(Applause)
One feature that identifies us as human beings
is that we ask ourselves questions.
Other animals have instincts, they have a perception of their environment
but we are the only ones who do not take what is around us for granted
We ask ourselves questions and possibly try to change the world around us
I consider myself a lucky person:
I had a family who supported me,
I had the opportunity to study, to travel, to do a job that
I like and that satisfies me
I was often in the right place at the right time
Well, those who receive a lot, like me,
then want to give.
Unfortunately, it is impossible,
because when you try to give,
you actually get much more.
This is the favela of Paraisópolis, “paradise city”,
one of the most populous in Sao Paulo, about 100,000 inhabitants.
In the favelas there is no water, there is no electricity
except that stolen from nearby neighborhoods
but there are schools
and a few years ago I was in some of those schools,
longing to give.
I was working on a Worldfund project.
Worldfund is an international organization that aims
to reduce poverty in Latin America through quality of education
thus reaching students through teachers and infrastructure.
my task was to tell these children
that with education and with school, they could be successful,
they could have a different future.
Daily life for children in Paraisópolis is on the street
Studying means sacrifice, means persuading parents and grandparents,
means working at night to go to school during the day.
On the last day
a group of students approached me after my speech
and asked for a photo.
A girl asked me: “Do you really believe
that I can change my future with school?”
“Yes, yes! I really believe it!”
And she told me
“But you, what are you doing
to contribute to the change you would like to see in the world?”
I didn’t know how to answer.
Once again, I wanted to give, but I found myself receiving.
I had received a huge mirror in front of me
a mirror that asked me
“What is the change you want to see in the world?”
and above all, “How do you plan to contribute?”
I brought this question
as a gift with me and then carried it around.
Two years later I was in Uganda,
working with Opportunity International
Opportunity deals with impact investing.
What is impact investing?
Literally, “impact investing”
means “investing with an impact”.
Obviously!
All investments have an impact, be it positive or negative
All the actions we take have an impact, be it intentionally or otherwise
But impact investing
means investing with a dual purpose:
with the purpose of financial performance
and, at the same time, of social impact.
A middle ground between pure financial investment and philanthropy.
If I make a pure financial investment, maybe I lend money
to a company or someone who will then give my money back with interest
My financial performance is the interest
However, if I make an investment with impact
it means I’m going to lend my money to a company or someone
who will pay me back with interest, but I’m also looking
at the social impact of that investment.
Maybe that company invested in building a school.
A school in a place which has never had one,
so the social impact is represented by those children who can go to school
increased literacy in the area
increased employment for those who built the school
for teachers, janitors…
That is to say: impact investing
is killing two birds with one stone
And impact investing gave me answers
because the change I want to see in the world
is a fairer world, a more equal world
a world where we can all
live with dignity
And how could I contribute?
With impact investing, as a financial intermediary.
The financial intermediary is nothing more than a bridge,
a bridge between those who have resources, savers
and those in need of resources, those who have projects
perhaps with an impact
And what does Opportunity International
or other such impact investing organizations do?
They do exactly that.
They create a virtuous circle
that helps the most unfortunate people to get out of the cycle of poverty
with their own strength.
Finally
something worthwhile.
Impact Investing is a relatively new concept.
The name impact investing was born around the year 2000
and, as all new concepts,
it is difficult to find statistics upon which everyone agrees
it is difficult to find a single definition
it is difficult to find a unique method of evaluation.
But I think
it’s important to understand the extent of this phenomenon.
If we look at the larger circle
it represents all global financial investments, all over the world
of all things, whether they are with or without impact.
We’re talking about hundreds of trillions,
300 trillion.
One third of that circle, more or less 100 trillion,
are the investments made by pension funds
investment funds and insurance
essentially our savings.
100 trillion.
And how are these 100 trillion invested?
10 percent
of these trillions are invested
in government bonds with negative returns
And so, is this related to the impact investing?
Yes, it is. Can you see the red dot?
It’s difficult to see.
just 0.1 percent is in impact investing.
It’s a paradox.
We can get financial returns
together with social impact and yet we don’t do it.
We are aware that our resources
are the means that can change the world
and we don’t exploit it.
We can kill two birds with one stone and we are happy with one!
Of course, these statistics may not be complete
maybe there are some investments that have a social impact
but are not reflected in these numbers
Perhaps there are some of us who haven’t explicitly decided
not to invest with impact, but just didn’t know it was possible
Actually, the most important thing
is that 99.9 percent of our resources
can be directed towards impact
We have 99,9 trillion that we can invest
in projects with social impact.
In 2015
the United Nations published a document
with 17 goals
to eradicate poverty
protect our planet, give welfare to everyone.
But there are even goals like
eliminating hunger in the world
solving the water problem, the quality of education
peace and justice.
Well, the United Nations estimates
that we need 1.5 trillion a year
to achieve those goals by 2030.
We have 99.9 available.
It’s good news, isn’t it?
So, what can we do, seriously?
Each financial market operator can do a different thing.
About governments: governments can create systems
where investments with social impact can work
For instance reducing the taxation system, and that’s already happening.
Financial intermediaries can organize themselves
to create investment solutions
with financial performance and social impact.
It is happening.
Impact investing is doubling its’ figures each year
and it is doubling as demand rises
above all from institutional investors
so there are solutions for institutional investors.
There are fewer solutions for private investors.
And what we have to do as private investors
is to create the demand.
We have to ask ourselves and ask our financial intermediaries
the consultant, the bank, the financial promoter
“What is the impact of my pension fund?”
“What is the social impact of my investment fund?”
These demands alone are few
but together we are 99.9 trillion.
And if the financial intermediary tells us
“Well, wait a minute,
if you want the social impact
you have to give up a bit of financial performance”
It’s not necessarily true.
There are statistics that say
that most investments with impact
have performance targets
but also effective returns, in line with the market,
and in addition investments with impact have a risk profile
completely different from that of other activities
which means
that in your portfolio they create
more diversification and therefore less risk.
And then perhaps the intermediary says
“Yes, but at least let’s separate financial returns from philanthropy”
No, not necessarily it’s true
philanthropy is very important.
We don’t want to replace philanthropy with impact investing.
However, when entrepreneurial spirit is lacking
philanthropy gets limited results.
If I have 40 billion euros
and I distribute them to 4 billion needy people
each of them will have 10 euros
to eat for a week
and then everything returns to square one.
If I invest those 40 billion euros in infrastructure and education
I create a momentum of growth and I change the world
That lady you see there, that energetic lady,
her name is Betty Mulooki.
Betty lives in Uganda, she has a disabled husband and three children.
Betty is an impact investing client.
Betty got a $10 loan
with which she bought equipment and sugar cane seeds.
Betty’s crop has gone well,
so she is paying interest
paying her debts and paying school for her kids
who will have education
and therefore a different future from Betty’s.
Betty is breaking the cycle of poverty
and Betty doesn’t need our charity,
Betty needs an opportunity!
Now I know how to answer
to the question of the girl from Sao Paulo
“How are you contributing to the change you would like to see in the world?”
“I’m helping Betty!”
(Applause)
”
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