1. ASN Bank
    Iwai toru
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    Iwai toru
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    • 1. Iwai Toru September 15, 2011 Impact Investment Efforts TBLI CONFERENCE™ ASIA 2011 Workshop 8 – Impact Investing
    • 2. Table of Contents
      • Public and Private Money for MDGs (P.2 ~ 5)
      • SRI & Impact Investing Efforts (P.7 ~ 21)
      • Conclusion (P22)
      • Appendix   (P24 ~ 34)
      This document has been prepared by Daiwa Securities Group (Daiwa) based on information, the sources of which are believed by Daiwa to be reliable, but Daiwa makes no representation nor warranty as to the accuracy or completeness of such information. Recipients of this document must make their own decisions on whether or not to adopt the recommendations discussed in this document, based upon their specific situations and objectives. Any use, disclosure, distribution, dissemination, copying, or reproduction of this document without prior written consent from Daiwa is prohibited.
    • 3. ( MDGs logos were created by 「 Don’t let it be – world poverty 」) Goal 1: Eradicate extreme poverty & hunger Goal 2: Achieve universal primary education Goal 3: Promote gender equity and empower women Goal 4: Reduce child mortality rates Goal 5: Improve maternal health Goal 6: Combat HIV/AIDS, malaria and other diseases Goal 7: Ensure environmental sustainability Goal 8: Develop a global partnership for development MDGs (Millennium Development Goals) Source: The World Bank, “The costs of attaining the millennium development goals.”   Summary of World Bank Policy Research Working Paper, “Development Goals: History, Prospects and Costs,” by Shantayanan Devarajan, Margaret J. Miller, and Eric V.Swanson. In addition to $57 billion of ODA in 1999, another $40-60 billions p.a. are needed t o achieve the MDGs . ■ Additional fund necessary to;
    • 4. ODA Trend Source: website of Japan’s MOFA Billion USD Japan USA Official Development Assistance by G7
    • 5. Private money for Social Issues
      • < Background >
      •   Fiscal condition of each country grows increasingly severe (policy makers’ side)
      •   Reflect on the financial crisis (investors’ side)
      •   world’s financial assets = $178 trillion in 2008 (world’s GDP is $58 trillion)
      • Not only Donations/ODA, but also Investments are required to solve social issues  
      • ■ GIIN (Global Impact Investing Network)
      •   GIIN is a not-for-profit organization created to “increase the scale and effectiveness of impact investing.”
      •   It was inaugurated at Clinton Global Initiative in Sep. 2009, to measure growth and increase of the social investment, ‘Impact Investment’, in which is more direct and has an immediate result compare to conventional SRI.
      •   Representative examples of investment products: vaccine bonds of IFFIm, Generation Investment Management of Al Gore, former US Vice President.
      •   Main investment target: poverty & hunger; global warming; water, food and energy; medical care, health, welfare; community development, education
    • 6. Deep pocket seeking quality Primary sources: Japan: Bank of Japan, Flow of Funds Accounts , June 17, 2010    United Kingdom: Office for National Statistics, Financial Statistics No 580, August 2010 Germany: Deutsche Bundesbank, Financial Accounts for Germany 1991 to 2009 . France: Banque de France, Financial Accounts and Financial Balance Sheets, June1, 2010 . United States: Federal Reserve Statistical Release, Flow of Funds Accounts, June10, 2010 . * converted into US dollars based on the year-end exchange rates of GBPUSD=1.62, EURUSD=1.43, USDJPY=92.90 Household Financial Assets Japan United Kingdom Germany France United States Currency and deposits Currency & deposits Insurance& Pension Shares Mutual funds Others Insurance& Pension Shares Mutual funds
    • 7. Table of Contents
      • Public and Private Money for MDGs (P.2 ~ 5)
      • SRI & Impact Investing Efforts (P.7 ~ 21)
      • Conclusion (P22)
      • Appendix   (P24 ~ 34)
      This document has been prepared by Daiwa Securities Group (Daiwa) based on information, the sources of which are believed by Daiwa to be reliable, but Daiwa makes no representation nor warranty as to the accuracy or completeness of such information. Recipients of this document must make their own decisions on whether or not to adopt the recommendations discussed in this document, based upon their specific situations and objectives. Any use, disclosure, distribution, dissemination, copying, or reproduction of this document without prior written consent from Daiwa is prohibited.
