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Impact Investing and Social Entrepreneurship – new innovations to generate social and environmental impact, with the potential for financial returns

Today at the World Economic Forum in Davos, the Credit Suisse Research Institute, in collaboration with the Schwab Foundation for Social Entrepreneurship, releases the key findings of its report entitled “Investing for Impact: How social entrepreneurship is redefining the meaning of return.” The report provides insight into the major trends shaping Impact Investing today and its ability to tackle some of the world’s most intractable societal problems.

Today, more than ever before, investors and entrepreneurs are proactively investing capital in solutions designed to generate a positive social or environmental impact, as well as the potential for financial returns. In practice, these solutions are emerging in most parts of the world, across nearly all asset classes, and at many different levels of risk and return. And although this field is still at a relatively early stage in its development, recent activities suggest that Impact Investing may be reaching a tipping point, with the potential to channel large-scale private capital for social and environmental benefit.

In this report, the Credit Suisse Research Institute explores the opportunities and complexities of Impact Investing. Primary focus is placed on Social Entrepreneurship. Here, direct investments are made into social enterprises that provide scalable, self-sustaining solutions to address global problems. Examples include access to clean water, improved health care or the provision of clean energy. Such investments create a direct and measurable impact, as well as offer the potential for financial returns. Beyond direct investments into social enterprises, other newly emerging financing innovations available to social entrepreneurs are also discussed.

The report further covers the latest trends shaping the field of Impact Investing, including the promise and risks of scaling growth for social enterprises, the importance of the right mix of financing structures to achieve scale, the development of standardized metrics, and the lessons learned by pioneering Impact Investors. Contributors to the publication include some of the most prominent leaders in the field today - Mark Kramer, the founder of FSG Social Impact Consultants, Rupert Scofield, the founder of FINCA International, and Sir Richard Branson, founder of the Virgin Group.

Giles Keating, Head of Research for Private Banking and Asset Management at Credit Suisse, states: “Increasingly, clients are looking for innovative ways to generate financial return alongside social and environmental impact. Today, many philanthropists and investors view Impact Investing as a viable alternative and perhaps a more effective vehicle to create social change than pure charity.”

Mirjam Schöning, Senior Director of the Schwab Foundation for Social Entrepreneurship, adds: “This report clearly highlights how Impact Investing provides great promise in addressing some of the world’s most pressing social and environmental issues.”