daiwa Securities Group Inc.
  29. 29. Paradigm Shift Environment, Resource & Human rights constraint ParadigmMaterially Rich Sustainability Era Shift a Er h owt Gr Carbon energy New/Renewable Energy EraIndustrial replaced animals and (Solar, wind, gravitational energy,Revolution manpower biomass) ÿ^ 20th century 21st Centuryÿ^ Low Carbon Community ÿ Unlimited Resourceÿ ÿ Limited Resourceÿ 28 ©Daiwa Securities Group Inc.
  30. 30. ISO 26000 ÿ Publish in Nov. 2010ÿ From CSR to SR  Guidance on Social Responsibility, provides harmonized, globally relevant guidance for private and public sector organizations of all types based on international consensus among expert representatives of the main stakeholder groups,.  What will ISO 26000 achieve? It will integrate international expertise on social responsibility –will be a powerful SR tool to assist organizations to move from good intentions to good actions. 7 Core Subjects 7 Code of Conducts 1. Accountability 1. Administration of the organization 2. Transparency 2. Human rights 3. Ethical behavior 3. Labor practice 4. Respect the interest of stakeholders 4. Environment 5. Respect the rule of law 5. Fair business practice 6. Respect the international code of 6. Consumer issues conduct 7. Community participation and 7. Respect the human rights development Source: ISO Web site . Japan Business Federation Political Sociology Division 2010.6.100 Summary of Result of Copenhagen Conference ISO2600000 29©Daiwa Securities Group Inc.
  31. 31. Funding type for Development Private SRI (e.g.: Microfinance Donation bond)No-financial return Financial return* * ssio avrtr d t exchtao adeit Posor t ee nue a lucinscr bon. i u o nget n d le neg r ad isk n f fu Grant Aid Yen Loan Public 30 ©Daiwa Securities Group Inc.
  32. 32. MFI Interest Yield Trend to borrowers 5 0 4 5 44 .3 200 3 4 0 200 6ÿ oGs La P tfoo 35 .1 34 3 6 f ro on or li 3 5 32.6 .5 31.7 3 28 0 .2 2 8 2 5 23.9 25 .5 24 26 .2 26 .8 .1 20.9 s 2 0 1 5 1 0 5 0 Wld or Aic EP EA LC MNA Su fr a A C A E oth Aia s Saurce: OCCASIONAL PAPER No. 15 , February 2009 The New Moneylenders: Are the Poor Being Exploited by High Microcredit Interest Rates? Note: Total Interest and Fee Income/Average Total GLP: average of 175 sustainable MIX MFIs, weighted by loan portfolio. 31 ©Daiwa Securities Group Inc.
  33. 33. Cross-border funding landscape to MF $21.3 billion* Private donors and Public donors and Investors (2009) Investors (Foundations, (Multilaterals, Bilaterals, Institutional and DFIs) Individual Investors) $14.6 billion $6.7 billion Microfinance Investment Intermediaries (MIIs) Apex & other Intermediaries (Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy) MFI Loan Portfolio ÿ 65.0billion ÿ MIX0 FY20090 1,058ÿ- ÿ&ÿ)ÿSÿ Source ÿ ÿ# ÿ ÿ! ÿ0 ÿ&ÿOÿCÿUÿS ÿ. ÿOÿT No. 70 April 2011, Cross- border Funding of Microfinance ÿE * Amounts based on data submitted by 61 funders and 90 MIIs. 32 ©Daiwa Securities Group Inc.