    • 8. Extremely Low in Japan Source :「 European SRI Study 2010 」 ; based on Eurosif publication and SIF-J material, compiled by Daiwa Securities Group. Exchange rate as of Dec 31, 2009 Billion Euro SRI Market size Europe US Canada Aus/NZ JPN
    • 9.
      • Inadequate regulation and guideline to promote SRI.
      • Less interests in SRI among labor unions, religious groups or private organizations which have a mission of social contribution.
      • Weak self-awareness in exercising a big impact on social development through financing and investing.
      • Fewer opportunities in school education that teaches how the investment behavior can have social impact.
      • SRI product and service development & offerings
      SRI Issues in Japan
    • 10.
      • Ministry of the Environment Government of Japan, trying to launch a new guideline like PRI for Japanese financial institutions.
      • Japanese Trade Union Confederation (RENGO), announced “Workers’ Capital Guideline”
      • Acknowledge a big social impact in development through financing and investing.
      • Events and Forums for Financial Literacy
      • SRI / Impact investing products
      New movements in Japan’s SRI
    • 11.
      • Ministry of the Environment approaches to Japanese financial industry to set up a new guideline for ESG issues
      • Public private sector engagement in SRI.
      • Working group meeting participants from commercial bank, insurance, investment banking and brokerage houses
      1. Guideline to promote SRI
    • 12. 2. More interest in SRI by Labor Union
      • ■ RENGO ACTION POLICIES 2010-2011
      • ACTION POLICY 3 Efforts for policies and systems toward establishing a reliable society based on fairness and solidarity
      • 30. RENGO will strengthen the influence of trade unions on the operation of workers’ capital (reserves contributed by workers), such as pension funds, and will avoid investment in anti-social and anti-labor funds. To this end, RENGO will formulate a “Guideline for the Operation of Social Pension Reserves” (provisional title) based on the Principles for Responsible Investment of the United Nations.
      Source Rengo Website http://www.jtuc-rengo.org/about/actionpolicy/a_policy03.html
    • 13. No-financial return Private Public Donation Grant Aid Yen Loan SRI (e.g.: Microfinance) Financial return*
      • Investment can have social impact
      *Possible for negative return due to exchange fluctuations and credit risk and so on. 3. Social Impact through Investing.
    • 14. MFI Loan Portfolio $ 65.0 billion   ( MIX 、 FY2009 、 1,058 MFIs) Source : CGAP Focus Note  No. 70   April 2011, Cross-border Funding   of Microfinance   * Amounts based on data submitted by 61 funders and 90 MIIs. $21.3 billion * (2009) Cross-border funding landscape to MFIs Public donors and Investors (Multilaterals, Bilaterals, DFIs) $14.6 billion Microfinance Investment Intermediaries (MIIs) Private donors and Investors (Foundations, Institutional and Individual Investors) $6.7 billion Apex & other Intermediaries (Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy) 3. Big impact in social development
    • 15. May 15 (Sat) – June 13 (Sun), 2010 @ Tokyo Mid-Town Design Hub   Host: Committee for ‘Imagine another Life through the Products’, CANPAN Center Special Sponsor: Daiwa Securities October 31 (Sun) – November 7 (Sun) @ Osaka International Convention Center Host: Junior Chamber International (JCI) Sponsor: Daiwa Securities ・ Running a booth at ‘Future Expo’, ・ P anelists for sectional meeting 4. Events for Financial Literacy
    • 16. http://www.daiwatv.jp/ Website Archives 4. Forums for Financial Literacy
