CONVERTIBLE DEBT Loan that can be converted into an equity investment at a future date or under certain circumstances. Upon conversion, the value of the debt is used to buy shares at a pre-negotiated, typically discounted price.

EQUITY Ownership of stock in an enterprise, purchased either directly from the company or from another investor. Equity investors may receive voting rights and/or board seats.

GRANT Financial award given to an organization to address a stated goal with no repayment obligation.

GUARANTEE Binding promise made by one individual or organization to cover the debts of another individual or organization in the event they cannot repay a debt.

LINE OF CREDIT Credit facility that can be drawn upon and replenished, typically to fund working capital. The line can include commitment fees as well as interest rate charges.

PREFERRED EQUITY Preferred equity investments give the investor a higher claim to dividends or asset distribution than other equity positions.

PURCHASE ORDER FINANCE Loan made with an incoming receivable, such as a customer order or grant, used as collateral. Repayment occurs when the receivable is collected.

RECOVERABLE GRANT Grant made by nonprofit organizations or donors that, under predetermined circumstances, becomes repayable, potentially with interest.

ROYALTY FINANCE Loan with repayment obligations based on a percent of revenue.

SAFE Simple Agreement for Future - Equity that provides rights to an investor for future equity without determining a specific price per share until a later priced round or liquidity event occurs. Often used with start-ups.

TERM LOAN Loan that is repaid in regular payments over a set period of time, usually greater than one year. Term loans can have a range of interest rates and amortization schedules.

The following is a list of key words and definitions you should learn.

Boston Impact Initiative (BII) has created this list in the form of a deck of 121 cards to teach you the terminology and definitions common to the impact investing space. These cards can be used in group settings or by the individual to learn about impact investing and structuring deals. Check out the definitions and the instructions on how to play.

Please reach out to BII to get permission to use the cards in a group setting. BII can facilitate a training session. Email them at - info@bostonimpact.org

Here are the game's instructions. Follow this link to learn more about the game - https://bostonimpact.org/card-deck/

CO-LENDING AGREEMENT Agreement made between two or more lenders concerning how they will jointly interact with the same borrower.

CROWDFUNDING Process of soliciting capital from the general public, including non-accredited investors, without the use of a registered underwriter, often leveraging internet platforms.

DPO Direct Public Offering is a structure in which a company offers stock directly to the general public, including non-accredited investors, without the use of a registered underwriter.

EQUIPMENT FINANCING Loan made to an enterprise with the purpose of purchasing equipment.

ESCROW ACCOUNT Contractual arrangement in which a third party (escrow agent) receives and disburses money or property for the primary transacting parties, based upon agreed conditions.

ISA Income Sharing Agreement is a debt repayment structure based on a percentage of future or current income for a discrete time period. Most commonly applied to student loans.

IPO Initial Public Offering is a structure in which a company uses an underwriter to establish an initial value for stock ownership of the company, then sells the stock on public exchanges to investors.

MORTGAGE Debt obligation secured by real estate owned by the borrower.

PARTICIPATION AGREEMENT A lending institution agrees to fund a portion of a larger loan commitment and allow a lead funder to administer the loan.

PAY-FOR-SUCCESS Deal structure in which repayment terms are based on the achievement of pre-established, observable metrics, usually defined by social impact. Social Impact Bonds are an example.

RECOVERABLE GRANT Grant made under predetermined circumstances that can become repayable, potentially with interest. Recoverable grants are different from loans in that they are forgivable.

ROYALTY FINANCE Form of debt in which lenders agree to be repaid based on an agreed upon formula, usually a percentage of revenue (a royalty).

SELF-LIQUIDATING EQUITY Form of structured exit in which an equity position is repaid using a pre-determined formula (such as available free cash flow) up to a cap.

SPV Special Purpose Vehicle is a standalone legal entity formed for the purpose of financing a specific project or business operation, often on a temporary basis.

STRUCTURED EXIT Pre-negotiated arrangement for an investor to sell a debt or equity position at a later date to realize an investment gain. This replaces traditional exits in which the investor is paid out when the company is acquired.

TAX CREDIT STRUCTURE Transaction in which the investor pays in advance for expected future tax credits related to project finance.

VARIABLE DIVIDEND VEHICLE Form of equity in which shareholders receive distributions (dividends) of available excess cash based on an agreed upon formula.

