2017
Annual Report

SIIF : Japan Social Impact Investment Foundation
The Nippon Zaidan Building 5F, 1-2-2 Akasaka, Minato-ku Tokyo 107-8404, Japan
TEL : +81-3-6229-2622 |MAIL : info@siif.or.jp
http://www.siif.or.jp/

Building a Market forSocial Impact Investing in Japan
To our stakeholders on publishing our Annual Report 2017:
The year 2017 when we founded the Japan Social Impact Investment Foun-dation also marks the tenth year since the term “social impact investment”
began to be used worldwide. We launched our foundation with the missionof creating a new ﬂow of funds for promoting solutions to the complex andmulti-layered social issues that Japan is facing ahead of other nations andof building and growing a market for social impact investing in Japan.

We have three strategies for building a market for social impact investment. First, we will create a concrete and pioneering model of social

impact investment, which is still unfamiliar to both investors and investees.
We will make investments that involve many stakeholders so they canexperience what social impact investing is about. Second, we will establish

a network that connects investors and businesses. We will provide neces-sary support for the growth of intermediaries contributing to the establish-

Capital For
Social Impact.

ment of this network. Third, we will research leading cases of social impact
investing around the world and disseminate the knowledge we gain

through actual investments. We will publish reports, hold symposiums andtraining sessions to raise awareness, and promote the spread of social
impact investment.

In the ﬁrst year of our founding, we succeeded in launching Japanʼ s ﬁrst
social impact bond and provided policy suggestions through research

reports and symposiums. As a result, social impact investment was included in the governmentʼs growth strategies, and media coverage increased.

These early accomplishments are the outcome of the cooperation andguidance we received from many stakeholders to whom we send thisannual report. Weʼ d like to express our gratitude for your warm support andcooperation.

We at SIIF are committed to pursuing the goal of building a market forsocial impact investment in Japan through various activities underpinned by
the three strategies. We look to your continued understanding and support.

Contents
P1 ｜ CEO Message
P2 ｜ Contents
P3 ｜ What is Social Impact Investment?
P5 ｜ Social Impact Investment Chronology
CEO, SIIF

Mitsuaki AOYAGIP7 ｜ About SIIF

P9 ｜ Fiscal 2017 Activities- Summery- Fund- Hub- Think Tank
P23｜ Organizational Summary
P24｜ Financial Situation

What is Social Impact Investment?

Why is now the time
for social impact investment?

Social impact investment is investment that aims to generate socialand environmental impacts as well as ﬁnancial returns. This three-di-Millennial generation
with an interest

mensional investment, combining the dimension of impact to existing

86

capital market principles of risk and return, is also growing in Japan.

Growth rate ofJapanʼs market

Return

％

Im

p

a

c

t

％

200

Global market size

3

23
2.5
Annual amount neededto achieve sustainable
development goals

Risk
Source: Prepared from UBS, “Doing well by doing good,” 2016.

As seen in the growth of environmental, social and governance (ESG) investing, there is a shift among
the ﬁnancial industryʼs institutional investors and major banking institutions toward ﬁnancing which

trillionYentrillion＄

also seeks social impacts. Another major trend is a shift among private foundations, individual donors
and social entrepreneurs toward results-oriented philanthropy and the resolution of social issues. Social
impact investment is positioned at the intersection of these two trends, involving many actors andcreating a major force in increasing the ﬂow of funds to make a better society

Philanthropy

Socialimpactinvestment

Conventional
investment

Number ofsocial impact bonds
issued globally108

It is estimated that developing
nations experience a fund shortage of $2.5 trillion
annually toward achieving the sustainable development
goals promoted by the UN, and much hope is being placed on
the use of private funds. Moreover, the interest of millennials insocial issues is growing, and social impact investment is being viewed
as a market with growth potential. As Japan rushes toward a
hyper-aged society faster than any other nation, there is an urgent
need to redeﬁne the border between public and private sectors andto establish a mechanism for solving social issues through private
investment funds. Restructuring the ﬂow of funds throughsocial impact investments will prove as a key
component of a new social system.

※Morgan Stanley Institute for Sustainable Investingʼs 2017
“Sustainable Signals” report.GIIN “Annual Impact Investor Survey” 2018
UNCTAD's World Investment Report 2014,
The Global Steering Group for Impact Investment“The Current State of Impact Investing in Japan 2017”,
Brookings Institution Global Impact Bonds Database, January, 20184

Social Impact Investment Chronology
The history of investing to solve social issues can be traced back to amovement to divest funds from cigarette- and alcohol-related companies, socially responsible investing that originated from the anti-Vietnam
War movement of the 1970s, and community investing as an alternative
to existing ﬁnancial markets. After the term “impact investing” came into
use in 2007, investments to solve social issues spread rapidly, mainly inEurope and the United States. Since 2010, social impact investment has
gained renewed attention in the context of rethinking ﬁnancial capitalism
following the global ﬁnancial crisis. Foundations in the philanthropy
sector, institutional investors and ﬁnancial institutions, and governments
and international organizations are working together to form a market forsocial impact investment. In Japan too, movements to establish NPO
banks and other social ﬁnance initiatives became active in the 1990s,
followed by a gradual increase in social impact investing by companies,
investment funds and foundations after the Great East Japan Earthquakeof 2011. More recently, social impact investment has been mentioned in
the governmentʼ s growth strategies, and support from the policy side isincreasing.