    • 17. Daiwa Africa Forum 2010 Date: July 21st, 2010 Venue: GranTokyo North Tower 18F Conference Room Speaker: Mr. Thierry de Longuemar, Vice President Finance, African Development Bank (AfDB) Mr. Pierre Van Peteghem, Treasurer, AfDB Dr. Boukary Savadogo, Manager of the Division of Education, Science and Technology, AfDB Dr. Naoyuki Kawahara, Director, NPO Rocinantes Ms. Keiko Sano, Director, East Africa Division 2, Africa Department, Japan International Cooperation Agency Ms. Agnes Chan, the ambassador of the Japan Committee for UNICEF, a pop singer, a television personality No. of Audience: 221 4. Forum for Financial Literacy
    • 18. Impact Investing Awareness ■ Which of financial return or social return do you care? ■ Do you support Impact Investment? ■ What social problems are you seriously concerned about? ■ What aspect do you most value when investing? Yes Strongly Yes No Both Financial Return Social return Water Poverty Health Education Infrastructure Climate Change No interest Revenue growth Profit Scale of operation CSR strategy Dividend Source: Questionnaire at Impact Investment Forum 2010, September 9th
    • 19. MDG s & Impact Investment Bonds
    • 20. ¥ Billion 5. SRI / Impact Investing Bonds 【 Annual Sales Trends 】 (十億円) Daiwa 69 % Source : Daiwa Securities ※Only for Individual bond ( Mar.2008-Mar.2011 ) Domestic share of the bonds Total approx.: ¥ 482.4 Billion   ¥ Billion Impact Investment Bond Sales Volume at Daiwa Securities Major Impact Investment Bonds 29.0 Microfinance Bonds 2010 年 9 月 22 日 13.9 Latin America Child Education Support Bonds 2010 年 7 月 15 日 11.8 Africa Education Bonds 2010 年 8 月 30 日 9.8 Ecology Bonds 2010 年 11 月 12 日 8.7 Microfinance Bonds 2010 年 6 月 15 日 32.6 Ecology Bonds 2010 年 5 月 21 日 60.4 Water Bonds 2010 年 4 月 16 日 Sales Volume Name of the Products Date of Issuance
    • 21.
      • Major Characteristics
      • The first microfinance mutual fund in Japan
      • Minimum investment unit is 1,031 yen, you can pursue both social and financial return
      • Direct lending in local currency to MFIs (currency risk free to MFIs )
      Daiwa Microfinance Fund 5. SRI / Impact Investing Fund
    • 22. Source : Daiwa Microfinance Fund prospectus (available only in Japanese) *Developing World Markets Loan users ( BOP )
        • Taking Currency risk, Interest rate risk and Credit risk
        • Reducing risks by deversifying portfolio
      Pursuing financial return as well as social return Daiwa Microfinance Fund ■ Investment Universe ■ Model Portfolio Reviewed by DWM* 300 MFIs Over 10,000 MFIs (E) Return 5. SRI / Impact Investing Fund
    • 23. Conclusion
      • To achieve MDGs, not only public, but also private sector money is necessary.
      • Socially Responsible Investment, especially Impact Investing is required to contribute MDGs.
      • Financial Institutions should implement its mission by leveraging financial capabilities
    • 24. Contact : Corporate Communication Department e-mail : [email_address] Tel:03-5555-1312   Fax:03-5555-0662
    • 25. Appendix  
    • 26. Our Surrounding Environment 経済 (Profit/Governance) 人間社会 (People/Society) 地球環境 (Planet/Environment) 企業・団体 (Enterprise) 【 PPP 】                  【 ESG 】
    • 27. Paradigm Shift       Sustainability Era      ~ 20 th century < Unlimited Resource >   21 st Century ~ Low Carbon Community < Limited Resource > Materially Rich Carbon energy replaced animals and manpower New/Renewable Energy Era     (Solar, wind, gravitational energy, biomass) Growth Era Paradigm Shift Industrial Revolution Environment, Resource & Human rights constraint
    • 28.
      • Guidance on Social Responsibility, provides harmonized, globally relevant guidance for private and public sector organizations of all types based on international consensus among expert representatives of the main stakeholder groups,.
      • What will ISO 26000 achieve? It will integrate international expertise on social responsibility –will be a powerful SR tool to assist organizations to move from good intentions to good actions.
