Social finance

Social finance includes a full range of investment strategies and solutions across asset classes that can provide an array of risk-adjusted returns tailored to investor intent. From understanding the role of Environmental & Social Governance (ESG) factors in managing investor risk to creating innovative blended finance and pay-for-performance approaches that crowd-in new investments into underserved markets, Deloitte is a thought-leader and strategic partner in helping clients leverage and deploy capital consistent with mission-related imperatives and financial return expectations.

Specifically Deloitte engages in strategy, innovation, metrics and eminence in:

• Building adaptive strategies
• Designing innovative models
• Measuring impact
• Building markets

This work encompasses topics such as, innovative finance and domestic resource mobilization strategies; ESG and socially responsible investing; Social Impact Bonds (SIBs) and pay-for-performance; Impact Investing; Blended Finance; and Alternative Financing Vehicles for Non-Profits.

Deloitte recognizes that many approaches to ESG, impact investing and measurement remain unchartered and many innovations remain untested. The seminal report on impact investing, From the Margins to the Mainstream, authored by the World Economic Forum with support from Deloitte, uncovered challenges that remain true today,  including: the maturing nature of the ecosystem; the limited number of investable opportunities; the misalignment with existing asset allocation frameworks; and the complexity that quickly emerges when investors and companies are asked to manage for a “double or triple bottom line”.

The sustainable pipeline of viable deals remains elusive for many, complicated in part by changing investor expectations. The first wave of blended finance and pay-for-performance solutions have not scaled and a second generation of instruments is being created with great, but untested potential. Investors are redefining and/or refining their perspectives on impact and intentionality while taking stock of new policy directives both domestically and internationally.

Building adaptive strategies

Strategic advisory for investors, development finance institutions, intermediaries and innovators

Successful strategies clearly articulate the investor’s goals and priorities, account for realities of the impact enterprise landscape, and anticipate future growth and evolution within the ecosystem. Having worked with leading players in the Impact Investing field, Deloitte’s practitioners offer strategic advisory services designed to help clients establish winning roadmaps and achieve financial and societal leadership in a rapidly evolving field.

Stories from the field

A leading multilateral development agency hired Deloitte to develop an innovative infrastructure investment vehicle that would enable it to deliver on its near-term strategic priorities while advancing the Sustainable Development Goals (SDGs). The team developed an investment thesis and strategy aligned with the agency’s mission objectives, a governance structure and operating model, an impact measurement framework, go-to-market plan, and socialization materials to leverage internal and external support.

Desigining innovative models

Financing mechanisms and structures, including social impact bonds 

Successful financing mechanisms match investors’ “risk-return-impact” appetites to impact investing opportunities. Steeped in practical insight into what it takes to launch innovative financial instruments, Deloitte helps design and launch products that align with clients’ impact investment objectives.

Stories from the field

A UK organization that delivers programs to provide at-risk youth with work, education, and training wanted to develop a SIB in the education sector in Glasgow. Deloitte conducted a feasibility study calculating the true economic cost of exclusion and truancy in England, Wales and Scotland. Deloitte UK’s ongoing work with the organization to develop an education SIB is an example of the firm’s efforts to develop workable SIBs. The initiative with the organization is only one of many SIB initiatives that Deloitte is supporting globally, across developed and emerging markets.

Measuring impact

Performance measurement, reporting and analytics support

Recognized performance measurement and reporting standards allow an organization to report on its impact, return, and risk profile. If designed well, they also enable better management decision making and promote transparency and increased confidence in the information disclosed to the market. Leveraging deep experience with global financial and non-financial standards setters and ratings organizations, as well as with corporations seeking “impact transparency,” Deloitte supports clients in implementing rigorous, yet practical impact evaluation and reporting practices.

Stories from the field 

B Lab’s GIIRS is a response to the gaps in the availability of tools and metrics through which to assess, benchmark, and report impact, which impedes investors’ assessment of investment opportunities. Deloitte is a pioneer funder of B Lab’s GIIRS and serves as the preferred provider for third-party desk and on-site reviews for companies and funds seeking a GIIRS rating. In addition, a Monitor Deloitte team helped develop a roadmap that would help a field-builder scale and “mainstream” its activities alongside a quickly evolving global impact investing market.
 

Building markets

Strengthening the social finance ecosystem

Successful ecosystem efforts are often the result of multiple, parallel interventions where players from across sectors work together to facilitate, stimulate, and enforce action. Learning from “aligned action” engagements across a host of issue areas and geographies, Deloitte helps clients agree to and deliver on common mandates and action agendas, including by leveraging proprietary crowdsourcing technologies to assure the most effective convergence of actors and solutions.

Stories from the field 

Given the highly evolving nature of the social finance industry, there is a need to have a strong and supportive ecosystem. Deloitte has supported initiatives focused on enhancing transparency and reporting practices worldwide as well as a range of convenings focused on rallying practitioners around ways to enhance the impact investing ecosystem. Efforts include support related to:

Enhancing Transparency and Reporting Practices

Based on our experience in sustainability and leadership in advancing financial and non-financial reporting, a consortium of field-builders invited Deloitte to help build a “FASB and GAAP equivalent” for impact investing.

Facilitating CDFI Aligned Action

Alongside a leading foundation, our team has supported a series of impact investing conferences and meetings to bring together leading players, identify challenges in the sector, and develop strategies to address them through collaboration. Deloitte has also provided targeted support to bringing the US impact investing community and Community Development Finance Institutions (CDFIs) closer together.

Helping the Private Sector Engage with the SDGs

Deloitte’s experience in inclusive business and impact investing led to the commissioning of a report with the UNDP focused on how to develop a company’s value proposition in the context of the SDGs based on their degree of “social impact” maturity.