5

Global2012

Big Society Capital, a social

2009

IRIS, a reporting standard for

impact investment fund fundedby dormant bank accounts, isestablished in the United Kingdom.

impact investment, begins
operating.

2010

2009

The Global Impact
Investing Network (GIIN),
a global network of social
impact investors, is established.

The Rockefeller Foundation uses the term “impact

investing” for the ﬁrst time andbegins to promote social impact
investing.

2015

SIMI (Social Impact
Measurement Initiative)
is established.

The promotion of social impact investment is mentioned for the ﬁrst time in2015

the governmentʼs growth strategies and in basic policies forregional revitalization.
2018

The United States gives legal
recognition to Beneﬁt Corporation as a category forsocial enterprises.

2010

The worldʼs ﬁrst social

impact bond is launched in the
United Kingdom.

Social impact bonds are includedin the agenda for the PPPThe Government Pension Investment
Fund (GPIF) signs the UN Princi-

ples of Responsible Investment.

2015

2014

proposals.

meeting of the Council on
Investments for the Future.

2017

The Japan Impact Investment
Taskforce announces seven

Japanʼs ﬁrst social
impact bond is launched.

2016

The Japan Impact
Investment Taskforce

The Dormant Deposits Utilization Act is enacted.

is established.

Domestic 2 0 0 6 → 2 0 1 7

2007

Domestic
2016

Domestic
Global2013

The Social Impact Investment Taskforce is estab-lished at the G8 Summit hosted
by the United Kingdom.

2014

The worldʼs ﬁrst development impact bond islaunched in India.

2015

The G8 Social Impact Investment
Taskforce is superseded by the

Global Steering Group for
Impact Investment (GSG).

Global2017

TPG, a major private equity ﬁrm,
establishes a ¥200 billion
social impact investment fund.

6

Fund

Capitalfor impact players

for Social Impact

Provide risk capital and demonstrate a model

We will cultivate an ecosystem forsocial impact investing together tosolve social issues

Think Tankforsystemic changes

7

Hub
for
impact communities

Fund
for
impact players

We will create a variety of models for social impact investment inJapan. Together with partner organizations, we will identify andsupport projects that contribute to the solution of social issues andact as a stimulator for other fund providers by supplying risk capitalthrough investments, loans, and guarantees, to promote the expansion of business operators and investors interested in solvingsocial issues.

Hubfor impact communities
Build the conerstone of the ecosystem and connect impact communities into a network
We will provide subsidies, investments, and other ﬁnancial support
to intermediaries developing social impact investment productsthat connect business operators, investors, and other important
stakeholders. We will also provide nonﬁnancial support, such as
the introduction of social impact evaluation. In addition, we willconnect various communities seeking to create social value alongside economic value to promote the formation of a social impact
investment ecosystem in Japan.

Think Tank

for systemic changes
SIIF is taking three approaches toachieve its mission.

Co-create, Circulate, Catalyze social change
Together with important stakeholders, we will produce informationand make policy proposals necessary for the growth of a social
impact investment market, and we will work to develop a dynamic
and sustainable ecosystem and to catalyze social change.

http://www.siif.or.jp/

8

Fiscal 2017 Activities
In ﬁscal 2007, SIIF led the launch of Japanʼ s ﬁrst
social impact bond in Kobe City and invested in
it. We also invested in Plus Social Investment,
an intermediary for regional social impact
investment. We published the “Current State ofSocial Impact Investment in Japan 2017” andheld Social Impact Investment Forum 2018 andSocial Impact Day 2017, as part of our initiative
to build a social impact investment market.

2017
2018
▼

Sep. 2017

Invited Third Sector Capital Partners (U.S.) to hold a
SIB seminar for intermediary support organizations.

Dec. 2017Concluded a business cooperation agreement with
Sumitomo Mitsui Banking Corporation to promote the spread of social impact investments.

910Feb. 2018
Jul. 2017

Published the “Current State of Social Impact
Investment in Japan 2017.”

Feb. 2018

Held Social Impact Investment Forum 2018.

Represented Japan at the GSG Summit held in Chicago.

Jun. 2017

Held Social Impact Day 2017

Jul. 2017

Sep. 2017

Feb. 2018

Mar. 2018

program for Preventing Severe Diabetic Nephropathy

the rate of residents receiving bowel cancer screening.

Photograph: The smart nursing room of investee company Trim.

Photograph: The promotion of Mandokoro tea is funded with a Higashiomi City SIB.

Invested in a social impact bond funding a Kobe City

Invested in a social impact bond of Hachioji City on improving

Decision Made to Invest in the Healthcare New Frontier Fund Invested in Plus Social Investment.