      ISO 26000 ( Publish in Nov. 2010 ) Source: ISO Web site . Japan Business Federation Political Sociology Division 2010.6.10 「 Summary of Result of Copenhagen Conference ISO260000 」 From CSR to SR
      • Accountability
      • Transparency
      • Ethical behavior
      • Respect the interest of stakeholders
      • Respect the rule of law
      • Respect the international code of
      • conduct
      • 7. Respect the human rights
      7 Code of Conducts
      • Administration of the organization
      • Human rights
      • Labor practice
      • Environment
      • Fair business practice
      • Consumer issues
      • Community participation and
      • development
      7 Core Subjects
    • 29. MFI Interest Yield to borrowers Saurce: OCCASIONAL PAPER No. 15 , February 2009 The New Moneylenders: Are the Poor Being Exploited by High Microcredit Interest Rates? Note : Total Interest and Fee Income/Average Total GLP: average of 175 sustainable MIX MFIs, weighted by loan portfolio.
    • 30. Myth of Microfinance
    • 31. Impact Investment Bond Uridashi Total $5,338 mil / Daiwa’s arrangements $ 3,721 / Daiwa’s market share 69%
    • 32. Impact investment bond Private Placement to Regional Banks Daiwa Ogaki Kyoritsu Bank $10mil 5 year USD Green Bond World Bank 6/14/2011 Daiwa Musashino Bank $10mil 5 year USD Green Bond World Bank 4/14/2011 Daiwa Oita bank $10mil 5 year USD Green Bond World Bank 3/17/2011 Daiwa Hokuyo Bank $10mil 5 year USD Green Bond World Bank 2/18/2011 Daiwa Nanto Bank $20mil 5 year USD Green Bond World Bank 2/24/2011 Daiwa Kagoshima Bank $10mil 5 year USD Water Bond Asian Development Bank 6/30/2011 JP Morgan San-in Godo Bank $30mil 5 year USD Green Bond World Bank 2/17/2011 Daiwa Public company $12mil 5 year USD Education Bond African Development Bank 8/19/2010 Daiwa Nishi-Nippon City Bank $30mil 5 year USD Water Bond Asian Development Bank 1/25/2011 5.25 year 5 year 5 year 10 year 5 year 5 year 5 year 5 year Term JP Morgan Aichi Bank $30mil USD Green Bond World Bank 1/25/2011 Daiwa Daishi Bank $10mil USD Green Bond World Bank 1/20/2011 Daiwa Fukui Bank $10mil USD Green Bond World Bank 1/20/2011 Daiwa Kagawa Bank $5mil USD Green Bond World Bank 1/18/2011 Daiwa Kiyo Bank $10mil USD Green Bond World Bank 12/21/2010 Daiwa Iwate bank $10mil USD Green Bond World Bank 11/30/2010 JP Morgan San-in Godo Bank A$30mil AUD Green Bond World Bank 11/16/2010 JP Morgan Iyo Bank $50mil USD Green Bond World Bank 9/1/2010 Lead manager investor Amount Currency Product Issuer Issue date
    • 33. Highlights of “Impact Investment Bonds” Issuer: IFFIm Purpose: Raise funds in the capital markets to accelerate funding available for health and immunization programmes in 70 of the developing countries around the world. Issue date and amount: Mar. 19, 2008 $211 million equivalent Feb. 20, 2009 $437 million equivalent Mar. 24, 2010 $338 million equivalent Issuer: IFC Purpose: Support microfinance businesses with the purpose of fostering economic independence by providing small scale financial services to the poor segments. Issue date and amount: Nov. 20, 2009 $275 million equivalent Sep. 22, 2010 $342 million equivalent Issuer: IBRD Purpose: Support projects in the World Bank’s member countries that meet specific criteria for low-carbon project. Issue date: February 3, 2010 Issue amount: $106 million equivalent Issuer: ADB Purpose: Support water project by developing countries in Asia and the Pacific. Issue date: April 16, 2010 Issue amount: $628 million equivalent Investors Investment in capital market Financial management Funding Support for vaccine securing program Donator Donation for up to 20 years Daiwa Securities joined the panel with GAVI on the 8th plenary session of the Leading Group on Innovative Financing for Development (16-17 Dec 2010, Tokyo) Vaccine Bonds Microfinance Bonds Green Bonds Water Bonds
