Impact investing helps promote well-being effectively and in a resource-wise way. It is a means of channelling private equity to projects whose aim is to achieve positive, measurable social benefit.
WHAT IS IT ABOUT?
Impact investing is a means of enhancing profitable co-operation between the private, public and third sectors by preventing and solving various well-being and environmental problems. Only approximately a tenth of all social welfare and healthcare funds are channelled toward preventive measures, even though these would be far more economical over the long term than solving problems. Hip fractures and type 2 diabetes are examples of medical conditions that cause significant problems for people and are usually preventable. Impact investing offers a way to make carefully planned, long-term, front-loaded investments.
What do we do?
The goal of Sitra’s Impact Investing team is to import this new model to Finland: to build the necessary ecosystem for it, encourage various stakeholders – the public sector, service providers and investors – to join and test the effectiveness of the model in Finnish society.
In the current economic situation, central government and local and regional authorities need new tools for promoting and financing well-being. An increasing number of investors want more than just returns on their investments – they want to promote the common good. There are also companies and organisations that have innovative solutions for promoting well-being and a desire to establish the effectiveness of their operations. Impact investing brings these companies and organisations together in a way that benefits everyone.
Where are we now?
The impact investing model originally developed in the United Kingdom is quite new, even by international standards. Sitra’s efforts to bring impact investing to Finland began in May 2014 and the project is due to close at the end of June 2017. Negotiations with the next messenger are already well advanced, and information on their progress will be provided later this spring.
For the time being, a total of five social impact bonds are up and running or under construction in Finland. There is, gratifyingly, a great deal of interest in these agreements from the public sector and among companies, organisations and investors.