FUND

Case example:

Kobe City SIB for Preventing Severe Diabetic Nephropathy

Provide risk capital anddemonstrate a model

Fund
for
impact players

In the fund business, we will develop social impact investment
schemes and provide risk capital in the form of investments, loans,and guarantees.

Summary of Fiscal 2017 Results
Invested in Kobe City SIB for Preventing Severe Diabetic Nephropathy

A SIB was launched for a project to prevent severe diabetic nephropathy. This project provides health guidance to high risk individuals
who have not taken medical checkups or who have discontinued
treatment, and a commission is paid based on such outcome indicators as improvement in lifestyle and reduction of kidney function deterioration. SIIF provided risk capital, and Sumitomo Mitsui Banking
Corporation and its customer investors invested in the bond.

Case Diagram

A major bank and individual investors participated in a project to prevent the need for dialysis, a shared challenge for advanced nations.

Invested in a SIB of Hachioji City on increasing the rate of residents

Serviceagreement

receiving bowel cancer screening.

A SIB has been launched for a leading-edge social marketing project using AI.

11

Evaluation report

Decision Made to Invest in the Healthcare New Frontier Fund
SIIF decided to support the healthcare-focused venture capital fund to conduct an impact
measurement for all investees and issue an impact report annually.

Financial institutions, individuals(Guarantees)

Investments
and loans

Repayments
Repayments
Investments
and loans

Evaluation ofoutcomes

Service providers (NPOs, etc.)
Service provision

Government

Payment linked tooutcomes

Paymentof commission

Institute for Future Engineering

・Program completion
・Lifestyle improvements
・Reduction of kidney
function deterioration

Management ofproject operation +provision of funding

Repayment of interest and principal /dividends, redemptions

DPP Health Partners

Kobe City residents

Case Summary
Project
Objective
Project
description

Beneﬁciaries

Social impact bonds (SIBs) are a form of social impact investments based on public-private partnership in
which social projects are implemented with private funds and investors are later repaid by the project contractee (e.g. the government) according to the outcomes of the project. SIBs can be characterized as outcome-based bonds to fund social projects by procuring investment from private investors. After the ﬁrst
SIB was launched in the United Kingdom in 2010, more than 100 SIBs have been launched across 22
nations by 2017 to fund projects for youth employment, childcare, prevention of criminal recidivism, andhealthcare. In Japan, SIBs were mentioned in national government policies such as the Japan Revitalization
Strategy and the Basic Policy for Overcoming Population Decline and Vitalizing the Local Economy for two
consecutive years of ﬁscal 2016 and 2017. Also at the regional level, Japanʼ s ﬁrst SIBs were launched by
Kobe City and Hachioji City in ﬁscal 2017.

Provisionof funding

Recommendation to seek medical advice
and provision of health guidance

Evaluationof outcomes

What is Social Impact Bond (SIB)?

Sumitomo Mitsui
Banking Corporation,
Individual investors

Kobe City

Project cost(amount raised)
Project period

Expected beneﬁts

Project for preventing severe diabetic nephropathy
Preventing diabetic nephropathy from advancing to higher stages
and preventing the need of dialysis▪Target group of 100 high risk individuals who have not taken medical checkups
or who have discontinued treatment▪The target population was recommended to seek medical advice and a six-monthprogram on health and dietary guidance was implemented.
▪To prevent the medical condition of target audience from worsening by seeking
medical advice and improving lifestyles.
▪Commission is paid based on outcome indicators such as program completionrate, lifestyle improvement rate, and the rate at which kidney function deterioration
was reduced.
¥31.15 million(Maximum payment amount: ¥34.06 million; Annual interest: About 5%)
July 2017 to March 2020 (3 years)
July 2017 to March 2018: Period for implementing health guidance
April 2018 to March 2020: Period for measuring outcomes▪Improvement of residentsʼ quality of life
▪Moderation of healthcare costs, etc.

12Case example:

Case example:

Hachioji City SIB on Increasing the Rate of Residents
Receiving Bowel Cancer Screenings

Decision Made to Invest in
the Healthcare New Frontier Fund

We invested in a SIB created for a project to increase the rate of residents
receiving bowel cancer screening. This project recommends relevant Hachioji City residents to take bowel cancer screening, and a commission ispaid based on such outcome indicators as increase in the rate of residents screened and those who underwent precision examination. SIIF
provided risk capital for this project together with Digisearch and Advertising and other institutional investors.

We have decided to invest in the Healthcare New Frontier Fund. Thisis a venture capital fund established by Kanagawa Prefecture tosolve social issues by promoting the extension of healthy life expectancy and industry creation in the areas of presymptomatic illness
and leading-edge healthcare. SIIF will not only invest in this fund,
but perform impact measurement of all investee startups to support
their growth and increase of corporate value in both ﬁnancial andsocial terms.

Case Diagram
Hachioji City

k-three Inc.

Serviceagreement

13

Report on residents
screened and thosefound to have cancer

Paymentof commission

Medical institutions, etc.

DIGISEARCH & ADVERTISING Inc.
SIIF
Mizuho Bank, Ltd.

