SDG-oriented thematic and impact investing

SDG-oriented thematic and impact investing encompasses investments in sustainability themes and in enterprises that seek to make a positive social and/or environmental impact in addition to generating a financial return. These strategies offer clients exposure to fast-growing sectors such as electric vehicles, education and water. A growing number of investors are using the SDGs as a reference point to align investments and impact goals and are working with investee companies to measure the impact of their products and services. For example, Credit Suisse participated in the launch of a responsible consumer fund in 2019. The fund aims to invest in businesses that are responsive to changing consumption patterns and pursue business models that generate sustainable products and services.

Impact investing is the subset of strategies that can demonstrate the contribution that investors in particular can make to the impact of enterprises. These investments are typically part of private market strategies that see investors directly finance the growth of impactful companies and aim to deliver measurable improvements in the sustainability performance of the underlying investments.

Credit Suisse focuses on impact investments that demonstrate the intention to deliver impact based on a clear strategy of change and that are able to measure such impact in a tangible way.

Key factors that set impact investing apart from other sustainable investment practices include:

• the intentionality of social and environmental impact;
• the strategy to reach such impact;
• the investor’s contribution to the impact (also referred to as “additionality”);
• the measurement of impact outcomes.

Due to the lack of a common standard defining such impact, the International Finance Corporation (IFC) introduced the Operating Principles for Impact Management in 2019. The Principles establish a framework for impact investing focused on ensuring that impact considerations are purposefully integrated throughout the investment lifecycle. Credit Suisse believes that transparency and a common understanding of standards in impact investing are crucial to developing this market, and we decided to be a part of this initiative as a founding signatory.

Impact investing activities at Credit Suisse include investments in small and medium-sized businesses with a social or environmental mission and the development of financial products, such as those designed to support smallholder farmers and high-potential students in developing countries. We also act as the impact advisor to the Asia Impact Investment Fund I L.P. (AIIF I), which invests in fast-growing businesses that address social challenges across Asia. In 2019, AIIF I invested in two healthcare companies in Southeast Asia and a microfinance institution in Indonesia that provides access to microloans for local women entrepreneurs. One example is Halodoc, an Indonesian company which aims to simplify access to healthcare services through its platform by integrating online and offline components of the healthcare ecosystem.

In 2019, we partnered with a leading healthcare private equity investor in Asia in an effort to bring affordable, quality healthcare to those at the bottom of the economic pyramid in Southeast Asia. The investments are focused on large, scalable businesses that address mass-market demand at affordable prices and aim to deliver positive investment returns while also having a social impact.

At end-2019, Credit Suisse’s SDG-oriented thematic and impact investing business included more than CHF 8 bil­lion of assets under management, of which over USD 4 bil­lion are in the area of impact investing.