ANCHOR INSTITUTION Nonprofit institution such as a university or hospital that once established tends not to move location. It can have significant impact in its local community via its investment, procurement, hiring and philanthropic practices.

ACCREDITED INVESTOR Investor with annual income above $200k ($300k for couples) or minimum net worth of $1M. An organization may be accredited if it has a minimum of $5M in assets or if its owners are accredited investors.

ANGEL INVESTOR Individual who provides financial support and strategic advice to entrepreneurs launching early stage enterprises, usually in exchange for convertible debt or equity. Angels often form organized collectives to identify investment opportunities.

BANK Regulated financial institution with access to the Federal Reserve. It is able to offer low interest rates, but primarily to organizations with profitable financial histories.

CDC Community Development Corporation focused on revitalizing its local geography, typically low-income, underserved neighborhoods that have experienced significant disinvestment.

CDFI Community Development Financial Institution provides affordable capital (primarily lending) to disinvested people and communities. Capital comes primarily from grants and low-interest loans from foundations, the government and banks.

CHARITABLE LOAN FUND Lightly regulated nonprofit that raises debt and grants from accredited and non-accredited investors to finance organizations that advance a charitable mission. Exempt from federal securities offering registration and in most states.

CORPORATE PHILANTHROPY Financial donations or in-kind support from corporations. Corporations may be inclined to support issues aligned with their corporate interests.

COMMUNITY FOUNDATION Tax-exempt charitable organization that distributes grants with a mission focus within a specific geographic area. Unlike private foundations, they have a broad, public donor base.

CREDIT UNION Financial cooperative owned and controlled by its depositors and providing its members with traditional banking services, including credit.

DIVERSIFIED BUSINESS FUND Fund whose investing activities are ancillary to some other purpose, such as being an incubator, accelerator or co-work facility.

DONOR-ADVISED FUND Charitable giving vehicle administered by a public charity created to manage donations on behalf of organizations, families or individuals. Donor retains advisory privileges over how money is distributed.

FAITH-BASED INSTITUTION Religious organization that may incorporate its values into decision-making criteria for its investing, grantmaking and procurement practices.

FAMILY OFFICE Entity established by wealthy families to manage their wealth and provide other services, such as tax and estate planning.

GOVERNMENT Direct, small business support from government may take the form of grants, low-interest loans, guarantees, technical assistance and policy programs effecting procurement and diversity practices.

IMPACT INVESTING FUND Institutional investors that evaluate investments based on financial and non-financial return objectives.

NON-ACCREDITED INVESTOR Investor with annual income below $200k ($300k for couples) and net worth less than $1M. They are frequently prohibited from making direct investments, with the exception of DPOS, crowdsourcing platforms and community funds.

PRIVATE FOUNDATION Tax-exempt charitable foundation that receives funding from one or a few high net worth individuals, families or corporations.It must grant 5% of its assets each year while a public charity may not.

REGISTERED INVESTMENT ADVISOR Person or firm that is registered with the State or Federal Securities Exchange Commission to provide investment advisory services to the public.

VENTURE CAPITAL Investors using pooled private capital to invest in early stage businesses. They typically take on higher risk, seek high returns and a 3-7 year exit. They may seek a controlling interest and assume an active role in governance.

B-CORP For-profit entity that is legally organized to be accountable for both profit and impact objectives.

COMMUNITY LAND TRUST Nonprofit corporation that develops and stewards affordable housing, community gardens, civic buildings, commercial spaces and other community assets.

EARLY STAGE ENTERPRISE Enterprise that has not yet achieved financial sustainability and may not have ready access to traditional financing given its limited operating history.

FOR-PROFIT ENTITY C-Corp, S-Corp, LLC that seeks to increase the value of ownership for its shareholders. For-profit entities may state impact goals, but are not held accountable to them by their incorporation.

GROWTH ENTERPRISE Enterprise with a fully devel oped business model seeking to grow its customer-validated value proposition. Revenue growth may come at the expense of profitability, requiring additional external funding.

NON-PROFIT ENTITY Tax-exempt organization that works for the public interest. All assets and income from the nonprofit are reinvested into the organization or donated.