Case Diagram
Kanagawa Prefecture

Provisionof funding

Support for project planningand associated creation of SIB

Investment revenue sharing

Investment revenue sharing

Investment

Dividends andredemptions

Project
Objective
Project
description

Project cost(amount raised)
Project period
Expected beneﬁts

Investee healthcare startups

Hachioji City residents

Project for improving the rates of residents receiving bowel cancer screening andprecision examinations
Increase in the number of early detections of bowl cancer▪Target group of 12,000 residents who have not been screened for bowl cancer inthe previous ﬁscal year, a group for whom the rate of bowl cancer examinations
is particularly low▪AI is used to analyze the medical information of the target group, and postcards
carrying customized messages according to the residentʼs risk factors are sent.
▪A commission is paid based on outcome indicators such as rate of receiving bowl
cancer examinations, rate of residents screened and those who underwent precision
examination, and the number of people detected with early cancer.
¥8.87 million(Maximum payment amount: ¥9.76 million; Annual interest: About 6%)
Period for sending recommendation to residents
Period for evaluating outcomes▪Improvement of residentsʼ life expectancy and quality of life
▪ Moderation of healthcare costs

Other investors

Provision of funds+
increase of the social valueof investees throughimpact measurement

Cancer Scan Co., Ltd.

Case Summary

General partnership（GP）

Management service agreement /investment

Recommendation
to take screening
・Cancer screenings
・Precision examinations
・Detection of early cancer

Capital Medica Ventures

Case Summary
Project
Objective

Investment
promotion policies
Investors

Investments total
Duration
Expected beneﬁts

Investment in the Healthcare New Frontier Fund
▪Industry creation in the areas of presymptomatic illness and leading-edge
healthcare in Kanagawa Prefecture▪Support for startups that contribute to the solution of social issues
Support of business development through the provision of funds and throughthe provision of place (provision of an demonstration ﬁeld) in the form of medical
institutions and facilities for the elderly
Kanagawa Prefecture, Kagoshima Bank, Kanagawa Bank, Capital Medica Ventures,
Cocokara Fine Healthcare, SIIF, Suruga Bank, Organization for Small & Medium
Enterprises and Regional Innovation, Toda Corporation, and Bank of Yokohama
About ¥1.2 billion
March 30, 2018 to December 31, 2027 (The ﬁrst ﬁve years are the investment
period and the second ﬁve years the payout period)
Improve quality and accessibility and reduce the cost of healthcare including
medical treatment and nursing care
As of March 28, 2018

14

Hub
Build the conerstone of the ecosystemand connect impact communities
into a network

Case example:

Investment in Plus Social Investment（PSI）
Hubfor
impact communities

In the hub business, we will support intermediaries which support
business that contribute to solving social issues, develop new
impact investment products and schemes, as well as conductimpact measurement and management etc.

Summary of Fiscal 2017 Results
Investment in Plus Social Investment

Investment Speciﬁcs
SIIF
business segment
Investment amountPurpose ofinvestment

Working together to create a mechanism for regional social impact investments

15

Development and Support of Actors That Will Create SIBs

Investment targets

Forming a community that will support eﬀorts to create new SIBs

Hub business (support of organizations providing intermediate functions for social
impact investments)¥30 million▪Create a new ﬂow of money that will contribute to the development of regionalsocieties▪Increase new fund providers of social impact investments, such as regional
ﬁnancial institutions, residents, and local governments, and increase organizations
providing intermediate functions
Within ﬁve years through PSIʼs business, more than 50 regional social enterprises
receive social impact investments (ﬁve-year cumulative total)
50 regional ﬁnancial institutions engage in social impact investments(ﬁve-year cumulative total)
Social impact investments by individuals (including regional residents)
total ¥5.0 billion (ﬁve-year cumulative total)⇒Social impact investments take root in regional JapanA notable achievement in ﬁscal 2017 is the investment in Plus Social
Investment (PSI), a company creating mechanisms for social impact
investments that contribute to the formation of sustainable regionalsocieties.

Company Summary

As population decline accelerates and society continues to age
throughout Japan, an increasing number of people, mainly young
people, are moving from regional communities to the Tokyo area, andas a result, the economic disparity between the Tokyo area andregional societies is widening. To prevent further decline of regional
economies, there is a need to change the ﬂow of money in regionalsocieties.

Organization nameLocation ofhead oﬃce
Representative
Number of employees
Year of founding
Project description

PSI aims to build a fund-ﬂow model that will catalyze social innovationin regional areas by identifying and developing projects that contributeto revitalizing the local community and solving social issues and bypromoting investments and loans in such projects in partnership withlocal ﬁnancial institutions.
By investing in PSI, SIIF aims to support the creation of a pioneeringmodel of social impact investment in regional areas of Japan and towork together with PSI to create an ecosystem for social impact
investments.

