Toronto, Ontario, Monday, June 8, 2015
Check against delivery
Thank you for your warm welcome.
I’m delighted to be here to welcome the Social Impact Investment Taskforce to Canada for the first time!
This truly is a special moment for all of you who understand the wonderful potential of impact investment to change our world for the better.
And it’s also a great time for those who are working hard to find innovative ways to tackle persistent challenges and create new opportunities. Canada has a history of forward thinking in so many ways, and we understand that innovation can propel us forward with real-world solutions.
The dreamers and big thinkers behind impact investment are innovators to be admired. We need such creative minds and inspired groups of people to move us ahead.
When it comes to social finance, this is a special time for Canada. Hosting this forum is a valuable opportunity for Canadians to learn from our international colleagues and to bring added attention to the cause of impact investment here.
There is, in fact, growing momentum behind social finance in this country right now. This could be called the movement’s second wave, and Canada can be a global leader in advancing this exciting blend of financial and social innovation.
For the sake of the uninitiated, however, let me take a step back and define exactly what it is we’re talking about here.
What is impact investment?
Perhaps the most well-known definition, from J.P. Morgan, the Global Impact Investing Network and the Rockefeller Foundation, describes it as “investment intended to create positive impact beyond financial returns.”
Or, even more simply: it’s about harnessing private capital for public good, while generating a financial return for the investor.
Another way to put it?
Everybody wins!
Canada, like its G7 partners, is faced with significant social, environmental and financial challenges. Such challenges—for example, poverty and homelessness, youth unemployment, chronic health problems—require innovative thinking and approaches because governments and communities increasingly lack the ability or sometimes the creativity and flexibility to respond adequately.
That’s the bad news.
The good news is this: it’s not as if there isn’t enough money in the world to help address these challenges. Rather, it’s that the money’s tied up in financial markets. It’s being held as interest-earning investments rather than being deployed to make a difference, where it’s needed most.
Impact investment asks the question: what if we put that money to good use and made a healthy profit for the investor?
It reminds me of one of my favourite quotes from George Bernard Shaw:
“Some people see things as they are and wonder ‘Why?’ We dream of things that ought to be and ask, ‘Why not?’”
Indeed, why not?
The question is especially pertinent in Canada, a country that has a long history of combining financial returns and social, environmental and cultural impacts.
Credit unions, for example, emerged in Canada in the early 20th century to support personal and communal financial and social needs. Co-operative enterprises have made an impact right across this country, from Quebec, where Alphonse Desjardins established the first Caisse Populaire in 1900, to the Far North, where co-ops emerged as an important source of income for Inuit artists, to the agricultural communities of the Prairies, Ontario and Atlantic Canada.
Other social finance models include community economic development initiatives, solidarity finance, Aboriginal Financial Institutions, micro-finance, public-private partnerships and socially responsible investment, to name a few.
We didn’t call it “impact investment” in 1900, but if social and financial goals weren’t seen as mutually exclusive back then, why, in the absence of compelling evidence, should they be seen that way today?
Of course, our context has changed considerably since then, and we need to find innovative ways to update our approach to social finance. Impact investment is an exciting avenue because of its ability to match investors and investees who, in addition to making a financial return, want to make a difference.
That’s the “investment” part of the equation.
Let me now talk about the other part: impact.
Ensuring impact is critical, and that means one thing: measurement.
Measurement is one of the keys to our success. Measuring a financial return is straightforward enough, but we also have to be able to demonstrate how the stated goals of an investee translate into a measurable social impact. And that’s a challenge, because social, environmental and cultural goods can be difficult to quantify.
But it’s so important to ensure due diligence and accurately gauge impact. Measurement allows us to chart progress, improve performance and communicate value to potential or current investors. It creates a truly virtuous circle and helps to demonstrate how impact investment strengthens our societies in concrete ways.
I’ve talked about impact and I’ve talked about investment, and now I’d like to briefly highlight another piece of the puzzle that can help us: foundations.
