Social Stock Exchange – Democratization of Capital Investing for Impact

The demand for investments that combine financial return with desired social or environmental impact is growing. Given the recent upsurge in entrepreneurship, shifting attitudes towards the role of business in society, and a broad policy push for sustainable development, there should also be no shortage of investors and financiers eager to absorb this demand.The problem, as emphasized both by WEF and UNEPFI, lies in matching assets that create positive impact with investors in a manner that is efficient, effective, transparent, and scalable. In other words, redirecting investment and finance, to impact oriented investments compatible with the UN Sustainable Development Goals and the Paris Agreement is a key factor in turning around the investment philosophy. The same applies to the process of creating and growing impact assets, and supporting entrepreneurs in their search for capital. Both factors are crucial for making the ‘impact economy’ grow exponentially rather than linearly. Today impact investing is mostly the domain of wealthy individuals, foundations, and family offices. Non-accredited investors and/or retail investors plus pensions funds are not yet able to meaningfully participate in this new way of investing. This is because of a lack of products, a lack of access to products available to more affluent investors, a lack of impact advisors serving that segment of the market, and a lack of transaction platforms.It has been argued that not enough assets can be found that match the impact definition.The creation of regulated funding platforms known as social stock or impact exchanges (SSEs) has been proposed as a necessary step towards democratizing and popularizing impact investing, easing the asset search process for investors and capital access for entrepreneurs. While the need for SSE is heavily debated in expert circles along with the challenges they may bring about, the first SSEs have come into existence in the UK, US, Canada, and Singapoore, complemented by some smaller SSEs in Brazil, South Africa and Kenya. This paper offers a prognosis about the contribution of SSEs in establishing an efficient market, addressing investment gaps and redirecting capital based on a literature review, analysis on unmet interests and
needs and open questions in impact investing.

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Decarbonizing Finance – Recent Developments and the Challenge Ahead

Societies around the world are faced with a multitude of social and environmental challenges as the negative effects of human activity on the Earth’s ecosystem are becoming increasingly evident. At COP21 in Paris, 195 countries agreed to work together to limit global warming to 2°C and aim for net zero carbon emissions by the second half of the 21st century. This will require large-scale investment in renewable energy, energy efficient buildings, protection of forests, sustainable production processes and materials, and innovative solutions to social problems. Niche finance and public sector funds alone will not be sufficient to address this challenge. Thus, mainstream investment must be aligned with sustainable development – a process already under way, although hobbled by challenges such as carbon-locked legacy infrastructure, technological path dependence, financialization, lack of patient capital for innovation, and underdeveloped policy frameworks and markets for mainstreaming impactdriven investment. While the financial sector has been grappling with the environmental and social implications of climate change for at least a decade, the Paris Agreement could represent a tipping point for Sustainable Finance. However, a systemic response has been left so late that even with increased mitigation action, warming of 2°C can still be expected, leading to climate migration and growing social and political tensions. This article maps the current landscape of Sustainable Finance and key challenges that lay ahead.

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„Markowitz revisited: Social portfolio engineering“

In recent years socially responsible investing has become a popular subject with both private and institutional investors. At the same time, a number of scientific papers have been published on socially responsible investments (SRIs), covering a broad range of topics, from what actually defines SRIs to the financial performance of SRI funds in contrast to non-SRI funds. In this paper, Markowitz’ Portfolio Selection Theory is revisited by allowing the incorporation of not only asset-specific return and risk but also a social responsibility measure in the asset selection process.

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Endlich geht es los!

Hier entsteht gerade unser Internetauftritt zur Forschung rund um das Thema Positive Impact Investing. Wir freuen uns über jegliche Art von Austausch – nehmen Sie einfach Kontakt zu uns auf!

Bis dahin,
Margarethe Rammerstorfer & Karen Wendt