Birgitte Bang Nielsen, Sustainability Director March 2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS Birgitte Bang Nielsen, Sustainability Director March 2017 02/03/2017
WHAT IS IFU? Independent government-owned fund, operating on commercial terms Promotes economic and social progress in developing countries 146 Provides risk capital and advice for projects having a Danish interest investment countries Established in Total contracted investments of more than 1967 18 169 bn DKK bn DKK invested in share capital and loans Leverage/mobilisation of capital: factor 8-9 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
IFU’s INVESTMENTS AND RETURNS 40 – 50 annual investments New and additional financing 12.3 % Investments in more than 100 countries Active portfolio of 221 projects Average commitment of 5 - 7 years 1200 The average annual gross return on share capital (2011 - 2015) DKK 5.8bn Contracted investments in 2015 DKK 906m Capital under management 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
IFU AS A FUND MANAGER 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
GLOBAL PRESENCE AND INVESTMENT TEAMS COPENHAGEN NEW DELHI NAIROBI ACCRA JOHANNESBURG CLIMATE INVESTMENTS SINGAPORE EUROPE AND MENA BOGOTA SOUTH ASIA NORTH ASIA LATIN AMERICA SUB-SAHARAN AFRICA AGRIBUSINESS IFU, KIF, DAF AIF KIEV SHANGHAI LAGOS KIF kan desuden investere i alle lande, der er røde og orange. Offices Investment teams 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
CLEAR COMMITMENT TO SUSTAINABLE DEVELOPMENT (from the IFU Sustainability policy, 2014) IFU strives to promote business opportunities whilst reducing risks and ensuring that investees contribute to sustainable development. The investees must continuously work towards achieving satisfactory long term results within sustainability and such activities must be anchored in the business plan. The investees should contribute to creating jobs and income, improving corporate governance, contributing to sound environmental and social performance and development in the local community. This is the contract that we make with our investees 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
WHY IS SUSTAINABILITY IMPORTANT TO IFU? Because we firmly believe sustainability is maximizing the value of the company in the long run. Because social and environmental issues influence financial issues. 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
IFU IS DRIVING CHANGE FOCUS ON IMPACTS Benefits for the local society: Increased income for workers Transfer of knowlegde Employee education and training Interaction with local business Funding for the public sector, e.g. education, healthcare or infrastructure 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
IFU CONTRIBUTES TO THE 17 SUSTAINABLE DEVELOPMENT GOALS General direct outcomes Sector-specific direct outcomes Jobs, taxes, female employment, youth employment, etc. Limited CO2 emissions Number of assisted small farmers IFU CONTRIBUTES TO THE 17 SUSTAINABLE DEVELOPMENT GOALS Input and output Indirect contributions Technology level, staff training, ESG assessment, etc. 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
IFU INVESTMENTS LINKED TO THE SDGs General outcomes Development outcomes Sector- specific outcomes Climate Energy Agribusiness Microfinance # DIM indicators 4 12 5 September 2016 IFU investment Seminar: Development Impact
IFU INVESTMENTS LINKED TO THE SDGs # DIM indicators Catalytic effect Project sustainability 4 1 2 IFU strategic indicators Additionality 5 September 2016 IFU investment Seminar: Development Impact
SUSTAINABILITY RISK ASSESSMENT AND MONITORING 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
SUSTAINABILITY REQUIREMENTS Operate in compliance with host country regulations. Comply with international standards for significant issues identified during appraisal. Adopt a written sustainability policy approved by their board of directors. Appoint a person with overall responsibility for sustainability. Establish a system to ensure continuous improvement and implement sustainability decisions relevant to the company size and sector and context in which the activity operates. Promote sustainability issues in interaction with suppliers and business partners. Prepare an annual report for discussion and approval by their board of directors or similar governance body. What is new: A written policy – 40 % of our investments all has already System is new Person is new – but similar to what our DFI colleagues requirement Annual report new - it was not in our old policy 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
SDG Report 2016: Leaving no-one behind Goal to reach first those who are furthest behind. Young men face the highest risk of becoming murder victims and suspected perpetrators In every developing region, the poorest women are least likely to have a skilled attendant during delivery People in rural areas are short-changed when it comes to many health-related services People in least developed countries are twice as likely to be undernourished as people in developing regions as a whole Key words for responsible investments: Do no harm is the lowest denominator Do good (charity) is OK but will not create long lasting new business Innovative and opportunity driven investments Do no harm: Safe guard approach, precautionary principal, business as usual Do good: Helps the local community is a short period Future oriented innovative and opportunity driven investments with opportunities not only for the investor, but also those lacking behind – that is when we are changing the agenda 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
LOCAL INVESTMENTS WITH A GLOBAL IMPACT 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
KEY CHALLENGES – WHAT IF Tomorrows investors and business leaders could distinguish themselves by defining clear aspirations and goals for social and environmental impact right at the start, using them to galvanise the entire organisation. Focus go beyond incremental change - rather creating a vision capable of inspiring staff as well as external stakeholders. look through the sustainability lens to identify business solutions with a positive social and environmental impact that lead to a competitive advantage These solutions: are often found in the tension between traditional markets are about transforming risk to new business ideas In the next 15 years will we see ”sustainable development” being a strong disruptive driving force as digitalisation has been the last 15 years? 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS
Time for questions 02/03/2017 RESPONSIBLE INVESTMENT – LOCAL INVESTMENT FOR GLOBAL NEEDS