Mobilizing Private Capital for Public Good

‘Canadians have long relied on governments and community organizations to meet evolving social needs while leaving markets, private capital and the business sector to seek and deliver financial returns. However, this binary system is breaking down as profound societal challenges require us to find new ways to fully mobilize our ingenuity and resources in the search for effective, long term solutions.’

In a ground breaking report released today Mobilizing Private Capital for Public Good, the Canadian Task Force on Social Finance makes seven recommendations that would form a national strategy and enable public, private and non profit sector stakeholders to build an effective impact investment marketplace. Impact investing is defined in the report as ‘the active investment of capital in businesses and funds that generate positive social and/or environmental impacts as well as financial returns (from principal to above market rate) to the investor.’

The most timely from my perspective was Recommendation #3. ‘To channel private capital into effective social and environmental interventions, investors, intermediaries, social enterprises and policy makers should work together to develop new bond and bond-like instruments. This could require regulatory change to allow the issuing of certain new instruments and government incentives to kick start the flow of private capital.’

As a retail advisor, I see the demand for community bonds every day. But product, simple accessible vehicles with minimums far below accredited investor thresholds, is almost non existent. A significant amount of capital from foundations and individual investors is ready to move into this market, and is snapping up the limited offerings that appear. What we need is, as the report says, ‘clear legislation and oversight mechanisms to govern the public sale of Community Bonds by non–profit organizations.’ And once that is in place, we need intermediaries to offer these bonds, and perhaps facilitate a market which provides liquidity and where, just like the regular bond market, prices reflect risk and reward. In that dynamic market various types of bonds with various purposes could be offered, and would thrive, survive or die on their merits.

Along with new types of community investment vehicles, Recommendations #5 and #7, allowing charities and non-profits to undertake revenue generating activities and to be eligible for government sponsored SME programs, will create a demand for debt and equity financing that can be met by innovative social finance markets.

Ilse Treurnicht, the CEO of MaRS Discovery District and Chair of the Task Force on Social Finance, in her introduction to the report says, ‘Our hope is that this report will raise awareness of social finance and stimulate a national discussion about a new partnership model between profit and public good, and the opportunity it represents for Canada’s future.’ Triple bottom line investing? Bring it on!

AGF to acquire Acuity

Toronto-based mutual fund firm AGF Management has announced plans to purchase Acuity Investment Management for $325 million.

There are no immediate plans to change Acuity’s portfolio management team or its fund lineup, which includes several SRI funds: Acuity Social Values Canadian Equity Fund, Acuity Social Values Global Equity Fund and Acuity Social Values Balanced Fund (formerly the Acuity Clean Environment Balanced Fund).

Under the terms of the agreement, Acuity shareholders will receive a combination of 60% cash and 40% AGF Class B Non-Voting shares. A portion of the purchase price will be deferred and is subject to an AUM-based adjustment over three years from closing. The acquisition requires regulatory approval, AGF said in a news release, and is expected to close in the first quarter of 2011.

AGF is one of the largest independent investment management firms in the country with assets under management of $44 billion increasing to more than $51 billion as a result of today’s announced acquisition.

"We are excited about this acquisition which strengthens our position as one of Canada's premier independent investment management firms," said Chairman and CEO Blake C. Goldring in a statement. "In this era of consolidation, we have demonstrated our ability to increase scale and we are strongly committed to enhancing our presence at home and internationally as we pursue both organic and strategic growth opportunities."

"We are pleased to be joining the AGF family which shares Acuity's values of independence, integrity and innovation. AGF is an established Canadian brand with a truly global reach that shares our entrepreneurial spirit and disciplined approach to investment management," said Acuity Founder, President and CEO Ian O. Ihnatowycz, who is expected to join AGF's Board of Directors after the closing of the transaction.

Cleantech 10 2010

This morning the opening bell of the TSX was rung by Toby Heaps, editor of Corporate Knights, and representatives of the Cleantech 10™, a list of Canada’s best publicly and privately held companies in the Cleantech realm. If this paragraph sounds familiar, well, it’s exactly what happened last year to commemorate the Cleantech 10™. Read it here.

So what’s new? (other than that you are reading this on Wordpress instead of Blogspot, or you should be!). Well, there are four new companies on the list.

ATS Automation Tooling designs and builds automation systems for many of the world's foremost manufacturers in areas as diverse as telecommunications, semiconductor, fiber optics, automotive, computers, solar energy and consumer products.

GLV Inc. is a global provider of technological solutions used in water treatment, recycling and purification, as well as in pulp and paper production. According to their website, ‘It notably stands apart for the superior performance of several of its key products and technologies, in particular with respect to their energy cost-efficiency.’

Primary Energy Recycling Corp. ‘creates value for its customers by capturing and recycling waste energy from industrial processes and converting it into reliable and economical electricity and thermal energy for its customers’ use.’

Pure Technologies develops innovative technologies for inspection, monitoring and management of physical infrastructure. “Being included as part of the Cleantech 10 emphasizes Pure’s presence as a company dedicated to sustainability and conservation,” said Jamie Paulson, Pure’s Chairman.

According to Corporate Knights, since the Cleantech 10™’s inception in 2007, it has outperformed the S&P/TSX Composite by 23 per cent (using an unweighted average of the past three Cleantech 10™’s returns as of October 25, 2010 and excluding dividends).

As of June 30th 2010 there are 129 clean technology issuers on the TSX with a combined market cap of $20.2B.

Sustainalytics named Best ESG Research House

Sustainalytics, also known as Jantzi-Sustainalytics in North America because of its connection to Canadian SRI pioneer Michael Jantzi, was named Best ESG Research House at the TBLI Conference Europe 2010 in London this week.

The TBLI Group ESG Leaders Awards honour select companies for their performance, transparency and innovation in the environmental, social and corporate governance arena.

“Winning this award would not have been possible without the long-term partnership and support of our clients, said Michael Jantzi, Sustainalytics’ chief executive officer, something for which we are profoundly grateful. We will continue to work hard to maintain their trust and to build on our status as the largest independent, and best, ESG research house in the world.”

At the TBLI conference, Sustainalytics noted their recently launched Country Risk Monitor, which evaluates sovereign debt by focussing on long-term sustainability trends.

This was the TBLI Group’s 3rd annual ESG Leaders Awards for those active in the ESG area.

Britons want banks to lend ethically, survey indicates

Nearly three-quarters of the British public (73%) think that banks should have ethical lending policies in place, a survey released by EIRIS this week suggests. Such policies would prevent banks from investing in, or lending to, companies involved in controversial areas such as arms manufacturing, or companies with poor records on the environment and human rights.

The national online survey, conducted by Ipsos MORI on behalf of non-profit research organization EIRIS, explores current consumer attitudes to green and ethical finance. EIRIS’s own numbers suggest that that the amount of money invested ethically in the U.K. has risen 289% over the last decade.

“The survey identifies clear evidence of the need for change in all investment and lending practices” EIRIS said in a news release. “66% of the survey respondents think that banks and other financial institutions have not learnt the lessons needed to prevent a future financial crisis but instead have reverted to 'business as usual'.“

Survey respondents were presented with a list of ways that banks or financial institutions could offer more to their customers. Ranked most highly (77%) was the disclosure of information on how and where banks lend to or invest their money.

Mark Robertson, Head of Communications at EIRIS said "It's clear that there's a lot more that financial institutions can do to build trust and persuade us that they have switched away from short-term, unsustainable investing and lending practices. Our survey shows that there's a huge appetite for a more intelligent approach to finance which places a greater emphasis on society and environment as part of a path towards a more sustainable financial future".