Читать книгу Позитивные изменения. Том 1, №1 (2021). Positive changes. Volume 1, Issue 1 (2021) - Редакция журнала «Позитивные изменения» - Страница 4

Social impact investments, or impact investments, are becoming increasingly prominent in the modern world building. At the same time, the concept itself, which puts classical investment cases on a level with social initiatives, still remains a thing in itself. What means «impact»? How to assess social impact? Do we need universal metrics to evaluate it? We asked people who know about the topic of impact investments to answer these questions on the experience of their own investments or a deep expert immersion in the topic.

The Global Impact Investing Network (GIIN) defines "impact investment" concept as "an investment made with the intention to make a positive measurable social or environmental impact and obtain a financial return." In practice today there is no common understanding of impact investment term. It allows for many interpretations. However, the venture investor Ksenia Frank, the chairman of the supervisory board of the Elena and Gennady Timchenko Charitable Foundation and a member of the supervisory board of the Zerno Ventures venture impact foundation essentially agrees with the GIIN statement: "These are investments in the projects that resolve and mitigate some important social problem in addition to financial gain for investors." She believes that the very fact of financial returns in this case is a prerequisite, along with a measurable social effect: "These are two components that are the must for impact investing, in comparison with any other effect, even if it is also very necessary and in demand".

IMPACT AS AN APPROACH TO LIFE

It’s not news that impact investing is near to other forms of socially responsible business development. Jioulnar Asfari, director of the SOLj Center for the Promotion of Innovation in the Society, says the same thing. According to the expert, finding place for impact investing among other investment strategies is, in fact, an attempt to separate it from ESG investments (environment-social/sustainability-governance), which began to form a little earlier. There is a steady movement that sees the difference between the first and the second in that the ESG concept, as a rule, arises within already existing business and impact projects are initially created in order to solve certain social or environmental problems.

At the same time, experts have no consentience regarding the equivalence of the two parts of the definition – «transformative» and «repayable» ones. In fact, financial dividends are not a fundamental point for the majority: the main thing is that investments work for a stable social effect. Zero return on social bonds is permissible, says Elena Feoktistova, Deputy Chairman, Managing Director for Corporate Responsibility, Sustainable Development and Social Entrepreneurship of the Russian Union of Industrialists and Entrepreneurs. "An investor can invest money as a social investments – in fact, as a grant, supporting social entrepreneurs, and that money, even if it doesn’t generate income, can be seen as an impact investment because it helps to solve specific problems," she said.

Jioulnar Asfari

MY FAVORITE IMPACT CASE

Ksenia Frank: Olga Barabanova and KINESIS. While still working as a volunteer, Olga finds out that wheelchairs for children are very heavy and do not provide sufficient mobility and are not individualized. Having set up the production of children's bicycles (Lisoped), Olga realized that the technology of making wheelchairs is not very much different from bicycles. Today Olga is producing light active wheelchairs in Moscow (the company is included in the register of social entrepreneurs): Kinesis is the first in Russia (and so far the only one) that makes personalized wheelchairs for children from 2 years old, adults and for Paralympians.

"A person who has created a successful business understands how to get what he wants with the help of investments. In business, this desire is measured in money. In impact investments – in social changes," Ekaterina Rybakova, President and co-founder of the Rybakov Foundation, supports the idea.

Summarizing, we can say: the definition scope can be wide – would be it useful. Thus, the founder of the Seven Suns Development Group of Companies, entrepreneur and social investor Alexey Ryzhkov believes that impact investing in principle should be understood as the activities of any companies that are somehow related to the positive impact arising. "I see ‘impact’ as a format that sooner or later everyone has to transit to," he says. Perhaps, different versions of the definition will again converge into a single picture at this ‘transition point’. "Impact Managing is the ability to see these aspects all as a whole. And there is an art to do it and now I see it more in terms of governments, that is, building a system of governance," Jioulnar Asfari says.

HOW THE IMPACT CAN BE MEASURED?

In fact, all market participants, which concerned the topic development, agree on one thing: investments should ‘work’, producing a clear and, if possible, measurable positive impact. It is still the second question – whether it will be possible to return funds invested and even more so to make a profit. The main thing is to achieve a measurable social effect… and be able to evaluate it.

"We decided for ourselves that since we want positive changes, they should affect the quality of people’s lives. And we will rely on feedback, on how people themselves evaluate these changes. Tens of thousands of people participate in our activities. We interview them. And we evaluate our impacts by the way they evaluate the impact of our programs, our projects on their lives," Ekaterina Rybakova says.

