As an impact investor, we make investments with the aim of delivering positive impact to the local populations in developing countries and emerging markets. Our investments contribute to broad-based, sustainable economic development.
Through the provision of finance to commercially viable local companies, we foster their growth and support the creation of formal, decent jobs. Considering the scarcity of employment opportunities in many developing countries and emerging markets, this is an important contribution to poverty reduction and local livelihoods.
Through the stringent standards imposed on all our investees, we not only contribute to the dissemination of international best practice across our target markets but also to sustainable and responsible economic development.
The sector composition of our clients’ portfolios depends on their preferences. Although impactful business models exist across most sectors of the economy in developing countries and emerging markets, we see an increasing number of high impact investment opportunities in the following sectors:
- Healthcare systems typically operate under severe funding constraints in our target countries, which limits both availability and quality. We support the sector by funding affordable health insurance providers, hospitals and clinics, as well as medical innovation aimed to serve the needs of the poor.
- Education is one of the first priorities for most families in our target countries. Private sector solutions play an important role in offering affordable quality education and bridge the demand-supply gap. Furthermore, education technology is gaining in importance and will further improve affordability.
- Basic infrastructure is vital to any country’s economic development. Through support of the provision of basic services, such as transport, communication, sewage, water and electricity, we help local economies operate more efficiently, inclusively and sustainably.
- Renewable energy plays a particularly important role due to the risks that climate change and pollution present to vulnerable parts of our target countries’ populations. We fund independent power providers that use technologies such as wind, solar, hydro and biomass.
- Agriculture remains a primary source of employment in many developing countries and emerging markets. Hence, sustainable business models and efficient technology solutions are of particular importance in sustaining and improving rural livelihoods.
- Access to finance is a key constraint for most local companies and populations in developing countries and emerging markets. Through support of various types of financial intermediaries with a specialisation in SMEs, fast-growing local companies and under-served population segments, we support broad-based and inclusive economic growth, the formalisation of the economy and the creation of jobs.
Our impact framework relates to the Sustainable Development Goals (SDGs), as set by the United Nations. We screen each investment opportunity for its potential contribution to the SDGs.
United Nation's Development Goals (SDGs)
We typically expect each investment to make a measurable contribution to the SDGs. In consideration of the common themes of economic development, support of local companies and job creation across all our investments, we make a strong contribution in particular to SDG 8 (job creation), SDG 9 (financing for SMEs) and SDG 17 (mobilisation of investment and fiscal resources for development).
In addition, contribution to other SDGs depends on the impact thesis of an individual investment opportunity. The expected contribution to the SDGs is assessed carefully and the investment decision making and selection has an SDG focus.
Obviam, as manager of SIFEM, has made, endorses, and supports the following commitments of SIFEM to Climate and Energy Finance, and will implement them across all of its operations:
- Objectives of the Paris Agreement: Obviam will align all new financing with the objectives of the Paris Agreement by 2022 and will transition its clients’ investment portfolios to net zero GHG emissions by 2050 at the latest.
- Exclusion of coal and fuel oil: Obviam will exclude new coal and fuel oil financing and will limit other fossil fuel financing to Paris-aligned projects until generally excluding them by 2030 at the latest.
- Ambitious targets: Obviam will build on its track record in climate finance and the mobilisation of private sector finance by holding itself to ambitious individual targets and by reporting publicly on its progress.
- Promotion of green growth: Obviam will invest strategically and provide assistance to its clients to support the development of Paris-aligned projects, and to promote green growth, climate adaptation and resilience, nature-based solutions, access to green energy, and a just transition to a low-carbon economy.
- Disclosures: Obviam will make climate-related financial disclosures in line with high international standards, specifically adopting the recommendations of the Task Force on Climate-related Financial Disclosures.
- Climate action: Obviam will embed climate action and climate risk management at every level of its organisation.
Obviam represents its client SIFEM as a member of the Association of European Development Finance Institutions (EDFI). The above commitments are in line with the EDFI Statement on Climate and Energy (adopted on 5 November 2020) which can be found at:
Obviam was among the first adopters of the Operating Principles for Impact Management which were developed by the International Finance Corporation (IFC) and launched on 12 April 2019 at the World Bank Group Spring Meetings in Washington DC. The Principles provide a common market standard for what constitutes an impact investment. They describe the essential features of managing investments into companies or organisations with the intent to contribute to measurable positive social, economic, or environmental impact, alongside financial returns. Impact considerations have to be integrated into all phases of the investment lifecycle: strategy, origination and structuring, portfolio management, exit, and independent verification. www.impactprinciples.org
Critically, the Principles call for annual disclosure as to how signatories implement the principles, including independent verification, which will provide credibility to the adoption of the Principles. Obviam’s “Disclosure Statement” for the year 2021
The “Independent Verification Statement” was established in November 2020.
“Independent Verification Statement”
We have a rigorous and comprehensive measurement system in place to track the impact generated by each investment. Systemic impacts, such as training effects, portfolio company development and mobilisation of additional finance, are assessed and monitored from the outset of the investment and followed on a biennial basis. In addition, specific development indicators, tailored to the impact thesis of each investment, are collected and reviewed on an annual basis, according to the client’s needs and preferences. We also coordinate independent audits of measured impacts for several of our clients.
Obviam’s case studies provide an in-depth view of selected investments and highlight the local impact, including effects on employees, their families, the local community and the environment.
Funding for technical assistance is available for selected investments. Technical assistance is designed to support knowledge transfer and capacity building of the local management teams and portfolio companies in areas such as financial reporting, improved management of environmental and social risks, and leadership training. The aim of such support is to maximise the investment’s impact, with follow-on effects including increased company sustainability and local community development.
“The impact we generate with our investments reflects the mandates tailored to the preferences of our clients, and is evidenced by thorough measurement and monitoring of outcomes.”
As Obviam's Impact Manager, Florence leads the efforts impact measurement and assessment function.
IMPACT TRACK RECORD EXAMPLES
More than 870,000 jobs cumulatively created or supported across the entire portfolio since 2005
USD 2,370 million in corporate and other taxes paid by portfolio companies in 2019
5.5 million tons of CO2 emissions avoided in 2019 (together with investment partners)
80% of investments trigger training effects for employees