OTHER COOPERATIVES Values-driven enterprise owned and governed collectively. Consumer coops buy goods and services together. Producer coops process and market products. Retail coops pool purchasing power. Housing cOop members own building shares rather than individual units.

SMALL/ MEDIUM ENTERPRISE (SME) Enterprise with typically fewer than 500 employees.

START-UP New enterprise that intends to grow beyond the founder and may not yet have earned any revenue.

WORKER-OWNED COOPERATIVE Values-driven enterprise that is owned and governed by its workers. Worker-owners participate in profits, oversight and management of enterprise using democratic practices.

AUM Assets Under Management is the total value of all deployed and undeployed fund assets, excluding operating cash.

BUDGET Projection of the expected inflows and disbursements of a fund, project or enterprise, used and modified in an ongoing way as an operating management tool.

CASH BALANCE Current amount of cash on hand.

COLLECTION POLICY Policy describing the fund's approach to collecting past due debts and recovering losses from collateral liquidations.

COVENANT TRACKING Report tracking financial and impact covenants, which are legally binding agreements made between the fund and an enterprise regarding expected financial and impact performance.

CREDIT RATING REPORT Report assessing the probability of repayment for each investment in a portfolio, based on historical and projected data and judgment.

DEPLOYED ASSET REPORT Report describing each investment the fund has made, including investment type, outstanding balance, credit score and repayment timeline.

DURATION ANALYSIS Dollar-weighted average time of asset return and liability obligations.

EQUITY VALUATION Projection, typically created on an annual basis, that assigns value to the ownership of a for-profit enterprise. Used to determine whether equity investments have appreciated or been impaired.

FINANCIAL COVENANT GUIDELINES Policy providing guidance about which financial covenants should be included in final investment documents.

FINANCIAL REPORTING Series of financial statements in line with accounting principles as required by law (GAAP) and management decision-making needs.

FUND POSITION REPORT Report used to monitor the continued financial viability of a fund with respect to its past and future obligations and investments.

IMPACT COVENANT GUIDELINES Policy providing guidance about which impact covenants should be included in final investment documents.

IPS: DEPLOYED ASSETS Investment Policy Statement for the fund's stated goals and requirements for making investments, including expected risk, return, asset mix and special constraints.

IPS: UNDEPLOYED ASSETS Investment Policy Statement for the fund's stated goals and requirements for how to invest undeployed assets in alignment with return, risk, liquidity and other non-financial expectations.

PRO FORMA Forecast of financial prospects of a fund, project or enterprise, typically used for soliciting capital.

RESERVE MANAGEMENT POLICY Policy for the fund's stated goals and requirements for how to determine required and discretionary reserves relative to current and future expected bad debt.

UNDEPLOYED ASSET REPORT Report describing the interim investment program for the fund's undeployed assets, and comparison to the borrowing costs to raise those funds.

YIELD ANALYSIS Analysis that compares a fund's average yield of assets against the average costs of its liabilities.

ANCHOR INSTITUTION Nonprofit institution such as a university or hospital that once established tends not to move location. It can have significant impact in its local community via its investment, procurement, hiring and philanthropic practices.

ANGEL INVESTOR Individuals who provide financial support and strategic advice to entrepreneurs launching early stage enterprises, usually in exchange for convertible debt or equity. They often form organized collectives to identify investment opportunities.

BANK Regulated financial institutions with access to the Federal Reserve It is able to offer low-interest rates, but primarily to organizations with profitable financial histories.

BUSINESS ASSOCIATION Network of professionals from various industries who exchange expertise and relationships to advance their field.

CDC Community Development Corporation focused on revitalizing its local geography, typically low-income, underserved neighborhoods that have experienced significant disinvestment.

CDFI Community Development Financial Institution provides affordable capital (primarily lending) to disinvested people and communities. Capital comes primarily from grants and low-interest loans from foundations, the government and banks.

CHAMBER OF COMMERCE Voluntary association of businesses in different trades and industries whose purpose is to advance shared business interests in their community.

CHARITABLE LOAN FUND Lightly regulated nonprofit that raises debt and grants from accredited and non-accredited investors to finance organizations that advance a charitable mission. Exempt from federal securities offering registration and in most states.

COMMUNITY ORGANIZATIONS Civic, grassroots and community-based organizations are formal and informal networks of community members that can be mobilized to advance educational, charitable, cultural, political or economic development goals.