Plus Social Investment（PSI）
Kyoto City
President and CEO Masato Noike 、Executive chairman Masataka Fukao
8 persons2016
Create a mechanism for social impact investments that contribute to regional societies
1. Developing and selling ﬁnancial products that invest in businesses contributing
to the solution of regional social issues▪Work together with regional businesses to create ﬁnancial products that contributeto regional societies
2. Partnering with regional ﬁnancial institutions▪ Use bank counters to propose and sell ﬁnancial products that contribute to theregional society to depositors with the bank
▪Support social business eﬀorts by regional small and medium-sized enterprises▪Exchange human resources with regional ﬁnancial institutions
3. Building a social impact investment ecosystem▪Develop and manage a social impact investment portal system

16Case example:

Case example:

Investment in Plus Social Investment（PSI）

Development and Support of Actors That Will Create SIBs
The role of intermediaries will be important in launching SIBs, who
structure the bond while communicating with and coordinatinginterests between such stakeholders as government, private fund
PSI thinks that enterprises and projects

born from the diverse resources of a region
including its nature, people, wisdom andculture should be viewed as regional assets

tions. As part of eﬀorts to support such intermediary support organizations, SIIF invites successful foreign intermediaries to holdtraining sessions.

taking the form of an enterprise or project,

Providing Support for Structuring SIBs

together with regional partners throughout

Support for structuring SIBs was provided

and calls them “project assets” . PSI works
Japan to identify and create such project
assets and to link them with investors

through the social investment platform
en.try.

to Social Value Japan, Japan Fundraising
Association, and K-Three through a service agreement. These three organizations put together SIBs for Ikeda City

Examples of project assets for which PSI

17

providers, business operators, and third-party evaluation organiza-

succeeded in raising funds in ﬁscal 2017

▪Toge reservoir solar power project(alternative school), Tama City (prevention of severe diabetic nephropathy), andOsaka Prefecture (support of foster
parent placements), that are scheduled
for launch in the next ﬁscal year.

▪Higashiomi City SIB project

Providing Training to Intermediaries
Case Summary

Kevin Tan of Third Sector Capital Partners, a major intermediary in the UnitedStates, was invited to lead a symposium

Silent partnershipinvestment

Investors

Project asset(fund)
agent

Individuals

Service agreement(investment oﬀeringand sales)

Project asset(fund)
proprietor

and training session for intermediaries
from September 5 to 7, 2017. The symposium was attended by about 80 persons
and the training session by about 20 persons. In the training session, in-depth
training was provided for seven hours per

Companies
Investor beneﬁts
Dividends

day over a two day period on raising thequality of the bond structuring process.

18

Think Tank

Case example:

Social Impact Mesurement Initiative（SIMI）
Think Tank

Co-create and circulate knowledge toforsystemic changes

catalyze social change

make visible the social value or the social impact they create in

In the think tank business, we will engage in research and studies

nical skills and other resources to realize new innovations towardand make policy proposals that are needed to develop a market en-solving issues. Social impact investors and management institu-

order to attract funds, talent with motivation, knowledge, and tech-tions also need to understand the social impact of their invest-

vironment that will contribute to the promotion of social impact

ments and explain it to individual investors and other stakeholders.

investments.

To promote social impact evaluation in Japan, the SIMI was founded in June 2016 as a platform for leading discussions on the current

Summary of Fiscal 2017 Results

state, challenges, and future goals of social impact measurement
as well as implementation of eﬀorts toward achieving that goal.

Promoting the Activities of

SIIF is a member of the initiativeʼ s joint administrative oﬃce. The

the Social Impact Measurement Initiative (SIMI)

initiative works together with private businesses, think tanks, inter-

As a member of the joint administrative oﬃce of the Initiative, we have worked to foster a culture

19

Business operators who contribute to solving social issues need tomediaries, fund providers, researchers, and government to takefor social impact measurement, supported the creation of guidelines and evaluation tools, andconcrete action toward promoting social impact evaluation in

Day 2017 held in June 2017.

the initiative.

accumulated case examples. About 200 people from many industries attended the Social Impact

Japan. As of May 29, 2017, 135 organizations are participating in

Promoting the Activities of the GSG
We held a social impact investment forum to which we invited Sir Ronald Cohen, chairperson of

the Global Steering Group for Impact Investment (GSG). We organized a meeting as the secretariat of the Japan National Advisory Board, and we prepared and published a report on the current
state of social impact investment in Japan.

What is Social Impact Measurement ?
Social impact evaluation is performed to make project outcomesvisible for the purpose of social impact management. Information
on project outcomes, such as whether issues are being solved andwhat kind of value is being created, is essential if projects aiming tosolve social issues and create social value are to increase social

Use in decision

Creation of logic model,

making, reporting

establishment of KPIs

A P
C D
Data analysis

Data collection

impact and achieve project goals. The Social Impact Evaluation
Initiative calls the process of evaluating and improving social
impact through a PDCA cycle based on project outcome information as “social impact management” .
Social impact management, through the creation of a logic model, the establishment of key performanceindicators (KPIs), and the collection and analysis of data, provides information on project outcomes andsupports the PDCA cycle process toward the achievement of project goals.

http://www.impactmeasurement.jp▼
Road Map Action Plan

Social Impact Day 2017

・ The road map action plan was developed by SIMI in ﬁscal
2016.

