Impact Investment in Peru
Impact investment
WHAT DO WE UNDERSTAND BY IMPACT INVESTMENT?
According to the Global Impact Investment Network (GIIN), impact investments are those made with the intention of generating a positive and measurable social and environmental impact, along with a financial return.
Impact investing aims to provide large-scale solutions to the world’s biggest problems, optimizing risk, return and impact to benefit people and the planet. This is achieved by establishing specific social and environmental objectives along with financial ones, and measuring their compliance (GSG Impact).
KEY CONCEPTS OF IMPACT INVESTMENT
INTENTIONALITY
It consists of having the purpose of solving a social and/or environmental problem, this being the main objective that guides decision making. In this way, we seek to generate a concrete impact, analyzing how, how much and with what depth we want to contribute to solving that problem.
MEASUREMENT
A distinctive feature of impact investing is the commitment to measure and report the social and/or environmental performance and progress of the underlying investments, ensuring transparency and efficient accountability.
PERFORMANCE
Impact investing is not about donations; A financial return on the invested capital is expected. These investments seek financial returns that can range from below-market rates (called concessional, when impact is prioritized) to risk-adjusted market rates.
CAPITAL SPECTRUM
There are various types of financing with specific characteristics related to the expectation of return, risk and intention to contribute to solving environmental and/or social problems. Impact investments, both thematic and those that prioritize impact, seek to contribute to these problems, and at the same time, obtain a financial return.
MAP OF THE IMPACT ECOSYSTEM IN PERU
In 2020, the impact ecosystem was mapped in Peru, identifying more than 180 organizations and classifying them according to type, categories and instruments. For some organizations, impact is a core part of their business. For others, it is a growing business segment that they are beginning to understand and develop products/projects around.
The 17 Sustainable Development Goals
HOW ARE WE AT THE COUNTRY LEVEL?
According to the UN (2023), the financing gap in developing countries to achieve the SDGs amounts to 4 trillion dollars annually. Furthermore, according to ECLAC (2023), only a third of the SDGs were on track to be achieved by 2030. To achieve this, joint efforts between sectors are needed.
Below is the level of progress of the SDGs in Peru according to the INEI (2022); in addition to the goals aimed at mobilizing resources for each SDG. Impact Investment is a key mechanism to mobilize capital to achieve this.
1 NO POVERTY
SDG 1: 69%
Peru has 9 complete indicators of the 13 proposed by the UN
Objective: End poverty in all its forms around the world.
Target: Mobilize diverse resources through enhanced cooperation to finance programs and policies in developing countries, with the aim of eradicating poverty in all its dimensions.
2 ZERO HUNGER
SDG 2: 50%
Peru has 7 complete indicators of the 14 proposed by the UN
Objective: End hunger, achieve food security and improved nutrition, and promote sustainable agriculture.
Target: Increase investments in infrastructure, agricultural research, technological development and gene banks in developing countries through greater international cooperation to improve agricultural production.
3 GOOD HEALTH AND WELL BEING
SDG 3: 68%
Peru has 19 complete indicators out of the 28 proposed by the United Nations.
Objective: Ensure healthy lives and promote well-being for all at all ages.
Target: Substantially increase health financing, and the recruitment, development, training, and retention of health personnel in developing countries.
4 QUALITY EDUCATION
SDG 4: 75%
Peru has 9 complete indicators out of the 12 proposed by the United Nations.
Objective: Ensure inclusive, equitable, and quality education and promote lifelong learning opportunities for all.
Target: Build and upgrade education facilities that are child, disability, and gender-sensitive, and provide safe, non-violent, inclusive, and effective learning environments for all.
5 GENDER EQUALITY
SDG 5: 64%
Peru has 9 complete indicators out of the 14 proposed by the United Nations.
Objective: Achieve gender equality and empower all women and girls.
Target: Implement reforms to grant women equal rights to economic resources, as well as access to ownership, financial services, inheritance, and natural resources, in accordance with national laws.
6 CLEAN WATER AND SANITATION
SDG 6: 64%
Peru has 7 complete indicators out of the 11 proposed by the United Nations.
Objective: Ensure availability and sustainable management of water and sanitation for all.