Foundations have an important role to play. And indeed, many foundations in Canada are already contributing to the common good. Currently, Canadian foundations must distribute 3.5 per cent of their assets annually. This amounts to a significant amount of money, but I can’t help wondering about the 96.5 per cent of foundations’ assets that are likely having no direct impact on their respective missions.
In other words, Canadian foundations have approximately $50 billion in untapped assets. What’s so exciting about social finance is that these new impact investment tools can help to unleash this accumulated wealth for the common good.
As you may know, the Canadian Task Force on Social Finance and the National Advisory Board to the Social Impact Investment Taskforce have encouraged foundations in this country to place 10 per cent of their assets into impact investments by 2020.
I’m certain that an allocation of 10 per cent to impact investing would have a meaningful impact on well-being in this country, and I want to repeat that call to action today.
Ten per cent! What a worthy gift to Canada as we approach 2017, the 150th birthday of our country.
I’d like to take this opportunity to thank and commend those foundations that have already taken this bold step: the Hamilton, Edmonton and Ottawa Community Foundations have all formally adopted the 10-per-cent objective.
Let’s give them an enthusiastic round of applause!
I also know the McConnell Family Foundation has adopted a 5–per-cent target. And in fact, they’ve even surpassed it.
Let’s also thank the good people behind this foundation, and encourage them to go even further!
Lest you think that I’m all hat and no cattle, I also want to tell you about the Rideau Hall Foundation, which is a relatively new foundation that we’ve established since my installation as governor general in 2010.
For those of you who aren’t familiar with Rideau Hall, it’s the official residence and workplace of the governor general in Ottawa, and as such is where my wife, Sharon, and I live and work.
The unique office I’m so privileged to hold is dedicated to connecting, inspiring and honouring Canadians, and we created the Rideau Hall Foundation as an independent, apolitical “meeting place,” where Canadians from various walks of life can come together and pursue common goals.
The Canadians in the audience may have heard of one of the Foundation’s ongoing initiatives: a social media campaign called My Giving Moment. This campaign aims to strengthen the culture of giving in Canada by encouraging volunteerism and philanthropy through storytelling. It’s a wonderful example of philanthropy 2.0 in action.
The Foundation is helping us amplify the scope and reach of the office of governor general. It’s enabling us to undertake initiatives that foster Canadians’ sense of values and identity, increase Canada’s potential for excellence, and strengthen our efforts to build a better country. And I’m pleased to inform you that the Foundation is currently looking into how it can engage with impact investments.
Let me bring us back to the “So what?” of all this. Why does it matter?
It matters because we have to find new ways of addressing the complex challenges that face our world today, and of seizing the new opportunities that are also before us.
These are truly transformative times, and those people and societies that have the ability to step up and make a difference have a responsibility to do so. Remember: with the arrival of truly revolutionary technology such as the Internet and digital communication, the questions that arise are as important as the possibilities.
Simply put, things are possible today that weren’t possible a generation ago—both benevolent and harmful things. What are they, and how do we maximize the good while minimizing the bad?
Let me close by posing three challenges to you today, three social-finance goals that are now possibilities for us.
One, I want to repeat the call for foundations to allocate 10 per cent of their assets to impact investments by 2020.
Two, at an individual level, I’d like to encourage everyone to seek out impact products for their personal investment portfolios.
And three, I’d like to challenge pension funds to direct some of their capital to impact investing. Pension funds can make a big impact, because of the sheer amount of capital they control and because that capital is patient and can take a long-term investment horizon approach. Because some impact investments may take several years to generate returns, pension funds are ideal investors because they don’t require short-term liquidity to the same extent as other investors.
Through impact investing, individuals, foundations and pension funds can catalyze positive change and help us build a smarter, more caring world for all people.
So, like George Bernard Shaw, the question I put before you today is:
Why not?
Thank you all for your dedication and caring. I wish you the very best in your important work.
