Message from management Foundation summary
As we step into the fiscal year 2024 I would like to take this opportunity to greet all of our stakeholders as we start the 2024 fiscal year. *What is impact-oriented resource circulation? Refers to activities aimed at resolving social problems and creating value that emphasize social impacts, and the circulation of funds that cannot be described as investments (funds that are close in nature to donations or subsidies), of human resources and knowledge and of other social, human and emotional capital whose value cannot be measured in economic terms. The previous iteration of SIIF also aimed to build a market for impact investing, but since the merger we have also been considering ways of support that include more flexible provision of funds, by which we mean methods of providing funds that should not be called “investments,” because material financial returns cannot be expected (for example, in situations where only the principal is repaid), but that require a greater level of responsibility from the recipient of funds than would donations or subsidies. We have positioned this statement at the beginning of the document because our goal is an environment in which more flexible approaches to providing funding that take into account the risk tolerance of the provider of funds can be utilized for the resolution of social problems.
Shuichi OHNO
The post-pandemic era began after the three-year period of turmoil in which the world was shaken by the COVID-19 was finally settled as WHO declared the end of it last May.
Looking back the past few years, the COVID-19 pandemic triggered major changes in society, lifestyles, and industrial base with a much greater speed than previously predicted. In addition, dramatically accelerated advancements of generative AI technology are driving its large-scale applications in a wide range of areas that were deemed impossible up until now.
Last year witnessed extreme weather phenomena all over the world. Not only Japan experienced a blazing hot summer, also the world experienced a tumultuous year with massive floods and storms, volcanic eruptions, and major earthquakes. These deteriorating environmental issues have heightened people’s interest and have urged the efforts to address these issues, while at the same time helping change the industrial structure in which new industries leveraging eco-friendly technologies, such as electric vehicles, are rapidly growing.
When looking at Japan, I can’t help feeling that, far from leading the change, Japan is standing still bewildered and paralyzed. In particular, large Japanese companies which led the world prominently by technology innovation seem to have lost the luster and momentum that they used to boast.
However, it is also true that behind the surface of this stagnation is there an accelerating aspiration t for change particularly among young people. The government has taken note of this trend and now is showing its support for companies and management seeking social change in its vision of “new capitalism. It should also be noted that the movement toward social change such as the “Impact-driven Financing Initiative” is growing in the financial industry.
In fiscal year 2023 amid these situations, SIIF was rigorously conducting activities in line with the medium-term strategy ending in FY 2025 that was formulated in FY 2022. SIIF set forth the three major tasks as below in this medium-term strategy:
(1) Creating symbolic cases and achievements, (2) Developing practical knowledge for the new economy, and (3) Establishing a platform where diverse practitioners can mingle and interact with one another.
First, for the (1) above, we set the three specific sub-themes to focus on: healthcare enhancement, regional revitalization, and opportunity disparity reduction. We then discussed and analyzed the causal structure of each of these three areas, and published the results in “Vision papers” in July 2023 while preparing for actual initiatives.
With regard to healthcare enhancement, the most advanced area among the three, SIIF established the “Wellness Fund” in June 2023 in investment cooperation with Japan Post Insurance, Teikoku Seiyaku (pharmaceutical company), Keio University, and others. For the remaining two themes, we decided to publicly solicit partners to help realize the system changes. We received 89 applications for the two themes combined although we set the open application period for only one month from October to November 2023. We plan to launch projects based on partnerships with these partners early in the new fiscal year.
Secondly, SIIF established the “Impact Economy Lab,” a new internal department dedicated to (2) developing practical knowledge for the new economy, where its members have been playing a pivotal role in catalyzing various entities for the system change in order to realize the impact economy. SIIF has also been working on the third sub-theme (3) establishing a platform, by systematizing the various knowledge gained through our past activities, by helping build system change initiatives, and by supporting PoCs while involving various stakeholders.
As a couple of specific examples, we made policy recommendations to promote impact investing based on the government’s “new capitalism” policy and supported the establishment of the Japanese government’s Impact Consortium. SIIF worked to prepare the “Impact-driven Financing Initiative” to grow competent and become self-sustaining, while establishing the “Impact IPO” working group inside the GSG Impact JAPAN with the aim to support startups that intend to go public.
Lastly but not the least, SIIF members served as members of government advisory committees and cooperated in various other areas, such as impact startup support, reform of public corporations, and investment and loan projects in the dormant deposit utilization system.
I look forward to working with all of our stakeholders, including investors and impact entrepreneurs, to further expand and evolve our activities in FY2024.