  34. 34. Impact Investment Bond Uridashi Year Name Issuer Lead Manager Tenor Settlement Date in Japan Amount ($mil) Vaccine Bonds IFFIm Daiwa 2y 19-Mar-08 $211 2008 TM World CO2L Bonds World Bank Daiwa 5y3m 27-Jun-08 $25 Vaccine Bonds IFFIm Daiwa 3y 20-Feb-09 $437 Vaccine Bonds IFFIm Mitsubishi UFJ 3y 28-May-09 $144 2009 Vaccine Bonds IFFIm HSBC 4y 25-Jun-09 $132 Microfinance Bonds IFC Daiwa 3y 20-Nov-09 $275 Green Bonds World Bank Daiwa 5y 03-Feb-10 $106 Environmental Support Bonds NIB Nomura 3y 03-Feb-10 $207 Climate Awareness Bonds EIB HSBC 5y 16-Mar-10 $200 Vaccine Bonds IFFIm Daiwa 3y 24-Mar-10 $338 Clean Energy Bonds AfDB Mizuho 4y 30-Mar-10 $78 Water Bond ADB Daiwa 3y 16-Apr-10 $645 Climate Awareness Bonds EIB Daiwa 3y 21-May-10 $368 Clean Energy Bonds AfDB Mizuho 3y6m 28-May-10 $108 Green Bonds Kommunalbanken Norway Nikko 3y 28-May-10 $102 Green Bonds World Bank SBI 5y 09-Jun-10 $6 Microfinance Bonds EBRD Daiwa 3y 15-Jun-10 $96 2010 Green Bonds Kommunalbanken Norway Nikko 3y 29-Jun-10 $47 Vaccine Bonds IFFIm HSBC 10y 29-Jun-10 $102 Poverty Reduction Bonds IADB Daiwa 4y 15-Jul-10 $158 Clean Energy Bonds AfDB HSBC 7y 29-Jul-10 $13 Green Bonds AfDB Nikko 3y 27-Aug-10 $30 Education Bonds AfDB Daiwa 3y 30-Aug-10 $136 Microfinance Bonds IFC Daiwa 3y 22-Sep-10 $342 Clean Energy Bonds AfDB HSBC 4y 30-Sep-10 $237 Clean Energy Bonds AfDB HSBC 6y 29-Oct-10 $13 Clean Energy Bonds AfDB Mizuho 4y 29-Oct-10 $123 Climate Awareness Bonds EIB Daiwa 3y 12-Nov-10 $118 Poverty Reduction Bonds IADB Daiwa 3y 02-Feb-11 $239 Green IFC Bonds IFC Nomura 3y 25-Feb-11 $44 2011 Clean Energy Bonds Kommunalbanken Norway HSBC 4y 29-Mar-11 $83 Vaccine Bonds IFFIm Daiwa 3y 31-Mar-11 $228 Total $5,338 mil / Daiwa’s arrangements $ 3,721 / Daiwa’s market share 69% 33©Daiwa Securities Group Inc.
  35. 35. Impact investment bond Private Placement to Regional BanksIssue date Issuer Product Currency Term Amount investor Lead manager African Development8/19/2010 Education Bond USD 5 year $12mil Public company Daiwa Bank 9/1/2010 World Bank Green Bond USD 5 year $50mil Iyo Bank JP Morgan11/16/2010 World Bank Green Bond AUD 5 year A$30mil San-in Godo Bank JP Morgan11/30/2010 World Bank Green Bond USD 5 year $10mil Iwate bank Daiwa12/21/2010 World Bank Green Bond USD 5 year $10mil Kiyo Bank Daiwa1/18/2011 World Bank Green Bond USD 10 year $5mil Kagawa Bank Daiwa1/20/2011 World Bank Green Bond USD 5 year $10mil Fukui Bank Daiwa1/20/2011 World Bank Green Bond USD 5 year $10mil Daishi Bank Daiwa1/25/2011 World Bank Green Bond USD 5.25 year $30mil Aichi Bank JP Morgan Asian Development Nishi-Nippon City1/25/2011 Water Bond USD 5 year $30mil Daiwa Bank Bank2/17/2011 World Bank Green Bond USD 5 year $30mil San-in Godo Bank JP Morgan2/18/2011 World Bank Green Bond USD 5 year $10mil Hokuyo Bank Daiwa2/24/2011 World Bank Green Bond USD 5 year $20mil Nanto Bank Daiwa3/17/2011 World Bank Green Bond USD 5 year $10mil Oita bank Daiwa4/14/2011 World Bank Green Bond USD 5 year $10mil Musashino Bank Daiwa6/14/2011 World Bank Green Bond USD 5 year $10mil Ogaki Kyoritsu Bank Daiwa Asian Development6/30/2011 Water Bond USD 5 year $10mil Kagoshima Bank Daiwa 34 ©Daiwa Securities GroupBank Inc.
  36. 36. Highlights of “Impact Investment Bonds” Vaccine Bonds Microfinance Bonds Issuer: IFFIm Issuer: IFC Purpose: Raise funds in the capital markets to Purpose: Support microfinance businesses with the purpose accelerate funding available for health and immunization of fostering economic independence by providing programmes in 70 of the developing countries small scale financial services to the poor segments. around the world. Issue date and amount: Issue date and amount: Mar. 19, 2008 $211 million equivalent Nov. 20, 2009 $275 million equivalent Feb. 20, 2009 $437 million equivalent Sep. 22, 2010 $342 million equivalent Mar. 24, 2010 $338 million equivalent Green Bonds Issuer: IBRD Support for vaccine Purpose: Support projects in the World Bank’s member Financial securing program countries that meet specific criteria for low-carbon management project. Issue date: February 3, 2010 Funding Investors Donator Issue amount: $106 million equivalent Investment Donation for up to in capital market 20 years Water BondsDaiwa Securities joined the panel with GAVI on the 8th plenary session of Issuer: ADBthe Leading Group on Innovative Financing for Development (16-17 Dec2010, Tokyo) Purpose: Support water project by developing countries in Asia and the Pacific. Issue date: April 16, 2010 Issue amount: $628 million equivalent 35 ©Daiwa Securities Group Inc.
