Message from management Foundation summary

Building a Market for Impact Investing and an Impact-oriented Framework for Resource Circulation in Japan

Chair of Executive Committee, SIIF
Shuichi OHNO

I am pleased to present our Annual Report 2019 to our stakeholders. The Japan Social Innovation and Investment Foundation (SIIF) was formed from the merger in October 2019 of the Japan Social Impact Investment Foundation and the Institute for the Advancement of Social Innovation, marking a new start for the organization. Through this merger we have been able to put in place a structure to move forward with the further expansion of our mission from the previous organization’s focus on creating a market for impact investing in Japan, to building a mechanism for circulating social and economic resources in a way that transcends the framework of self-help, public help and mutual help, and that aims to create a society in which social problems are resolved and diversified value creation occurs spontaneously and sustainably. I am deeply grateful for your support, without which these changes would not have been possible.

Looking back at fiscal 2019, there was a global trend of promoting activities aimed at the creation of a better society, such as SDGs and ESG investment. One could also say that it was a year in which it became widely accepted that corporate activities’ negative impact on society should be eliminated. Buoyed by this trend, the market for impact investing recorded dramatic growth, primarily in the United States and Europe. In Japan also we are seeing a rise in interest, albeit gradual, across society, with not only major financial institutions but also community foundations entering the market. However, despite the global market for impact investing having grown to an estimated total of ¥54 trillion, it must be noted that the market in Japan is believed to be no more than ¥317.9 billion, and is still undeveloped.

Faced with this situation, SIIF implemented the following initiatives in fiscal 2019 in order to provide a forward-looking model for the impact investing market in Japan.

  • Began full-scale management of social impact funds created in cooperation with financial institutions, etc.
  • Created and made proposals for an impact investing model that utilizes dormant deposit accounts (an initiative in which we have been involved since the planning stages of the system), and was selected as an Organization Distributing Funds.
  • Created Japan’s largest social impact bond (SIB) partnering with companies, and the first SIB in the world to support giving up smoking, which were created and financed jointly with local governments and business operators.
  • Provided financing and initiated support programs for human resources and organizations to build new mechanisms to drive circulation of regional resources such as personnel, nature and culture. 

“At the Osaka G20 summit in 2019, Prime Minister Abe declared Japan’s intention to be a leader in the international discussion and investigation of diverse and innovative means of funding, including impact investing and the use of dormant deposit accounts, in order to secure the funds necessary to resolve problems at the global level. This provided fresh impetus to the ongoing activities of SIIF, and we are determined to continue moving forward to play a key role in the impact investing market.
Since the beginning of the year the global spread of novel coronavirus has had an impact not only on the way we work and live our lives, but even on our values. I feel that each and every one of us is beginning to consider the question of what a better society might be.”

“In addition to creating new model projects that encourage the circulation of funds, people, knowledge and other resources in pursuit of a better society, and making pump-priming investments in them itself, SIIF will broaden the scope of such case studies to include a greater number of collaborators. In addition, by using research and policy proposals to put in place an environment that allows the expansion and development of model projects, we aim to build an ecosystem for the circulation of resources in which the resolution of social problems and the creation of value occurs autonomously and sustainably.
I myself was passed the baton from Mariko Bando, the inaugural Chair of Executive Committee, in June 2020 and I will lead SIIF to achieve its mission by fulfilling the role with which I have been entrusted to the best of my ability.”

It is my hope that this annual report will help readers attain a better understanding of SIIF, and encourage their continued support going forwards.

*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.