Impact investing

Why We Invest in Impact and How You Can Too

Photo by Ruth Hazlewood

Photo by Ruth Hazlewood

We are honoured to have received the MaRS Social Finance "Impact Investor of the Year" award, which "is presented to a Canadian organization or initiative that has created—or demonstrated the potential for creating—positive social or environmental impact through direct investment". We are grateful to our partner and global leader in impact investing, Oikocredit, for supporting our nomination. And we look forward to continuing to work towards sustainable investing. Receiving this award has prompted us to reflect on why we focus on impact investing and how important it is to continue to promote these investment options in Canada.

Impact investments, as opposed to traditional investments, not only focus on achieving strong financial returns, but also on delivering measurable environmental and social benefits. We promote entrepreneurship among women, provide credit to micro and small businesses, and improve access to clean energy, affordable housing and healthcare. Deetken Impact has been successfully investing in triple bottom line (financial, social, environmental) opportunities for the past decade. Our investment funds are designed to promote the achievement of the United Nations Sustainable Development Goals. Specifically, we are helping achieve good health and well-being, quality education, clean and renewable energy, and decent work and economic growth.

Promoting Impact Investing is no small task but it is one we are extremely passionate about. Our mandate is to make impact investing more accessible to both Canadian and international investors alike. And not just accredited and institutional investors as it has been traditionally the case. We want to give everyone an opportunity to better align their investments with their values regardless of their wealth and with no sacrifice to financial returns. That's why financial instruments such as Deetken Impact Bonds, which Canadians can buy from their RRSP and TFSA accounts, are becoming so popular and the preferred option for many individual investors. As Impact Investing becomes more widespread and new investing options emerge, more people can contribute towards making a more sustainable world.  We are excited to be part of this journey.

Deetken Impact at FOROMIC 2017

Plaza San Martin in Buenos Aires, Argentina

Plaza San Martin in Buenos Aires, Argentina

Elegant, precise, controlled, the Tango got the show started at the closing dinner for the 20th InterAmerican Forum on Microenterprise (FOROMIC) in Buenos Aires (Argentina) last night. Halfway through, the curtain was drawn for several minutes before raising to reveal an explosive performance of the Cumbia in honour of Barranquilla (Colombia), the host city for FOROMIC 2018. The enthusiastic applause for the tango gave way to dancing in the aisles as thrilled Colombians shouted “Bravo” in support of the performers.  The marked contrast in seeing performances of the two iconic dance styles in such quick succession kept a smile on my face right through the second half of the show.

Other contrasts in Latin America and the Caribbean (LAC) are less thrilling. By many measures it is the most economically unequal region in the world. From the Rio Grande to Cape Horn the reality behind those measures is evident. Wealth and poverty are neighbours in many cities of the region and, to echo the sentiment expressed at the closing ceremony of FOROMIC 2017, “poverty is expensive”.  Microfinance, the provision of small loans to individuals at the bottom of the economic pyramid, addresses one aspect of those costs, the higher cost of finance. By promoting financial inclusion across the economic spectrum, microfinance companies make it possible for microenterprises to access credit for investment and working capital at a lower cost and in a more secure way than is otherwise available through informal money lending.

Deetken Impact has been supporting financial inclusion in the LAC region with loans to microfinance companies for over a decade. During this time, we have seen a remarkable growth in the industry. Indeed, since the first FOROMIC was held in 1998 the number of microfinance customers in the region has grown from 1.5 million to 20 million.[1] Over 1,200 people attended the event this year and we had the opportunity to meet with dozens of them over 3 days on the 24th floor of the Sheraton hotel overlooking the Plaza de San Martin in Buenos Aires. Over the course of our conversations we met with people representing organizations in Argentina, Bolivia, Colombia, Ecuador, El Salvador, Haiti, Honduras,  Nicaragua, and Peru.

The theme of this year’s FOROMIC was the role that the digital revolution and recent technologies are playing in financial inclusion and entrepreneurial innovation in the region. The theme was explored in the context of technological acceleration, stimulating innovation, regulation, rural production, client-centeredness, smart cities, human talent, small and medium-sized enterprises, and climate finance, among others.  The conversations and panels provided further impetus for Deetken to continue to extend the offering of our Big Data and Machine Learning advisory services to our partners in the region who are offering financial, education, and health services to thousands of people.

