(The panel discussion on impact investing. From left to right: Ms Naina Batra, Mr David Heng, Mr Andreas R. Kirchschläger, Mr Vineet Rai and Mr Andrew Farnum.)

Impact investing is both a rapidly growing sector of investment and an increasingly important source of funding for social and environmental causes. Moving away from the adherence to shareholder primacy, impact investing marks a shift towards investing in communities to generate positive, measurable social and environmental impact beyond financial returns.

Corporations seeking to solve societal problems will find it challenging to do so without the capabilities of the private sector, which Mr Andrew Farnum has identified as the role of impact investing. Impact investing forms partnerships with private companies and provides incentives for them to work on critically important issues. Corporates can embrace this new pathway for well-rounded decision-making. For instance, imposing a market-rate return requirement ensures that corporations are rewarded according to the risk undertaken. Mr David Heng advocates a data-driven and evidence-based approach to impact measurement, ensuring that impact investing efforts are funnelled in the right direction. As opposed to being reliant on donations, institutions should develop sound business models to be sustainable.

Mr Andreas R. Kirchschläger shared some considerations that govern the elea Foundation’s approach towards impact investing: only making direct investments towards organisations creating products, services, infrastructure or education for impoverished communities; expecting these companies to possess a growing value creation plan not only for impact but also for business success; investing in the early growth stage from the get-go to tide organisations through the critical phase; and assuming the role of an active investor during this crucial period, building businesses to prepare them for investors seeking market-related returns.

Both Mr Vineet Rai and Mr David Heng emphasised the importance of intentionality in impact investing. A good place for corporates to begin impact investing would be deliberately taking steps towards building up the capabilities required. This can manifest itself from the initial deal screening process and due diligence impact assessment, to determining the impact Application Program Interface (API) and designing the impact management framework. Without intentionality, there would be no impact.

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About Temasek Trust Conversation

Temasek Trust Conversation is one of Asia’s philanthropic-focused conferences to facilitate dialogue and insightful panel discussions among experienced practitioners and thought-leaders on today’s giving landscape. Organised by Temasek Trust, the Temasek Trust Conversation is a signature event held annually to inspire and enable giving.

About the Speakers

Panellists

Mr Andrew Farnum is the Director of the Gates Foundation’s Strategic Investment Fund, where he manages the foundation’s $2 billion impact investment program.

Mr David Heng is the Chief Executive Officer of ABC World Asia Pte Ltd, a newly established private equity fund focused on impact investing.

Mr Andreas R. Kirchschläger is the CEO of the elea Foundation for Ethics in Globalization and the President of the Max Schmidheiny Foundation.

Mr Vineet Rai is the Founder of Aavishkaar Group and chairs its Group Executive Council.

Moderator

Ms Naina Batra joined AVPN as CEO from September 2013, and was appointed as Chairperson in May 2018.