  37. 37. Highlights of “Impact Investment Bonds” Climate Awareness Bonds Poverty Reduction BondsIssuer: EIB Issuer: IADBPurpose: Support future lending projects in renewable Purpose: Support innovative poverty alleviation energy and energy efficiency, both of which programsare identified by EIB as key areas for mitigating in Latin America and the Caribbean, includingthe effects of climate change. several conditional cash transfer programs,Issue date and amount: such as Oportunidades in Mexico. May. 21, 2010 $393 million equivalent Issue date: July 15, 2010 Nov. 12, 2010 $118 million equivalent Issue amount: $158 million equivalent Microfinance Bonds Education BondsIssuer: EBRD Issuer: AfDBPurpose: Support micro and small enterprises, which Purpose: Finance projects in the field of education andare hence foster economic and social growth in not catered for by the formal financial sector, African countries. with sustainable access to financial services, Issue date: August 30, 2010 via a range of financial institutions. Issue amount: $137 million equivalentIssue date: June 15, 2010Issue amount: $96 million equivalent 36©Daiwa Securities Group Inc.
  38. 38. $` -3ÿ Enlightening ActivitiesM ay 15 ( S a t ) – – Panelists for sectional meeting 37 ©Daiwa Securities Group Inc.
  39. 39. $a Social Engagement%Participating in the international initiativesGC (UN Global CompactÿPRI ÿ Principle for Responsible InvestmentÿUNEP FI ÿ UNEP Finance InitiativeÿCDP ÿ Carbon Disclosure Projectÿ% Cooperation with the internationalorganization/NGOGRI ÿ Global Reporting InitiativeÿFTSE4Good ÿ Policy Committee Member of an SRI IndexÿSIF-Jÿ Board Member of Social Investment Forum Japanÿ 38©Daiwa Securities Group Inc.
  40. 40. $b Corporate Citizenship% Real business as a result of partnership with ÿ. ÿ0ÿ/ 0ûÿ. ÿ ÿ/1ÿ Social Business Collegeÿ Kopernikÿ This is a lecture by social entrepreneur for social business practice, held bimonthly since Oct. 2010 (12 lectures in 2 years), for the university students and working persons. The operation is funded by the outstanding balance of donation of Daiwa Eco Fund and contents can be found in the web.2ÿ Daiwa SRI Fund Grant Program ÿ Civil Society Initiative Fundÿ In order to strengthen the basis of domestic NGOs operating in the field of human security, we support them for personnel expenditure (instead of program cost) aiming at nurturing leaders for the core of the organization. The operation is taken from the outstanding balance of donation of Daiwa SRI Fund & Daiwa Eco Fund. Since 2006, there have been 24 cases in total with more than 42 million yen of support.3ÿ Daiwa Securities Group – Tsunami Reconstruction Fund ÿ Asia Community Center 21ÿ From 2005 (after receiving appeal from the UN), for the next 10 years, we provide support of 10 million yen every year for reconstruction assistance NGOs in devastated areas (India, Sri Lanka, Indonesia) and is used as a source for microfinance and many more. In the brackets are the name of NGO/NPO 39 ©Daiwa Securities Group Inc.
  41. 41. $c Information Disclosure (CSR Report)%Employees as stakeholders (CSR promotion base) Posting pictures of employees’ baby on the cover ÿ ÿ ÿ ÿ ÿ ÿ ÿ ÿ ÿ ÿ ÿ ÿ 40 ©Daiwa Securities Group Inc.
  42. 42. $c -2) External Appraisal %Evaluation on CSR in general  SRI index constituent Dow Jones Sustainability Indexes (12 consecutive years) FTSEÿ Good Index (6 consecutive years) % Ranking for Work Place NIKKEI Most Famous Companies for Job Seekers (2009) Rank 5 for Financial Institution (Rank 1 for Securities Industry) NIKKEI Woman (2011) Best 100 Companies with friendly working environment for women Rank 1 for Financial Institution (Rank 3 for general category) 41©Daiwa Securities Group Inc.