The President of Argentina, Mauricio Macri, opened FOROMIC 2017 by highlighting that in Argentina only about 50% of the population has a bank account, and that the majority of those who do have accounts, withdraw their entire paychecks on the first day it is deposited. These observations illustrate the challenge that lies ahead for all of us working to increase financial inclusion as part of the broader effort to reduce the contrast between rich and poor throughout the LAC region.

[1] https://www.economia.gob.ar/argentina-will-host-the-inter-american-forum-on-microenterprise-foromic-annual-meeting-in-2017/

My journey through three impact success stories in Mexico

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On my most recent visit to Pro Mujer Mexico I had the opportunity to meet with three inspiring entrepreneurs and learn up-close how our investments impact real lives.  Pro Mujer is an outstanding microfinance organisation with operations across 5 Central and South American countries and Deetken Impact provides them access to capital to lend to their clients and support their operations in health and education services.

 

A Naturopathic Practice With Indigenous Roots

My first visit took place in Tezontepec, a small town about 2.5 hours east of Pachuca, home of Pro Mujer’s head office. The road narrows from freeway to rural highways through agricultural lands and eventually the narrow streets of the town centre on a hillside. We pick up Lenin, the head of the office, who also happens to be the loan officer for Marta. You can see that they know each other well, and it isn’t surprising given that Marta has been a client for 10 years and 29 loan cycles. 

Marta is an example of the success of Pro Mujer’s programmes. She has gone from selling tortillas to owning a successful business which includes nutrition and spa treatments inspired by their indigenous community.

Marta became interested in these therapies from her husband who practices in the same field.  Their house was too small to use as a full-time practice. Funding from Pro Mujer has not only allowed her to buy the land and construct a building but also for her and her daughter to earn diplomas in naturopathic medicine.  She is a specialist in medicines and her daughter in massage. Loans then allowed her to expand her services and broaden the range of products that she offers. This includes a greenhouse for medicinal plants and a special sweat lodge used in combination with other therapies.

Marta, her family, and business

Marta, her family, and business

As her business includes the use of traditional plants and techniques I am hopeful that it can help in the preservation of the region’s indigenous knowledge. What’s next for Marta? We’ll soon see as she has a  proactive personality, continuously looking to expand her knowledge and business.

 

The Neighbourhood Home Cooking Canteen

We have returned to Pachuca, an industrial city two hours east of Mexico City, and we visit Pro Mujer entrepreneur Maria de los Angeles in a sprawling part of the city outside the historic centre.  Here Maria has created Cocina Economica which means “Affordable Kitchen”. It provides popular Mexican food at low cost, yet it still includes table service so workers from the neighborhood and the school across the road can rest their legs.  

Maria had no experience managing a restaurant or a kitchen but the opportunity to rent a spot across from the busy school was too good to pass up. She opened it originally as a breakfast spot and teachers would come every day.  The teachers were followed by school staff and then more people from the area. Her loans have helped her set up her business, have cash to pay the rent up front, and slowly add tables and chairs.  

Maria has been a PM client for 3 years and 6 months and her Pro Mujer loan officer, Fabiola, has been there along her side during her journey. Before Pro Mujer, Maria took care of children and the house she lives in.  She was also selling goods via catalogue, which is a common starting point for many women in Pachuca. Maria’s loan group is now at 16 members and they are on their 12th loan cycle.  Maria finds everyone in the group to be very responsible and also very supportive of each other. 

Maria, her friend Ibis, and Pro Mujer loan officer, Fabiola

Maria, her friend Ibis, and Pro Mujer loan officer, Fabiola

These days, Cocina Economica gets quite busy and sometimes her friend Ibis, her son and daughter all help out. Despite the success, Maria is ambitious: she has heard that another similar sized restaurant is available and she may be soon taking on both businesses.

 

A Boost To The Little Corner Store

Back on the road and 475 winding and beautiful kilometers to the south we arrive in Oaxaca, an area recently affected by two powerful earthquakes. Oaxaca is among the most culturally rich locations in Mexico, its cobblestone streets and colourful colonial buildings are striking to an outsider like me. Despite its beauty, Oaxaca has significant poverty. Here I meet Maria-Elena and her daughters. 

