Impact Investing Goes Mainstream in Ontario, Canada

By Dr. Eric Hoskins, Minister, Ontario Ministry of Economic Development, Trade and Employment

When trading opened on the Toronto Stock Exchange (TSX) on September 19^th, North America’s first online platform designed to connect social ventures and impact investors, the Social Venture Connexion (SVX), was launched.

It was an important moment for all of us who every day work to support companies that not only meet their financial bottom line, but that also contribute to the social or environmental good. The idea of mobilizing industry to support the common good and benefit financially is not new—after all, such thinking is part and parcel of the Triple Bottom Line concept. But a specific approach to investment  focused on engaging private capital has been steadily gaining ground for the last few years: impact investing.

A subset of the larger category of socially responsible investing, impact investing consists of capital investment in organizations and companies that focus equally on bettering our world and generating financial return for investors.

The time is ripe

From climate change to food shortages to economic opportunity, the world is faced with tremendous and difficult-to-solve social and environmental problems. While public sector policy and charitable leadership remains an important part of the solution, I believe the role of private capital in driving change remains an under-tapped resource.

There is an increasingly robust sector emerging that is populated with organizations that are rising to the challenge of solving social challenges by building business models with innovative, impactful missions. A foundational roadblock for many of these impact ventures has traditionally been access to capital.

Meanwhile, the rising popularity among investors of socially responsible investing has everyone from angel investors, capital funds, fund managers, asset managers and foundations looking for strategic, mission-related investments.

Building relationships

Arguably, the biggest challenge on both sides of the table is finding the time to build the right relationships. Both parties' needs can be satisfied with a structured platform for impact investing -- one that brings together social ventures and investors.

The SVX is designed to solve that particular challenge. The SVX is the result of a partnership between the Government of Ontario, the MaRS Centre for Impact Investing, Canada, and the TMX Group, owners of the Toronto Stock Exchange (TSX). Our vision has been to create a local impact investment platform that connects investors looking to make a positive impact with social enterprises that have a proven social, cultural, or environmental impact—as well as the potential for financial return.

Place matters: the role of government in impact investing

Together with our private and not-for-profit partners, government is playing a key role in building the bridges between private capital and social enterprises. It’s no mistake that the SVX platform is launching in Ontario, where about 10,000 social enterprises are already operating, and the Ontario government is playing an active role in helping them attract capital. The Ontario government is already playing a leadership role in this area, with the goal of helping our social entrepreneurs grow and thrive by establishing the province as North America’s number-one destination for social investment.

The SVX platform is one of many impact investing and social entrepreneurship programs the Ontario government has launched or supported. Ontario has strengthened the social enterprise industry in the province by creating an Office for Social Enterprise to promote partnerships with the private, not-for-profit and public sectors, launching the Ontario Catapult Micro-loan Fund as a pilot program to support early stage social enterprises, and investing in SiG@MaRS, a program that supports social entrepreneurs at all stages.

And in September, Ontario launched its Social Enterprise Strategy, a plan to make Ontario the number one jurisdiction in North America. Our plan will help social entrepreneurs start up and scale up, and will attract billions of dollars in impact investment to our province.

So far, the numbers look promising for this emerging investment strategy. The impact investing sector here in Canada is expected to grow from $5.3 billion to $30 billion over the next decade. If, as projected, one percent of total globally-managed assets moved in this direction, $500 billion could flow to these ventures over the next ten years, according to the Investing for Social and Environmental Impact report from the Monitor Institute.

I am optimistic that these two worlds can come together and complement one another based on the progress we've made thus far.  And we’ll continue to work to make Ontario the number-one jurisdiction in North America for social enterprise, capturing the growing economic and social return that this exciting sector offers.

Dr. Eric Hoskins is the Ontario, Canada Minister of Economic Development, Trade and Employment (MEDTE). A renowned humanitarian, family doctor, husband and father, Dr. Hoskins co-founded the international charity War Child Canada, and practiced medicine in war zones around the world before entering public service in his home province of Ontario. MEDTE works with partners in the private sector and across society to grow Ontario’s economy, create jobs and increase prosperity.

[Image credit: Ministry of Economic Development, Trade and Employment (MEDTE)]