CORPORATIONS Large companies that may be inclined to direct philanthropic or in-kind support to social issues aligned with their corporate interests.

CREDIT UNION Financial cooperative owned and controlled by its depositors and providing its members with traditional banking services, including credit.

DIVERSIFIED BUSINESS FUND Individuals who provide financial support and strategic advice to entrepreneurs launching early stage enterprises, usually in exchange for convertible debt or equity. They often form organized collectives to identify investment opportunities.

FAITH-BASED INSTITUTION Religious organization that may incorporate its values into decision-making criteria for its investing, grantmaking and procurement practices.

FOUNDATION Public, private and community foundations are tax-exempt charitable organization that distribute grants with a mission focus.

GOVERNMENT Direct, small business support from government may take the form of grants, low-interest loans, guarantees, technical assistance and policy programs effecting procurement and diversity practices.

INCUBATORS & ACCELERATORS Organizations that support early-stage businesses by offering strategic advice, technical assistance, co-work space and/or financial support.

MENTOR NETWORK Network designed to match experienced business and nonprofit leaders with emerging leaders. Mentoring may include leadership coaching, strategic guidance and technical advisory support.

MUTUAL AID NETWORK Network or platform designed to enable voluntary reciprocal exchange of resources and services for mutual benefit in a community.

NGO Non-governmental organizations are mission-based and tax-exempt nonprofits that rely on grants, and sometimes earned income, to advance a social good.

PRIVATE EQUITY Funds and individual investors that directly invest in private companies. They may seek to take managerial control and grow the business to sell for profit.

TA PROVIDER Technical Assistance Providers are individuals and organizations offering practical, strategic business advice to enterprises. These services may be paid for by a third-party.

VENTURE CAPITAL Investors using pooled private capital to invest in early stage businesses. They typically take on higher risk, seek high returns and a 3-7 year exit. They may seek a controlling interest and assume an active role in governance.

WORKER SERVICES AND LABOR Organizations representing the interests of a workforce, whose endorsement and bargaining power depend on the labor climate in the community.

ANTI-DISPLACEMENT PRACTICES Require that real estate investments do not displace local residents and businesses, thereby contributing to accelerated speculation and gentrification.

COMMUNITY EMPLOYMENT Require a percentage of jobs to be created and sustained from target populations (e.g. returning citizens, immigrants and refugees, neighborhood workers, etc.).

COMPENSATION RATIO Cap the difference in total compensation between the highest paid and lowest paid workers in an enterprise.

DISTRIBUTED OWNERSHIP Require a percentage of enterprise ownership to be distributed to workers.

GENDER EQUITY Designate a percentage of board seats, management and/or staff to be filled by women based on recruiting and retention efforts.

LIVING WAGE Require wages to approach, meet or exceed a calculated wage target that covers the cost of living in the enterprise's Community.

PROCUREMENT: EQUITABLE Require a percentage of supplier relationships or dollars to come from enterprises owned by people of color and/or women.

PROCUREMENT: LOCAL Require a percentage of supplier relationships or dollars to come from local providers.

RACIAL EQUITY Designate a percentage of board seats, management and/or staff to be filled by people of color based n recruiting and retention efforts.

WORKPLACE DEMOCRACY Require the creation or maintenance of internal systems that distribute information and decision-making power among staff (e.g. cooperatives governance, participatory decision-making, open book accounting, etc.).

COMMUNITY ENGAGEMENT How engaged is the enterprise in its local community?

ECOLOGICAL STEWARDSHIP What is the ecological footprint of the enterprise? What steps is it taking to improve its positive impact or mitigate its negative impact?

EQUITABLE OPPORTUNITY How does the enterprise create opportunity for people who have been impacted by racial, social and economic inequality? How many quality jobs does it create? What is the composition of management and leadership?

EQUITABLE OWNERSHIP Who has the opportunity to own this enterprise? How is ownership structured to create meaningful, social impact?

LOCAL CONSUMPTION To what extent does the enterprise create products and/or services for the local community?

LOCAL PRODUCTION How much of the enterprise's supply-chain is sourced locally? How much production takes place locally?

NEGATIVE SCREENS To what extent does the enterprise earn revenue from business sectors that the fund has screened out (such as fossil fuels, private prisons, defense sector, etc.)?