The bold Maria-Elena and daughters Ibis and Geysi in their "bodega"

The bold Maria-Elena and daughters Ibis and Geysi in their "bodega"

Maria –Elena has been a client for 1.5 years and is into her 5th loan cycle. Before opening her store, she was a street vendor and then worked in a cookie bakery. Her daughters Ibis and Geysi, one of whom has now graduated university, previously sold these cookies from the same factory, going store-to-store.  Her store has grown from a fruit and vegetable kiosk to offering personal care products, meat, cheese and milk.  Loans have helped her to sell these higher value products and build out the store with shelving, counters and appliances. 

Her daughters, Geysi and Ibis proudly tell me their mother is in the “leading lending group” in the city. I’m thinking this healthy competition drives even more excellence from Pro Mujer clients. They are all a force: bright, charismatic and full of confidence. As I leave, I thank them for their warm hospitality and they boldly tell me that they will come visit me at my home in Canada.  I, of course, gladly extend the invitation to my new associates.

Highlights from the Caribbean Renewable Energy Forum 2017

Fernando Alvarado, CEO of the Caribbean Basin Sustainable Energy Fund

Fernando Alvarado, CEO of the Caribbean Basin Sustainable Energy Fund

Last week, we had the opportunity to attend the 9th annual Caribbean Renewal Energy Forum (CREF) in Miami, Florida. The event has grown rapidly in importance during the last couple of years, and it focuses on the emerging trends in renewable energy across this region. Among the keynote speakers during the opening ceremony, we heard from the honorable Jennifer McIntyre, Canada’s Ambassador for Climate Change. She emphasized the historical immigration links between Canada and many of the Caribbean nations, and the joint commitment to combat climate change through sustainable energy practices.

Deetken Impact was invited to the Conference by one of our partners in the region, the Caribbean Basin Sustainable Energy Fund (CABEF), whose geographical mandate includes not only the small and large Caribbean islands, but also the Central American countries that share the Caribbean basin. Fernando Alvarado, CEO of CABEF, was a keynote speaker and a panelist in the topic of how to unlock private and public sector financing for renewable energy projects.

After such a strong and devastating hurricane season, the discussion also focused on the destruction and reconstruction needed across the Caribbean. Despite all the challenges, there is cautious optimism that the recent events will force policy makers, utilities, and community leaders to plan for a more resilient and sustainable energy framework. Some of the frequently heard topics included microgrids, inter-island grid connectivity, resiliency alternatives, and energy storage.

It is noteworthy to mention the large delegation of Canadian companies present in this year’s CREF: over 40 companies, which were by far the largest contingent from outside of the Caribbean. Canada had the largest meeting facilities, and plenty of networking activities organized by Trade Commissioners from Global Affairs Canada. Given the unique challenges and opportunities across the Caribbean basin, we expect that the Deetken Impact Fund will continue to support projects in renewable energy, a key impact sector for our Fund.

Deetken joins the B Corp Movement

At Deetken Asset Management, we are committed to identifying and supporting companies that generate sustainable returns while making a meaningful, positive contribution to their communities. Pursuing more than one “bottom line” is core to our business model and our investment philosophy.

That’s why we decided to become a Certified B Corporation.

Certified B Corporations are a new type of company which use the power of business to solve social and environmental problems. B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification to milk.

We are proud to join a growing community of over 2,100 Certified B Corps from 50 countries who have voluntarily chosen to conduct business in a way that creates value for all stakeholders, not just shareholders. In Canada, Certified B Corps include a diverse range of businesses from coffee roasters and sustainable food providers to major banks and media companies.

To become a Certified B Corporation, Deetken Asset Management participated in a rigorous evaluation process. Because most business decisions have the potential for positive impact, our operations were assessed from end to end, from our governance framework to the way we treat our workers to our environmental impact. We achieved a particularly high score on our practice of investing in businesses which have a proven and deliberate strategy to benefit the communities in which they operate, by promoting entrepreneurship or increasing access to renewable energy, affordable housing or education.

“The B Corp movement is a tremendous force for changing the way that the world does business,” said Alexa Blain, Chief Operating Officer of Deetken Asset Management. “The ultimate goal is to encourage companies to grow in a way that creates shared and durable prosperity for all. It’s a natural fit for Deetken to join this collective movement. The assessment process provided us with a new lens on our business, and we look forward to continuing to drive best practices alongside this global community of like-minded companies.”

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For more information on B Corporations, visit www.bcorporation.net.

For more information on Deetken Asset Management, visit www.deetken.com.