・ Social Impact Day 2017 on June 29, 2017

・ SIIF is giving emphasis to deciding guidelines and an
outcome indicator tool set as part of infrastructuredevelopment.
・ An outcome indicator tool set was developed in thecurrent ﬁscal year for avoiding the need for nursing
care, disaster preparedness, and the support of parenting.

・ About 200 persons participated from NPOs and companies.
・ The road map and action plan were announced, anddomestic and foreign case examples were shared(a speaker was invited from Australia).

20

Case example:

The Global Steering Group for Impact Investment
GSG Impact Summit 2017 in Chicago
The GSG Impact Summit 2017 was held in July 2017, towhich 550 people were invited to participate from morethan 30 nations, bringing together the front-runners ofsocial impact investing. About 10 persons participatedfrom the Japan National Advisory Board. Agreement
was reached on a strategy of nations working together
to promote social impact investments with 2020 as thetipping point. There was much interest in the enactmentof the Dormant Deposit Utilization Act in Japan.

Current State of Social Impact Investment in Japan 2017

The predecessor of GSG is the G8 Social Impact Investment Task-

21

force established by G8 nations under the proposal made by Prime
Minister David Cameron when the United Kingdom hosted the G8
Summit in 2013. Membership was extended to non-G8 nations in

The latest report was published on social impact investment in Japan in ﬁscal 2017, reviewing market size,
recent case examples, and the progress of the sevenproposals made in 2015. Market size is estimated to beat least ¥71.8 billion in 2017, more than double from theprevious year. The entry of such large ﬁnancial institutions as Shinsei Corporate Investment and Sumitomo
Mitsui Banking is a noteworthy development.

2015, and the taskforce was superseded by the Global Steering Groupfor Impact Investment. Currently 16 member nations have established
National Advisory Boards. SIIF serves as the secretariat of Japanʼ s
National Advisory Board, and it coordinates with the GSG head oﬃce
and the advisory boards of other nations as it engages in researchand studies and makes policy proposals that are needed to promotesocial impact investments in Japan and around the world.

Social Impact Investment Forum 2018
On February 19 and 20, 2018, a forum was held to coincide with a visit by Sir Ronald Cohen, GSG chairperson,
to Japan. More than 300 persons attended, mainly fromﬁnancial institutions and companies. Sir Ronald met
with oﬃcials such as Chief Cabinet Secretary Yoshihide
Suga, Deputy Chief Cabinet Secretary Yasutoshi
Nishimura, Financial Services Agency Commissioner
Nobuchika Mori, and Minister of Justice Yoko Kamikawa to call for the promotion of social impact investments by the government.

E x e c u t i ve S u m m a r y

Figure 1.

Trend of the Japanese impact investing market size

（USD Million）

800

718

700
600

Japan's impact investing sector in a nutshell

500
400

337

300

The Japanese impact investing sector is a product of its unprec edented super aging

200

demography, its advanced economy led by powerful corporates, and its nonproﬁt sector

1000with strong expertise in disaster relief, elderly care, and healthcare. The key features ofthe demand and supply sides of the impact investing sector include the following:
Demand side

170
2014

2016

2017

2017 highlights

・ Japanese society faces major stru ctu ral issu es su ch as the worl d's fastest ageing
demographic, poverty among children, and shrinking regional economies. The
government-led resource reallocation model from the post-war economic growthThree key achievements are worth highlighting from the Japanese impact investing

period has its limit in addressing these social challenges. Developing a new ﬂow oflandscape in 2017.

private money to social challenges is critical.
❶ Enactment of the Dormant Accounts Utilization Bill・ Healthy growth in the number of nonproﬁt organizations especially in the period

A seminal law for the Japanese impact investing sector - utilization of dormant account

immediately following the devastating earthquake and tsunami in eastern Japan in 2011.

funds for social causes - was enacted in December 2016. As a result, up to US$700 million

・ Emergence of social enterprises in the recent past, leading to approximately 200,000
ventures in number and employing 5.8 million people. Given the lack of a legal(after deducting refunds) annually will be channeled to the private sector in the form oforganization, many social enterprises operate as for-proﬁt entities.

grants, loans, and equity for the purpose of tackling social issues that are deemedchallenging to resolve by government eﬀorts alone2. This bill will come into eﬀect by mid

・ Expansion of corporate engagement in social issues, particularly with the spreading of

2018, within 1.5 years of enactment. In May 2017, the Cabinet Oﬃce set up a council

concepts such as creating shared value (CSV) and base of the pyramid (BOP).

speciﬁcally for the utilization of dormant account funds. Subsequently, in September
Supply side

2017, the council published an interim report on some of the key issues such as the need・ Substantial role of crowdfunding platforms to mobilize individual donations andfor an optimal governance structure for the agency responsible for fund distribution andincorporating innovative methodologies from the private sector. This new ﬂow of funds

investments for impact investing projects.

from dormant accounts is expected to serve as a positive stimulus to the overall impact

・ Involvement of mainstream ﬁnancial institutions, notably the largest pension fund ininvesting sector.

the world, Japan's Government Pension Investment Fund (GPIF), which has made acommitment to ESG investing.