Venture investor Ksenia Frank is also confident that quantitative assessment when measuring impact raises many questions and is insufficient by itself. "In the work of the Timchenko Foundation, we do not tie grants only to the achievement of planned metrics (the Foundation introduced a monitoring and evaluation system in 2015). If metrics are too closely tied to funding, they can inadvertently provoke wishful thinking." Ksenia Frank notes that in areas such as social or environmental impact, the purely numerical equivalent of benefits can lead to a shift in focus: "We all know how to count «outputs»: number of classes held, manuals published and people who attended the class. Yet there is something much more difficult to assess and that very few people think about. That is what really has changed in the lives of these people and how stable these changes are."

Jioulnar Asfari agrees with the existence of an internal conflict between the known metrics of performance evaluation and, in fact, the impact evaluation. "The impact is such a semantic aspect, and its ‘birth place’ is the heart, and all the evidence is in the head. Therefore, it is important not to overdo it: the control and measurement system itself should not become a goal in itself. When we talk about impact, it is important to be able to see the effect of all indicators at the strategic level together." At the same time, Jioulnar Asfari notes, today the world market is beginning to form the impact evaluation standards necessary for public companies, there are indicators that can be measured and calculated, and the formation of a relevant evaluation system is, as a whole ring, a matter of time.

Ksenia Frank

Ekaterina Rybakova

MY FAVORITE IMPACT CASE

Ekaterina Rybakova: If we talk about the Rybakov Foundation's projects, it's difficult for me to choose. They include the University of Childhood and our course, which we developed together with The Higher School of Economics university as an evaluation and self-diagnostic tool for schools, as well as the school community «The School is the center of society». The course that we are now introducing into the curriculum of pedagogical universities is aimed at giving future teachers skills in community management, community building so that they can use them immediately in school.

Alexey Ryzhkov is sure that the metrics, in any case, are necessary for impact: "It is important that any sphere, any activity is viable in terms of metrology. It is important to develop criteria, it is important for society to coordinate them. It is important to use these criteria." At that Ryzhkov notes, along with universal criteria, there should be industry metrics. But they should be universal, relevant for all countries and activities – first of all.

However, everyone has no inherent optimism about the prospects for implementation of a single universal evaluation system. Ekaterina Rybakova believes that it will be extremely difficult to reach an agreement even at the level of one, single country. "In many ways, the question of preferences, what exactly you consider important for a certain sphere, plays a role here," she notes. Preferences – and, we add, the traditional "devil in details". "For example, one foundation states: we invested in the project – 300 children have been taught programming. My first question is: where are these children from? If these children played chess yesterday, and today you taught them programming, how much social effect is there? If yesterday they were drinking beer in the alleyway, and you brought them to the club, got them interested so they stayed, taught them programming and gave them a profession, then there is a real social effect", – says Ksenia Frank.

In general, experts agree: an evaluation is necessary despite all its complexity. "When you create an infrastructure project, it’s ‘a venture inside a venture'", Vladimir Smirnov says. "I know that a reasonable, conscious, social community will say that this is really needed. It is very necessary – a very cool project, which really works, helps, makes. For example, in Blagosfera Center, as in the most complex project, we count this. And the numbers are quite encouraging for us.

Vladimir Smirnov

MOVING DIRECTION

The broad scope of ‘impact investing' concept sets a predictably long running start for modeling the development paradigm. On the one hand, mainstream cases have already begun to appear on the Russian market. So, in 2020, the Towards Impact Investments accelerator was launched – the Impact Hub Moscow pilot project and the Navstrechu Peremenam Foundation, under which social projects for impact investment are selected and finalized. On the other hand, the current map of the domestic impact extends from internal social projects of large companies to models of public-private partnership and venture financing.

Thus, investors are increasingly ready to invest in the development of territories and communities and evaluate this activity as a kind of impact investment. There is potential in the sphere that will sooner or later begin to return not only with human capital, they believe. Many projects of the Rybakov Foundation are focused in this direction – About Women, About Children and others. "Community is a special relationship between people, where people are united by common values, a common working. It is being in the community that changes their lives and leads to those positive changes that begin first of all in thinking and then in actions, deeds, and quality of life."

At the same time, in the format of influence investments, public-private partnership projects are developing today, supported, in particular, by VEB (the Bank for Development and Foreign Economic Affairs). "VEB, as a development institution, has a whole direction that is dedicated to this – impact investments and impact projects," Elena Feoktistova says. In the first case, we are talking about financial participation in socially significant projects, in the second – about the creation of projects as such. "In fact, this is a private public partnership, a real entrepreneurial activity, which should ensure the return on investment. Above or below the market value – it is another story," she said.

