Message from management Foundation summary

Promote mainstreaming of impact investing and
Establishing an Ecosystem to Support Social Entrepreneurs

Chair of Executive Committee, SIIF
Shuichi OHNO

As we begin the fiscal year 2022, I would like to take this opportunity to extend my greetings to all concerned.

In fiscal year 2021, despite the harsh conditions caused by the ongoing COVID-19 pandemic, we were able to make significant progress in the areas of impact investment and social enterprises, which are the themes of the Japan Social Innovation and Investment Foundation (SIIF).

Looking back, the G8 Social Impact Investment Task Force (now Global Steering Group for Impact Investment: GSG) Japan Committee was launched in 2014 as the first organized effort to promote impact investment in Japan. Seven years later, on November 29, 2021, 21 Japanese financial institutions finally signed the “Japan Impact-driven Financing Initiative”. Prior to this, in September, 360 people participated in the “Impact Investment Forum” hosted by SIIF, despite the conference took place online. The top executives of major financial institutions who spoke at the forum strongly stated that there are signs of impact investment becoming mainstream in Japan as well.

FY2021 was also a year of renewed expectations for social entrepreneurs. What was made even clearer by the Covid pandemic was the limitations of politics and the public sector and the importance of the proactive role of individuals and the private sector, namely the need and potential for collaboration between tax-based public resources and dynamic private-sector know-how and funds. This will bring together entrepreneurs who are aware of social issues and investors who support entrepreneurs.

In FY2021, SIIF continued to support social entrepreneurs through investment activities and companion support using its own funds and dormant deposits. Through these activities, SIIF has become widely recognized as a central organization in the field of impact investment and social entrepreneurship support. As a result, several financial institutions and high-net-worth individuals have sought our advice on impact investing and philanthropy for a fee.

Nevertheless, Japan’s impact investment balance is still far below that of Western countries. According to an awareness survey conducted by SIIF, only 6% of the general public is aware of impact investing. While impact investing has finally entered the mainstream, it remains at the stage of only a small number of financial institutions, institutional investors, and others.

There are still many issues to be addressed in other areas, such as support for social entrepreneurs. To overcome these challenges, SIIF is in the process of formulating a medium- to long-term strategy that can be shared by all parties involved.

Looking back, what we have lost during the two years of the pandemic is tremendous, both tangible and intangible. However, it is not all negative. While the weaknesses of human and social systems have been revealed, the value of human warmth has been highlighted once again, and many hints for a better future have been presented. In order to create change out of calamity, we need a deeper understanding of the present and ability to see through the essence, insight, imagination, and action are needed.

Let’s keep our antennae of intelligence and sensitivity up and our imagination fully engaged, absorb all the hints, and move forward toward a better society.

*What is impact-oriented resource circulation?

Refers to activities aimed at resolving social problems and creating value that emphasize social impacts, and the circulation of funds that cannot be described as investments (funds that are close in nature to donations or subsidies), of human resources and knowledge and of other social, human and emotional capital whose value cannot be measured in economic terms. The previous iteration of SIIF also aimed to build a market for impact investing, but since the merger we have also been considering ways of support that include more flexible provision of funds, by which we mean methods of providing funds that should not be called “investments,” because material financial returns cannot be expected (for example, in situations where only the principal is repaid), but that require a greater level of responsibility from the recipient of funds than would donations or subsidies. We have positioned this statement at the beginning of the document because our goal is an environment in which more flexible approaches to providing funding that take into account the risk tolerance of the provider of funds can be utilized for the resolution of social problems.