Impact Investing Potential A World Changer

International keynote speaker Durreen Shahnaz has hailed impact investing for its potential to change the world to an Australian audience of top social finance experts at the Social Marketplace conference in Sydney recently.

Speaking at the event’s executive dinner, Shahnaz, founder of the world’s first social stock exchange, championed social capital markets as a way to promote inclusion worldwide and solve inequality between rich and poor.  

Inclusion, Shahnaz said, was characterised by “the democratization of the entire capital markets where everyone is an issuer and an investor, a capital markets that works for all and is a blessing for all”.

“A vibrant marketplace is created where actors who value social, environmental and financial returns come together,” she said.

Shahnaz, a native of Bangladesh, recalled her modest upbringing in the country and lamented the growing gulf in Asia between the “haves” and “have-nots” – a region with a booming middle class but more than 1.1 billion people suffering from multidimensional poverty.

“There is not enough dollars for philanthropy and not enough hearts in capital markets to solve this inequitable growth,” Shahnaz said.

“Social Capital Markets means organisations are, on one hand, not focused on profit maximization at any cost and on the other hand not relying on unreliable philanthropic grants.”

Shahnaz’s Social Capital Markets brought together social enterprises, impact investors and other stakeholders part of what she termed the impact investing “ecosystem”.

The ecosystem comprised:

• Social impact and rating agencies, such as IRIS.

• Investor networks such as Social Ventures Australia or globally, the Global Impact Investing Network.

• Development banks, foundations and NGOs from Oxfam through to the International Finance Corporation.

• Private banks and investment.

• The public sector and academia.

• Consultancies, accounting and law firms.

Shahnaz described this ecosystem in Australia as “vibrant” and urged greater action.

“I have great hope for this country,” she said.

Progress in Australia could come from private sector involvement in impact investing, rechanneling wealth from philanthropy to impact investing and engaging the social sector in financial markets to promote inclusive growth.

Australia could also harness its development success into regional leadership for impact investing, she said.

Her urge to invest in social capital markets, she said was “not a political call or an economic silver bullet, rather it is a solution for a fair and inclusive society”.

“It … has been brewing over the last two decades and in the past five years it has reached a boiling point,” she said.

“This is not a quixotic utopia. This is something that is happening today and right now.”

Shahnaz’s own projects match impact investment capital with social sector development.

Impact Investment Exchange Asia: IIX aims to efficiently raise investment capital for social enterprises, while the Not for Profit Shujog focuses on social enterprises themselves in terms of impact, capacity building and investment readiness.

Shahnaz said Shujog’s work had been allowed to magnify the impact of the social enterprises by many folds and spread the word on social capital markets movement to the various corners of the world.

Proactivity proved a key point as Shahnaz illustrated how financially insignificant the global impact investing space is relative to mainstream investment.

The conference, hosted by The Centre for Social Impact and convened by Sandy Blackburn-Wright, former Head of Social Innovation at Westpac, brought together social enterprises and investors and was intended to explore what an impact investment market could look like in Australia.