The 3rd meeting of the "Impact Investing Roundtable " was held on Friday, November 20, 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.
In the first and second sessions (held in June and September), the participants discussed the basic concept of "impact investing" and the diversity of approaches and positions on impact investing. In Japanese languages, the term " Hyoka” could mean several different concept such as “Valuation”, "Evaluation", "Measurement”, “Assessment” and “Appraisal”, which is sometimes a source of confusion when we discuss “Impact Measurement and Management (IMM)” In the context of impact investing, since Impact Measurement & Management (IMM) is a key concept, this roundtable shared the latest discussions on the definition and purpose of IMM, and then the participants exchanged views on a number of issues, including the intention to create impact, the role of IMM in different financial products, the contribution of investors , and prevention of impact-washing, and so on.
Dr. Takeshi Mizuguchi, the Chairman of the roundtable and the Professor of Faculty of Economics at the Takasaki City University of Economics, and Mr. Satoshi Ikeda, the Vice Chairman of the roundtable and the Chief Sustainable Finance Officer, Financial Services Agency first gave opening remarks.
Before the roundtable, a video lecture titled “Impact Measurement and Management (IMM):Trends, Approaches, and Prospects” from Prof. Karim Harji* was distributed to the roundtable members to provide basic knowledge and understanding. Mr. Katsuji Imata, President of the Social Impact Management Initiative (SIMI), gave supplementary comments around topics such as the importance of starting “Why?” questions rather than jumping into "How to measure impact," upon starting IMM.
Then, Dr. Mizuguchi askes further questions to Mr. Imata such as "What does 'management' in IMM really mean?", "Which of investors or the enterprises are the main actor in IMM?” “What are differences between Measurement, Assessment, Valuation, Evaluation, Rating, Scoring, etc.?" and "Why is the emphasis placed on 'Integrity' among Intention→ Integration→ Integrity spectrum?”.
Three panelists, Mr. Tsukasa Kanai, Chief Sustainability Officer of Sumitomo Mitsui Trust Bank, Mr. Tomoya Shiraishi, Director of Social Investment Partners, and Mr. Keisuke Takegahara, Executive Officer of the Development Bank of Japan Inc., joined with Dr. Mizuguchi and Mr. Imata for further discussion. In particular, the panelists' different experiences in the areas of financing, private equity investment, and policy financing highlighted similarities and differences relating to current and future IMM activities.
After the panel, first trial of breakout session was conducted in this roundtable, in which the panelists were divided into several groups to discuss two questions: "List the Five Tips for IMM" and "What do we need to do to get more support for impact investing and IMM?”. Some of the points discussed in the breakout session included: the importance of clarifying the intention to create impact and sharing it between investors and enterprises, the importance of changing the mindset of individual and other fund providers, whether IMM should be done at the portfolio level or at the enterprise level, and a balance between qualitative and quantitative measurement is important, and how to think about the costs of IMM. The importance of balancing between the widening of impact investing and deepening IMM to avoid impact-washing was also mentioned.
Lastly, Ms. Fumi Sugeno, Head of Business Development Department, SIIF , the secretariat of the roundtable, provided some information on what frameworks and tools are being developed in the world for impact measurement and management, and how Japanese companies can participate in the development process of these frameworks and tools.
31members attended the roundtable, including financial and market participants, businesses and industry leaders, amounting to total of about 120 people including related ministries and observers.
The next meeting is scheduled on January 29th.
*Prof. Harji, an expert of IMM and impact investing, and Director of the Impact Measurement Program at Oxford Impact Measurement Programme at the Said School of Business, Oxford University, and lives in Canada.