The 4th meeting of the "Impact Investing Roundtable " was held on Friday, January 29, 2021 to deepen the understanding among these leaders on impact investing, together with the significance and challenges of addressing social issues through impact investing in Japan and beyond.
Members of “Impact Investing Roundtable"
The 4th meeting focused on "Impact Measurement & Management (IMM)" for impact investment in unlisted companies, particularly targeting startup companies. We discussed the importance of formulating impact strategies as an investor before implementing IMM in the invested companies. We also reviewed the challenges related to the implementation of IMM that investors face when investing in unlisted stocks. Additionally, we shared views on the benefits and challenges of impact investing from the perspective of entrepreneurs. We then further examined what is needed to increase impact investment in unlisted companies in the future, as well as the desirable and responsible exit strategies for them.
The opening remarks were delivered by Dr. Takeshi Mizuguchi, Chairman of the roundtable, Professor of Faculty of Economics and Vice President, Takasaki City University of Economics, and Mr. Satoshi Ikeda, Vice Chairman of the roundtable, the Chief Sustainable Finance Officer, Financial Services Agency. Afterwards, Ms. Fumi Sugeno, Head of Business Development at Japan Social Innovation and Investment Foundation (SIIF) gave an overview of the pre-recorded and previously shared presentation featuring Ms. Marilou van Golstein Brouwers, Former Managing Director, Triodos Investment Management BV and Ms. Isabelle Laurencin, Fund Manager of Triodos Food Transition Europe Fund. Ms. Sugeno gave an outline of the Triodos Food Transition Europe Fund, and explained the specific framework of IMM and Impact KPIs used in the fund. She highlighted that Triodos Bank created and disclosed a vision paper for impact-creation for the entire banking group. She further explained how the fund developed a consistent impact investment strategy as a subsidiary of Triodos Bank, and then implemented IMM at the portfolio level as well as an individual company level.
Next, Ms. Chunmei Huang, Senior Director, Shinsei Corporate Investment Limited, illustrated examples of impact investment funds for unlisted companies in Japan. She gave an overview of the "Hataraku FUND", the fund’s Theory of Change (ToC), the IMM processes, evaluation tools and methods, utilization of evaluation results, and their approach for impact IPOs. Mr. Masashi Kataoka, Head of Venture Investment Center Alternative Investment Department, The Dai-ichi Life Insurance Company Limited, introduced the company's direct impact investment cases and its impact strategy. Mr. Naoto Hoshi, CFO of Unifa Inc., explained the benefits and challenges of impact investing from the perspective of entrepreneurs actually receiving impact investment. Those benefits included receiving support for impact measurement and disclosure, maintaining motivation among executives and positive effects on the hiring of new employees, and increased recognition as a company that aims to solve social issues. On the other hand, challenges and concerns included the need to understand the reality of limited resources for startups, and the case of a bias against impact investing based on assumption that while it highly values impact it undervalues the financial returns.
This was followed by a panel discussion led by Dr. Mizuguchi, Mr. Yoshiaki Ishikawa, CFO of Life is Tech, Inc., Mr. Masashi Kataoka, Ms. Nagisa Shigetomi, Principal of Global Brain Corporation, and Ms. Sayaka Takatsuka, Senior Director of Shinsei Corporate Investment Limited. The panelists discussed how IMM is being considered and practiced in their organizations, how to increase impact investment in unlisted stocks in Japan, and what role they expect the government to play.
They pointed out that it is important for investors to understand what kind of goals each investee has on solving social issues, and to work together with the investees to come up with strategies and indicators for impact creation. They also pointed out that it is necessary to utilize evaluations that are appropriate for the nature and characteristics of each investee. Furthermore, they discussed the needs for developing indicators to visualize outcome which reflects the actual reality of social issues, and for accumulating comparable impact data. Additionally, the panelists pointed out the need to establish and secure a sufficient organizational structure for IMM, and to emphasize that creating impact is directly linked to corporate sustainability. They also discussed the need for policy-based public support measures for start-up companies.
The meeting was followed by a breakout session with several groups where they discussed "What is necessary to increase impact investment in unlisted stocks in Japan?" and "What should be the responsible exit strategies for impact investment in unlisted stocks?” For the first question, the group discussed the need for the participation of diverse players including buyout funds and foundations, sharing of best practices, regulations and incentives to promote the VC industry, as well as the need of a mechanism for the public -private partnership to share risks such as blended finance. Regarding the latter question, some raised the need for a variety responsible of exit strategies beyond IPOs and M&As, and others pointed out the need for tax incentives as well as listing support by stock exchanges.
Thirty-three committee members consisting of financial operators, market participants, business operators, and industry representatives attended the meeting. When including those from related ministries and agencies as well as observers, there were approximately 130 participants at the meeting.
The next meeting is scheduled for April 15.
|List of speakers|
Satoshi Ikeda, Vice Chairman of the roundtable, the Chief Sustainable Finance Officer, Financial Services Agency
<Presenters and panelists> *Including Video Presenters
Marilou van Golstein Brouwers, Former Managing Director, Triodos Investment Management BV
Isabelle Laurencin, Fund Manager, Triodos Food Transition Europe Fund
Nagisa Shigetomi, Principal, Global Brain Corporation
Sayaka Takatsuka, Senior Director, Shinsei Corporate Investment Limited
Chunmei Huang, Senior Director, Shinsei Corporate Investment Limited
Masashi Kataoka, Head of Venture Investment Center Alternative Investment Department, The Dai-ichi Life Insurance Company, Limited
Naoto Hoshi, CFO, Unifa Inc.
Yoshiaki Ishikawa, CFO, Life is Tech, Inc.