Investing With Impact

 

The world’s most urgent problems are being addressed by the expanding impact investing market, which is funding initiatives in fields like sustainable agriculture, renewable energy, conservation, affordable and accessible basic services including housing, healthcare, and education.

(GIIN, 2019).

Impact investments are investments that are made with the goal of producing both a positive financial return and a verifiable social and/or environmental impact.

Impact investing is now a popular practice among investors worldwide as a means of maximizing the positive potential of money. It contradicts long-held beliefs that market investments should only be focused on generating financial returns, and that social and environmental issues can only be addressed through charitable donations.

By making investments that also generate financial returns, investors have a variety of realistic options to advance social and environmental issues.

How profitable are impact investments?

Reports on investments covering emerging economies, established markets, and the market as a whole generally show that portfolio performance meets or exceeds investor expectations for both social and environmental effect and financial return.

At Enabling Qapital, we believe in the power of moving money to meaning. Below is a copy of our most recent Impact report, showcasing the performance of our investments.

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Previous Reports

EMF Enabling Microfinance Foundation

The non-profit EMF Enabling Microfinance Foundation is closely linked to the EMF Microfinance Fund with the target of generating the greatest possible social impact by reducing poverty. While the fund is the main instrument for achieving this goal, this charitable foundation is additionally used to launch new projects to improve the conditions along the microfinance value chain, such as a microfinance training program for women.

“We need solutions which bring the sector forward.”

Werner Wallner,
Chairman EMF Enabling Microfinance Foundation

The Enabling Microfinance AG as the promoter of the EMF Microfinance Fund was owned by the EMF Enabling Microfinance Foundation since the inception of the Fund in 2008 and EQ became the Advisor as of May 2020. As of July 1st 2022 Enabling Qapital AG took the ownership of the EMF Microfinance Fund in order to adapt to the current market landscape as well as to streamline processes. Enabling Qapital AG supports the EMF Enabling Microfinance Foundation with a yearly donation to further expanding research and supporting activities towards the microfinance sector. To celebrate this cooperation, we want to provide you with a deeper insight into how the Foundation is contributing to achieve positive social and environmental outcomes through their projects with the use case of Our Climate Resilience Enhanced Dept (CRED) in the following section.

The Foundation plays an integral role in establishing and strengthening financial institutions by encouraging sustainable development. Through the Fund and Foundation, EMF strives to make capital available where it’s needed most by amplifying financial intermediation infrastructure and promoting more inclusive financial policies. Furthermore, they hope to show that investing in MSMES in developing countries can be commercially viable, inspiring future investments that address wider financing gaps.

Climate Resilience Enhanced Debt (CRED)

Climate Resilience Enhanced Debt (CRED) is a financial tool designed to provide counter-cyclical financing to financial institutions, promoting business continuity and resilience in the face of extreme climate events and other natural disasters. Developed by Enabling Qapital in collaboration with Global Parametrics, CRED is structured as a tailored blend of multiple financial tools, including an emergency liquidity facility, subordinated loan, and partial interest or loan forgiveness. The goal of CRED is to ensure that the recovery process is not halted by a lack of liquidity, enabling Micro and Small Enterprises to rebuild and adapt to changing needs of the community in a post-disaster scenario.

In 2021, the first CRED facility was granted to Cambodia, one of the most disaster-prone countries in Southeast Asia, with 30% of the population living below the poverty line. Chamroeun, an MFI in Cambodia, was chosen as the recipient of the first CRED funding, along with technical assistance from EA Consultants, who have significant experience in inclusive finance and insurance. EA Consultants worked with Enabling Qapital and Chamroeun’s team to develop and monitor a recovery-based climate loan product for Chamroeun’s clients.

While it is hoped that Chamroeun will never need to use the climate-risk product, CRED provides peace of mind and support to the MFI and its clients in the event of major natural disasters. The success of the CRED initiative in Cambodia could inspire other countries to adopt similar measures, providing much-needed support and financial stability in the face of increasingly frequent and severe natural disasters.