Target: Expand international cooperation and support to developing countries to improve capacity in water and sanitation-related activities and programs.
7 AFFORDABLE AND CLEAN ENERGY
SDG 7: 67%
Peru has 4 complete indicators out of the 6 proposed by the United Nations.
Objective: Ensure access to affordable, reliable, sustainable, and modern energy for all.
Target: Increase international cooperation to facilitate access to clean energy research and technology and promote investment in clean energy infrastructure and technologies.
8 DECENT WORK AND ECONÓMIC GROWTH
SDG 8: 69%
Peru has 11 complete indicators out of the 16 proposed by the United Nations.
Objective: Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.
Target: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, financial, and insurance services for all.
9 INDUSTRY, INNOVATION AND INFRAESTRUCTURE
SDG 9: 58%
Peru has 7 complete indicators out of the 12 proposed by the United Nations.
Objective: Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.
Target: Facilitate access to sustainable and resilient infrastructure in developing countries through enhanced financial, technological, and technical support to African countries, least developed countries, landlocked developing countries, and small island developing states.
10 REDUCED INEQUALITIES
SDG 10: 36%
Peru has 5 complete indicators out of the 14 proposed by the United Nations.
Objective: Reduce inequality within and among countries.
Target: Encourage official development assistance and financial flows, including foreign direct investment, to states with the greatest need, in line with their national plans and programs.
11 SUSTAINABLE CITIES AND COMMUNITIES
SDG 11: 33%
Peru has 5 complete indicators out of the 15 proposed by the United Nations.
Objective: Make cities and human settlements inclusive, safe, resilient, and sustainable.
Target: Provide support to least developed countries, including financial and technical assistance, to help them build sustainable and resilient buildings using local materials.
12 RESPONSIBLE CONSUMPTION AND PRODUCTION
SDG 12: 8%
Peru has 1 complete indicator out of the 13 proposed by the United Nations.
Objective: Ensure sustainable consumption and production patterns.
Target: Encourage companies, particularly large and multinational corporations, to adopt sustainable practices and integrate sustainability information into their reporting cycle.
13 CLIMATE ACTION
SDG 13: 25%
Peru has 2 complete indicators out of the 8 proposed by the United Nations.
Objective: Take urgent action to combat climate change and its impacts.
Target: Fulfill the commitment of developed countries to jointly mobilize resources to support the needs of developing countries and ensure the full operationalization of the Green Climate Fund.
14 LIFE BELOW WATER
SDG 14: 20%
Peru has 2 complete indicators out of the 10 proposed by the United Nations.
Objective: Conserve and sustainably use the oceans, seas, and marine resources for sustainable development.
Target: Strengthen scientific, research, and marine technology transfer capacity according to the Criteria and Guidelines of the Intergovernmental Oceanographic Commission, to improve ocean health and enhance the contribution of marine biodiversity.
15 LIFE ON LAND
SDG 15: 21%
Peru has 3 complete indicators out of the 14 proposed by the United Nations.
Objective: Manage forests sustainably, combat desertification, halt and reverse land degradation, and halt biodiversity loss.
Target: Mobilize significant resources from all sources and levels to finance sustainable forest management and provide appropriate incentives to developing countries to promote conservation and reforestation.
16 PEACE, JUSTICE AND STRONG INSTITUTIONS
SDG 16: 71%
Peru has 17 complete indicators out of the 24 proposed by the United Nations.
Objective: Promote just, peaceful, and inclusive societies.
Target: Build effective, accountable, and transparent institutions at all levels.
17 PARTNERSHIPS FOR THE GOALS
SDG 17: 42%
Peru has 10 complete indicators out of the 24 proposed by the United Nations.
Objective: Revitalize the Global Partnership for Sustainable Development.
Target: Mobilize additional financial resources from various sources for developing countries.
- RED ( less than 30%);
- AMBER (from 30% to 59%);
- GREEN (more than 60%).
%: The percentage of indicators built in Peru with respect to the total indicators that the UN indicates that each country should report for a specific SDG.
Source: System for monitoring and tracking the indicators of the Sustainable Development Goals for Peru (INEI, 2022).
Link: https://ods.inei.gob.pe/ods/objetivos-de-desarrollo-sostenible