    • 34. Highlights of “Impact Investment Bonds” Issuer: EIB Purpose: Support future lending projects in renewable energy and energy efficiency, both of which are identified by EIB as key areas for mitigating the effects of climate change. Issue date and amount: May. 21, 2010 $393 million equivalent Nov. 12, 2010 $118 million equivalent Microfinance Bonds Issuer: EBRD Purpose: Support micro and small enterprises, which are not catered for by the formal financial sector, with sustainable access to financial services, via a range of financial institutions. Issue date: June 15, 2010 Issue amount: $96 million equivalent Issuer: AfDB Purpose: Finance projects in the field of education and hence foster economic and social growth in African countries. Issue date: August 30, 2010 Issue amount: $137 million equivalent Issuer: IADB Purpose: Support innovative poverty alleviation programs in Latin America and the Caribbean, including several conditional cash transfer programs, such as Oportunidades in Mexico. Issue date: July 15, 2010 Issue amount: $158 million equivalent Climate Awareness Bonds Education Bonds Poverty Reduction Bonds
    • 35.    Foreign Equities Focus on the   environmental technology of each nation Creator : Russell Investment Formulated : May 1 st , 2008 ( Unlimited term ) As of April 28 th , 2011 Basic price : 8,560 円  Total net asset : 143 億円 ● Daiwa Eco Fund ● Daiwa SRI Fund SRI product: Mutual funds   ● Environmental Business Fund for Next Generation Domestic Equities Economy & Ecology Creator : Daiwa SB Investment Formulated : Feb. 27 th , 2009 ( Redemption date : Feb. 26 th , 2014 ) As of April 28 th , 2011 Basic price : 9,840 円   Total net asset : 10.13 億円 Domestic Equities Economy & Ecology Creator : Daiwa Asset Management Formulated : March 9 th , 2006 ( Redemption date : Feb. 22 nd , 2016 ) As of April 28 th , 2011 Basic price : 4,814 円   Total net asset : 89.20 億円 ● Russell World Environment Technology Fund ● Daiwa Energy Technology Fund Domestic Equities         Focus on alternative energy which global demand is estimated to increase          Creator : Daiwa Asset Management Formulated : Dec. 25 th , 2008 ( Redemption date : Jan. 14 th , 2014 ) As of April 28 th , 2011 Basic price : 10,127 円   Total net asset : 38.92 億円 Domestic Equities Focus on integrity & transparency of the enterprise Creator : Daiwa Asset Management Formulated : May 20 th , 2004 ( Redemption date : May 9 th , 2014 ) As of April 28 th , 2011 Basic price : 6,837 円   Total net asset : 24.73 億円
      • SRI Funds distributed by Daiwa Securities
      • Total net asset
      • of 15 products
      • ¥ 92.8Billion
    • 36. Social Engagement ■ Participating in the international initiatives
        • GC (UN Global Compact )
        • PRI ( Principle for Responsible Investment )
        • UNEP FI ( UNEP Finance Initiative )
        • CDP ( Carbon Disclosure Project )
      ■ Cooperation with the international organization/NGO
        • GRI ( Global Reporting Initiative Japanese Edition )
        • FTSE4Good ( Policy Committee Member of the SRI Index )
        • SIF-J ( Board Member of Social Investment Forum Japan )
    • 37. ■ Real business as a result of partnership with NPO・NGO 2 ) Daiwa SRI Fund Grant Program   ( Civil Society Initiative Fund ) In order to strengthen the basis of domestic NGOs operating in the field of human security , we support them for personnel expenditure (instead of program cost) aiming at nurturing leaders for the core of the organization. The operation is taken from the outstanding balance of donation of Daiwa SRI Fund & Daiwa Eco Fund. Since 2006, there have been 24 cases in total with more than 42 million yen of support. 1 ) Social Business College ( Kopernik ) This is a lecture by social entrepreneur for social business practice, held bimonthly since Oct. 2010 (12 lectures in 2 years), for the university students and working persons. The operation is funded by the outstanding balance of donation of Daiwa Eco Fund and contents can be found in the web. 3 ) Daiwa Securities Group – Tsunami Reconstruction Fund   ( Asia Community Center 21 ) From 2005 (after receiving appeal from the UN), for the next 10 years, we provide support of 10 million yen every year for reconstruction assistance NGOs in devastated areas (India, Sri Lanka, Indonesia) and is used as a source for microfinance and many more. In the brackets are the name of NGO/NPO Corporate Citizenship
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