Arthur Conan Doyle once quipped, “It is a capital mistake to theorize before one has data”. We at IIX and IIX Foundation, formerly known Shujog, avoid this pitfall by harnessing and analyzing our data with the aim of informing investment decision-making and adding rigor and transparency to the impact investment space. As a pioneer in impact investing in Asia, we have access to a wealth of data collected through 8 years of impact assessments, capital raising and research activities. This includes a wide range of metrics related to the impact, return and risk of impact investments.
Focusing first on the agricultural sector because of its rising investor profile and prominent economic role in Asia, we framed our analysis along three perspectives: (i) dissecting impact across the agriculture value chain, (ii) identifying trends on a regional level within Asia, and (iii) assessing the correlation between risk, financial return and social impact with a view to maximize investment efficiency.
Our value chain analysis examined where Impact Enterprises (IEs) — mission-driven for-profits or revenue-generating not-for-profits — are involved along the agriculture value chain.
Regionally, the trend is similar with the majority of IEs being involved at the distribution and processing stages. The exception is South Asia, where IEs are primarily concentrated at the production stage working directly with smallholder farmers.
The data also revealed who is being impacted and where along the value chain the greatest potential for impact lies. The figure below illustrates where the potential for creating impact on women occurs along the value chain. Women are key stakeholders in the agriculture sector, comprising over half the labor force, particularly in small-scale farming. However, their contribution tends to be marginalized as they face restricted access to resources and markets.
Across regions, the highest number of women are impacted by investments focused on the distribution stage of the value chain. In Southeast Asia, the processing stage actually holds a greater potential for impact on women compared with South Asia and Mekong.
On a regional level, we assessed the social and environmental outcomes (i.e. the change experienced by beneficiaries) in the agriculture sector in Asia. The data uncovered that increased household income for smallholder farmers is a top priority for IEs. In Southeast Asia, providing beneficiaries with access to a market for their products and services was the primary focus, while skill development through training is more highly valued in South Asia and the Mekong region.
Once we gained insight into where and how impact is being created in Asia’s agricultural sector, we took our analysis a step further – synthesizing our impact data with risk and financial return information to enable more efficient investment decision making.
For further insights on regional and sectoral benchmarks and the risk-return-impact spectrum across five sectors — agriculture, healthcare, water and sanitation, education and energy — look out for the release of the full IIX Foundation Impact Analysis report next year.
If you are in the private sector and interested to join the movement, we would love to gain insight into your thoughts, issues and concerns. To receive a complimentary copy of the report (worth $175), we would appreciate your participation in the survey below.
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