❷ Emergence of social impact bonds (SIBs) in Japan・ Entrance of major private foundations that are willing to provi de risk capital that

The Current StateCity Governments of Kobe and Hachioji decided to commit funds to SIBs in March 2017. A
range of investors from individual investors, private foundations, to major retail banks
backs these SIBs.
Apart from SIBs, national and local governments are currently exploring the use of otherMarket size of Japan's impact investing sector

Pay For Success models. To realize them, regulatory adjustments allowing for multi-yearplanning, implementation, and payments, as well as the development of intermediaries,
will be required.

The current size of the impact investing market in Japan is estimated to be at least US$2017
2 0 1 8 . 2 . 19

Social impact bonds (SIBs) emerged as a full-ﬂedged social ﬁnancing mechanism when theenables other investors with lower risk appetite to participate in impact investing
projects.

of Impact Investing in Japan718 million 1. The two-fold increase from the 2016 ﬁgure of US$337 million can be❸ Participation of mainstream ﬁnancial institutions

attributed to two key factors: 1) the entrance of new market players; 2) the additional

The research behind this report conﬁrmed the active participation of mainstream ﬁnancial

capital commitments by existing impacting investors. In terms of target sectors, healthinstitutions in the Japanese impact investing sector, including life insurance companies,

and medical care attracted the most investments.

major commercial banks, and venture capital ﬁrms. Regional banks are also starting toenter the market, which point to a signiﬁcant potential segment.

1

2

All monetary ﬁgures in this document are calculated at US $1 = 100 Japanese yen.

Source: Cabinet Oﬃce and Ministry of Finance (2017) 2013-2015 data

Global Social Impact Inv est ment St eer ing Gr oup（GSG）

Progress on key recommendations

The Japan National Advisory Board of the Global Social Impact Investment SteeringGroup (GSG)3 proposed seven key recommendations towards the expansion of theJapanese impact investing sector in 2015. Two years on, major progress has been
observed in three of the seven areas:
・Recommendation 1: Utilization of dormant account funds
・Recommendation 2: Introduction of social impact bonds and development impact bonds
・Recommendation 5: Promotion of social impact measurement
Given the increasing demand for investments in social and environmental initiatives,
stakeholders are pushing for the establishment of legal entities and certiﬁcations forsocial purpose organizations (Recommendation 3). The following table summarizes the
progress against each recommendation since 2016 as well as the suggested next steps.
Progress
Recommendation 1:

Latest activities

Bill enacted in December 2016
Council established under the
Cabinet Oﬃce in May 2017
● Interim report published by theCouncil in September 2017

● Now that the supply side ofdormant account funds hasachieved progress, the demandside requires structure andcoordination. For this, promotionof innovative, successful cases is key.
to mobilize additional capital into
the impact investing market andachieve a more sustainable ﬂow
of money.

development in the social sector.
● Promote understanding of social
impact measurement andrelevant frameworks.
Recommendation 2: Introduction of social impact bonds and development impact bonds

Kobe and Hachioji cities in July
2017.
● Implementation of Pay For

Major
progressachieved

Success projects by two regional
cities.
● Launch of SIB pilot by the

Ministry of Health, Labour, andWelfare in Sept 2017.

No
major
progress● The Japan Association of New

Economy published a report on
venture philanthropy and impact
investing in April 2017 andproposed recommendations
regarding public-interest
organizations and tax beneﬁts.

● Prioritize establishing legal

entities and certiﬁcations related
to social purpose organizations.

Recommendation 5: Promotion of social impact measurement● The Social Impact Measurement● Promote common understanding

Initiative (SIMI) launched the"Social Impact Measurement
Roadmap 2017-2020" in June
2017

Major
progressachieved● Impact measurement guidelines

and a culture of measurement
through SIMI's working groups
on guiding principles andguidelines.
● Develop a practical toolkit

were created and case studies
compiled by SIMI's eight working
groups.

through SIMI's other working
groups● Create capacity building

opportunities for evaluators,
implementers, investors, andintermediaries● Leverage dormant account funds● Create opportunities for talent● Implementation of SIBs by the

Recommendation 4: Establishment of tax beneﬁts for impact investing

Issues and next steps

Utilization of dormant account funds● Dormant Account Utilization● Dormant Account Utilization

Major
progressachieved

Recommendation 6: Clariﬁcation of ﬁduciary duties

No
major
progress● Individual investors participatedlocal government initiatives tobroader nation-wide scale.

in Kobe City's SIB project. In thiscase, private foundations
furnished risk capital to lower risk
for individual investors.

● In order to enable multi-year● Develop frameworks to provide

technical and ﬁnancial support tointermediaries that are necessary
to the implementation of Pay For
Success mechanisms.

made with regards to clarifying
the relationship between impact
investing and ﬁduciary duties,
multiple examples of institutional
investor participation in impact
investing emerged in 2017.

● Promote research on thecorrelation between impact
investing and ﬁnancial returns.

