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#SRI — 20.11.2017

Sustainable Impact: In conversation with Mason Tan

Co-Founder and CEO of Garden Impact Investments & Vice Chairman of Transformational Business Network Asia

“We need to practice social justice in a sustainable  manner, especially when the gap between rich and poor is widening. I don’t believe charity alone will help extend the opportunities that people want.”

When asked to convey the mission statement of Garden Impact Investments (‘GII’), CEO Mason Tan says: “There are many people today in Asia who are living in poverty. They live without basic social security, often in substandard housing with no running water or flushing toilets, let alone working electricity. We invest in social enterprises that alleviate poverty through job creation.”

Since its incorporation in late 2013, GII has invested in eight social impact businesses in Thailand, Indonesia, Malaysia, and Singapore that are dedicated to helping people move from informal to formal employment.

He recalls one of the earliest projects in which GII invested – a prison call-centre in Singapore. “The employees were being paid a flat rate by the prison authorities. The change we introduced was a commission based compensation that enabled call-centre colleagues to triple their take-home pay.” He adds, “Our investment was an act of restoring broken relationships with their loved ones by helping them to see the value of their contribution while serving their sentences.”

Mr Tan’s passion in life is supporting those who are “unbankable” – people who are marginalised in society and are not served by financial institutions. For these individuals, he observes, “being poor is very expensive. Often they are in a debt cycle, where they struggle to get by because their interest rates on loans are so high.”

“There are many people today in Asia who are living in poverty. They live without basic social security, often in substandard housing with no running water or flushing toilets, let alone working electricity."

MASON TAN

Co-Founder & CEO of Garden Impact Investments

GII has invested in social enterprises that make a tangible difference to quality of life. For example, one investment helps improve the affordability of toilets in Indonesia, a country where the financing for basic sanitation facilities struggles to keep pace with population growth.

GII provides working capital for purchase of raw materials by entrepreneurs and in turn enables families to make purchases with only 30% down-payment. GII is also making interventions in a peer-to-peer lending platform that helps students in the health sector to access student loans with affordable interest rates.

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By the end of the year, GII expects to have made 10 investments in total. Given the diversity of his projects, Mr Tan has developed his own philosophy on returns. “It is impossible to be both profit-maximising and impact-maximising at the same time.

Of course, we need to be financially sustainable in order to have sustainable impact. But each project has its own social impact metrics. When you invest for social and humanitarian reasons, you need to be patient. This means expecting financial returns in the single digits or low teens, over a longer time horizon.”

GII looks for active involvement with the social enterprises in which it invests. Stringent financial discipline is a pre-requisite, and close attention is paid to the monitoring of social impact metrics over the years.

Critically, Mr Tan looks for social entrepreneurs with passion and readiness to listen closely to what people on the ground are saying before coming up with solutions. He tells a story of how in the aftermath of a recent typhoon in the Philippines, the authorities prioritised building new homes for the communities whose livelihoods had been devastated.

“In reality, what the communities actually needed was fishing boats. They were fishing people, who needed to re-gain their livelihoods to support their families. I ask myself sometimes if we are too quick to move into solutions, when we should be listening to what people tell us they need.”

For Mr Tan, the decision to make impact investments ultimately comes back to values. “We need to practice social justice in a sustainable manner, especially when the gap between rich and poor is widening. I don’t believe charity alone will help extend the opportunities that people want.”

THE ABOVE ARTICLE IS AN EXCERPT FROM BNP PARIBAS GLOBAL ENTREPRENEUR REPORT 2018. READ MORE ABOUT THE REPORT HERE.           OR CLICK BELOW TO DOWNLOAD THE FULL REPORT