WORKPLACE DEMOCRACY How democratic or participatory is the enterprise? Do workers have a voice? How is information and decision-making distributed?

Title: How do we finance a better future?

Date and Time: Thu, 21.10; 2-4.30 pm CEST.

Session Description: Join oikos International for a workshop on using the financial system to solve climate change's global challenges. We'll work together and discuss the available financial tools. The workshop will use the newly created oikos Sustainable Finance Toolkit and Career Map. This platform has been built to help students and researchers explore the exciting world of Sustainable Finance, ESG (Environmental, Social, and Governance), and Impact Investing. Come learn how our financial system can be used for good

Agenda:

1. Welcome and Introductions (5min)

2. Presentation of the Toolkit (5mins)

3. Carbon Markets and Group Discussion (10min)

4. Breakout Groups - Challenges and Opportunities (20min)

5. Integrated Capital Game (30min)

6. Check-out (20min)

Facilitators:

• Darija Miletic

• Deniz Nam

• Sophie Lockhart-Smith

• Stephen Snider

• Valentin Dal Zotto

Participants:

Please fill out this registration form. We'd love to stay in touch with you after the workshop.

Purpose of the Toolkit:

This toolkit is a platform to help you enter the field of sustainable finance by providing you with knowledge, skills, and access to the community.

You can join our Sustainable Finance Squad to help us to build this toolkit with resources, interviews, trainings, and more.

• Share the research you are working on

• Explore topics of interest

• Network with the industry

What is Sustainable Finance?

Sustainable Finance describes a broad area within the world of finance. We can think of it along a spectrum of activity.

It can get quite complicated...

It is helpful to think of it in terms of Risk, Profit, AND Impact. Where Impact is the additional of ESG (Environmental, Social, and Governance).

BNP Paribas has a quick article to explain all this further - Click Here. And you can use our toolkit for more information. Check out this page:

Methods to Implement Sustainable Finance

There are a lot of good blogs out there to help you. Here is one.

• Exclusionary Screening

Avoid investing in companies in industries that are deemed as unethical e.g. tobacco, weapon, gambling. This strategy is sometimes referred to as Socially Responsible Investing (SRI) and is the oldest form of sustainable investing that first became popular in the 1980s

• Best-in-Class Screening

Also referred to as positive screening, this strategy is based on selecting companies with better or improving ESG performance relative to their peers.

• ESG Integration

Consider ESG risks and opportunities as part of the investment process alongside financial analysis. Some examples are adjusting a company’s financial forecast or cost of capital based on its ESG risks.

• Thematic Investing

Invest in themes that are specifically related to sustainability such as clean energy, carbon transition, education, healthcare.

• Active Engagement

Exercise ownership rights through direct engagement with companies. Some examples are voting in annual general meetings, meeting with company representatives, filing a shareholder resolution.

• Impact investing

Investments are made with the intention to generate positive and measurable impact alongside a financial return.

There are many misconceptions that research is changing.

Carbon - A Key Piece to the Puzzle

Will finance really ever be sustainable unless we price in externalities?

• Understanding carbon and other emissions is a key piece of knowledge future finance practitioners should have

• Reporting and ESG frameworks are grappling with how to measure and price Scope 1, 2, and 3 Emissions

• Analysis of carbon and the need for a price on carbon is going mainstream

Why do we need a price on carbon?

• healthcare costs from pollution

• heatwaves and droughts

• damage to property from fires, flooding, and sea-level rise

• a choice - move to greener technologies, or continue polluting and pay

• capital markets will compare companies’ true cost of capital

"While no one would suggest we immediately stop driving, flying, or using steel, the sooner we admit these activities come with a cost, the better."

Steve Waygood, Aviva Investors, Chief Responsible Investment Officer

Time for an Activity

The Carbon Literacy Project is a very useful training and is from the University of Nottingham Trent. The project has identified the major outcomes that will happen given the impacts of climate change.

We need the world of finance to help with this future.

Will it be a Positive one? or a Trouble one?

• What do you think are the most important issues to address?

• How can finance be used to prevent or facilitate these issues?

Positive Future Cards

Trouble Future Cards

Now Let's Role Play

Choose one of your most important issues and use the following game to discuss that issue.