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Momentum 21 Nov 2019

Sustainability requires impact investing

“Impact investing has made traction and is now fundamental to addressing the significant objectives related to sustainability. At a time like now, when all of us are experiencing the impact of the climate emergency, this type of asset is all the more relevant. It is undeniable: sustainability requires impact investing.” Lidia del Pozo, BBVA’s Director of Community Investment Programs, said these words at the European Venture Philanthropy Association (EVPA)’s 15th annual conference in The Hague.

During her presentation, Lidia del Pozo summarized the different social impact investment initiatives BBVA has put in place and explained how the bank espouses the full typology proposed by the EVPA model. “From the more traditional models as promoted by corporate philanthropy or the more recognized, such as sustainable and responsible investment to leading edge trends such as investing to make a social impact, investments targeting social organizations with financially sustainable business models or impact investing, targeting traditional businesses that deliberately seek to make a social impact,” she explained.

Of the bank’s various initiatives, Lidia del Pozo focused on BBVA Momentum, “which seeks to make investments in order to create a social impact.” Over the program’s nine completed series, 684 social entrepreneurs — each with financially sustainable business models — in six countries (Colombia, Spain, Mexico, Peru, the United States, and Turkey) have been supported through both funding and non-financial support.

The bank also has a track record in impact investing. “The BBVA Microfinance Foundation has produced exemplary work since its creation in 2007 by providing access to beneficial financing for more than 2 million at-risk or vulnerable customers,” she explained. BBVA Microfinance operates in five countries where it delivers microfinance products and services while concurrently providing financial education to its customers in order to support their financial development.

During the event, there was also discussion about sustainable products that “respond to a demand and to a growing sensitivity on the part of our customers,” del Pozo explained. “The latest example is the BBVA Sustainable Future Fund, launched by BBVA Asset Management. It is a fund that invests in equities and public debt and credit, applying SRI (socially responsible investing) criteria across all asset classes and also sets aside a part of the commissions as a contribution to social organizations,” she concluded.

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Lidia del Pozo, BBVA's Director of Community Investment Programs.

The conference is used as an occasion to emphasize the role of social investment and philanthropy in Europe. This year the current state of the climate emergency was also discussed. “A topic that must be addressed as soon as possible. Banks will play an important role and for good reason: they operate the investment pipelines.” Within this context, in 2018 BBVA announced its Pledge 2025, a commitment to secure €100 billion in sustainable finance by 2025.

In its latest report presented at the conference, the EVPA recognized the key role of the financial sector, given its ability to secure financial resources and its important contribution in terms of financial support. Likewise, the study refers to the finance sector’s responsibility to society, which is increasingly committed and demands “a new kind of banking, one that is responsible and sustainable.”

The report, produced for EVPA’s 15th anniversary and entitled “15 Years of Impact”, evaluates the present and future status of the philanthropic venture-capital investment domain. The report serves as a reference document for impact investors by focusing on the three principle practice areas: investment, impact measurement and management, and financial support. It also reviews the role of the key players, their function, and the challenges and the opportunities the sector represents.

This year, the event was held in The Hague and was formally opened by her majesty the Queen Máxima of the Netherlands. Included among the more than 750 participants representing 63 countries were investors, social entrepreneurs, third-sector organizations, and some financial institutions like BBVA, one of the first banks to join the association, which it did in 2011.

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