Recommendation 7: Expansion of individual investors● Push Pay For Success beyond

implementation and payment,
consider establishing a similar
mechanism to the "Outcome
Fund" by the UK Cabinet Oﬃce.

● While no major progress has beenSomeprogressmade● Explore match-making between

private wealth management andimpact investing.

● Promote the development of

impact-focused investment trusts
operated by asset managementﬁrms, speciﬁcally targeting
individual investors.

● Thanks in part to the growth ofequity-based and loan-based
crowdfunding platforms, anincreasing number of individuals
is involved in impact investing. In
comparison to European andNorth American markets,
however, the menu of options forindividual investors is limited.

● Engage with crowdfunding

platforms to incorporate impact
measurement into theirmechanisms.

● Work in synch with theabove-mentioned tax beneﬁts for
impact investing.

Recommendation 3: Establishment of legal entities and certiﬁcations for social purpose organizations● A special committee within the

No
major
progress

3

Liberal Democratic Party
published a report on expansionof social venture initiatives in
May 2017.

● As part of the plans to revive

regional economies by the Prime
Minister's Oﬃce, an enabling
environment for private
sector-led initiatives wasemphasized in June 2017.

Formerly known as the G8 Social Impact Investment Taskforce● Promote certiﬁcations throughprivate-public partnerships.
● Raise public awareness byrecognizing exemplary cases ofsocial innovation.

An overarching challenge across the recommendations is building the capacity of social
enterprises and developing intermediaries that can support these ventures. It isimperative to nurture entrepreneurs and business professionals who are capable ofrunning eﬀective social enterprises that not only meet the increasing supply of impact
investing, but also learn and grow with impact investors.

22

Organizational Summary

Financial status
Net Assets Variation Statement

Change in general net assets

Change in designated net assets

1. Change in ordinary revenue/expenses(1)Ordinary revenue
Operating revenue

Foundation Summary

23

Subsidies, etc., transferredInterest received

Name

Japan Social Impact Investment Foundation

Date of founding

March 17, 2017

Objectives

Through the development and practice of a new model of social impact
investment, which is investment made with the intention of generating positive
impact on issues such as education, healthcare, social welfare, theenvironment, and regional communities, regional communities. The foundation
aims to broadly contribute to the greater welfare of citizens through theenhanced eﬃciency of public interest activities and the expansion ofoutcomes by increasing the availability of private investment funds in Japanʼspublic interest sector and by improving government services based on
public-private partnership investments.

Businesses(2)Ordinary expenses

To achieve the above objectives, the foundation will engage in the following
businesses.
(1) Research and studies, human resources development, and promotion
activities related to social impact investments(2) Development and practice of new fund provision methods, such as
investments, loans, and guarantees, for social projects(3) Other necessary businesses for achieving the foundationʼs objectives

Board Members

Operating expenses
Total administrative expenses
Total ordinary expenses
Current change in ordinary revenue/
expenses before adjustment by appraisal gain or loss

7,582,410
111,328,192
811
118,911,413

90,313,856
28,416,757
118,730,613
180,800

2. Change in extraordinary revenue/expenses

Contributions received

Closing balance of net assets
110,168,251

April 1, 2017 to March 31, 2018 (Unit: Yen)

(1)Extraordinary revenue

00Current change in general net assets before taxes 180,800
Income taxes
180,800
Opening balance of general net assets 6,277,943
Closing balance of general net assets 6,277,943(2)Extraordinary expenses

24

Balance sheet
Councilors

Directors
CEO

Mitsuaki AOYAGIExecutive Director

Nanako KUDO

Director

Shuichi OHNO

Visiting professor at Tama Graduate School of Business,former Chief Financial Oﬃcer of Mori Building.

Yumiko IGARASHI

President of the Nippon Foundation.

Auditor

Total ordinary revenue

180,000,000
2,218,500△ 111,328,192
Transfer to general net assets
70,890,308
Current change in designated net assets
33,000,000
Opening balance of designated net assets
Closing balance of designated net assets 103,890,308
Private subsidies received

President, The Sasakawa Peace Foundation
Attorney at Law, Igarashi Law Oﬃce

Masayasu KITAGAWA

Professor Emeritus at Waseda University andadvisor at the Waseda University Research Institute of Manifesto.

Tsutomu HORIUCHI
Takeju OGATA

Yuko KAWAMOTO

Professor at Waseda University Graduate School of Business.

Assets
1. Current assets
2. Fixed assets(1)Basic assets

Liabilities
10,388,013
3,000,025

4,110,070
04,110,070

1. Current liabilities
Fixed liabilities
Total liabilities(2)Designated assets

Business management equalization fund 30,000,254

Investment business cumulative deposits 18,694,851
Marketable securities
Total designated assets
Total ﬁxed assets
Total assets

52,195,178
100,890,283
103,890,308
114,278,321

Net assets
1. Designated net assets
Private subsidies
Contributions
Total designated net assets
2. General net assets
Total net assets
Total liabilities and net assets

101,671,808
2,218,500
103,890,308
6,277,943
110,168,251
114,278,321

As of March 31, 2018 (Unit: Yen)