Over the last 15 years, Credit Suisse has built a large impact investing platform. It now manages assets worth over USD 3 billion. However, the existing investment metrics and frameworks turned out to be inappropriate for this type of investment. A sound business case still had to be made and the investment product had to be excellent from a financial perspective.
Intentionality spectrum
The impact fund still needed to be compelling also from the point of view of traditional portfolio theory. The financial returns had to be scalable and attractive. An article on the INSEAD business school website described the impact intentionality spectrum:
- Charity/NGO: solving societal issues, dependent on funding – traditional philanthropy
- Social enterprise: solving issues that are not dealt with by other forms of businesses (at least partially self-funding) – venture philanthropy
- Impact-driven business: seeking both positive impact and profits – impact investing but with a stronger focus on profits
- Sustainable business: impact is included in the value chain as it enables long-term profit – sustainable/responsible investing
- Traditional business: traditional company – often engaged in some CSR/philanthropy activities – traditional profit-based investing
Recently, Credit Suisse managed to create a fund aimed at social impact. It focused on opportunities in Asia and has gained considerable popularity. So the question is: how to create a meaningful impact without being forced to compromise on the market returns expected by clients? Read the second part of the article fo find out more.
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