Finally, a scenario is possible where impact investing will close to venture financing, which is much more understandable to traditional business. "I believe in the potential of venture capitalists, who are not indifferent people deep inside, and on weekends they often do volunteering in helping elderly and rescuing dogs. In business, they also often make decisions based on the common human values. Simply put, the idea has not been formed yet, nor «digitised» by them" says Ksenia Frank. Perhaps, it is not necessary to turn non-profit organizations in the direction of repayable financing, instead, direct more traditional investors and founders to where there is the impact… "I am sure that many of the founders of companies on a human level have a desire to make a positive contribution to the society, they do not understand yet that it can be beneficial for them as well," – she remarks.

Elena Feoktistova

MY FAVORITE IMPACT CASE

Elena Feoktistova: Roman Aranin and Observer. Let's give a very classic example. A person began with solving his own problems (the company that creates modern wheelchairs and an accessible environment in the regions today began with a wheelchair repair shop after its founder suffered a spinal injury – ed.), but solved the problem not only of his own, but also of hundreds of people around. He managed to ensure stability in solving that problem, which was original, and very significantly expanded the original idea and project. This is a very good example of how things work.

THE "THREE SECTORS MODEL" NO LONGER WORKS

Most experts agree that a public discussion about the impact approach is needed to conduct. "In my opinion, now it is important to talk, write, and build knowledge," Jioulnar Asfari says. – It is important to conduct public discussions. In our country, there is quite a strong division: charity is separately, corporations are separately, investment communities are separately, and we have a lot of self-regulation within individual communities." The result of this approach is the low negotiability of market participants, the expert notes. To form a systematic approach to the impact, it would be useful to create platforms where representatives of various communities can conduct discussions, and form a cross-regulation. "Then there will be a movement from disparate private investment, which cannot be copied and repeated as an experience, because it is always individual, towards some institutional, collective forms," Jioulnar Asfari sums up.

MY FAVORITE IMPACT CASE

Vladimir Smirnov: School of Positive Habits at the Lifestyle Foundation. How can we raise people who will be socially responsible? We can only starting from a young age. School of Positive Habits is developed for 1–4 forms, a case of 9 lessons, where children discuss the topics of mercy, compassion, helping their neighbor, helping the environment, and animals. The program also intended for high school students, 9-10 forms, who then conduct the same lessons in their school. Such a synergy turns out. Part of this program is also designed for preschoolers, when children 5–6 years old are told what is good and what is bad. These are just values common to humanity. It would be great to have these in every country, in every region, in every school. Tens of thousands of children have already complete the program training, in two or three regions there are centers organized at pedagogical institutes of higher education that train future teachers, seminars are held, there a methodological center operates. I have a dream that this will be in every school in the country.

Smirnov also speaks about the problems that hinder to build a dialogue today: "The social and charitable community itself has often bad, ‘unprofessional’ attitude to business. People who save other people seem to be somewhere near angels and cherubs. The social block, the social sphere does not work loyally enough with business and potentially involved people."

But for all that, according to business representatives, this distance can be covered. "I perceive the commercial and social elements as two components of a single whole, like Yin-Yang, which should always be a whole," Alexey Ryzhkov says. – And today we see when companies or projects do not combine these two components they suffer without each other. When these two components are combined with each other, there is that integrated whole that should be."

Alexey Ryzhkov

INEVITABLE IMPACT

Perhaps the only thing on which all stakeholders are unanimous is that the "transition to the side of good" for business and society as a whole is inevitable. "You’re somewhere in America, come to a decent party and say "I’m doing business." "What kind of social activity do you do?" – «None» – "Okay. Are you doing something interesting? Maybe you’re saving nature or doing something to make it different?" – "I do nothing." You will be invited to business meetings, but not to good society. It should be by itself. It was once fashionable, today it has become mandatory. At least this «fashion» should appear in our country, so that it is inconvenient to do nothing," Vladimir Smirnov says, founder of the Blagosfera Center for the Development of Social and Cultural Projects and Charity.

Alexey Ryzhkov is, also confident in the inevitability of a paradigm shift. "We are experiencing a civilizational crisis. And in order to emerge victorious from it, we need to review all our activities regarding impact, the impact we have on the world as a whole. We shall formulate these criteria of impact, to understand that we cannot address important issues using local approach. We cannot build our local well-being or our local happiness without solving common problems. I believe that in this logic and in the logic of ‘victory’ over the challenges and threats that we face, we must move to a new format of activity as a whole: business, government activities, all individual people, and all market players."

Prepared by Maria Krieger