As new global funding programs that aim to harness private sector investment start to take off, the United Nations launched its own $5 million Social Impact Fund last September. The Post’s Kali Kotoski sat down with Jenny Chow, COO of Shanghai Pudong Development Bank and an adviser to the UN fund, to discuss its potential.

What is the Social Impact Fund?

The UN Social Impact Fund is trying to leverage the economic value of social impact projects. My role with the program is to advise the first donor into the fund and help them to set up and structure their investment.

How will the funds from the program likely be dispersed?

While that depends on what individual investors are looking for, I would expect most of it to be done through private equity. That is for several reasons.

First of all, it is easier and because private equity funds involve getting shares of a company. Usually that is higher value than debt financing. Plus, I don’t think Cambodian companies or the economy is ready for private sector debt financing.

What are the qualifications for a company to receive funding?

First off the company has to be working and profitable. Basically we need to make sure there are some commercial returns to the social impact investment. While we can’t guarantee profits, we will make some profit projections for our investors.

How do you measure the social impact of an investment?

That is very difficult because there are different projects that will have different measurements, but still there is no unified measurement that can put an economic value on potential investment returns. The problem is that there are just too many different definitions to measure a project. So what we need to do is develop more consistent standards that the UN can apply to different investment classifications. The goal is impact first and profit second.

Why is it important to bring the private sector into social impact programs?

Well, it is good for investors that want to make a difference. And it is also good to have businesses that are not just focused on capitalistic exploitation. What we need is to have capitalism shift toward more long-term solutions.

The fund was launched in September of last year. Has it made any investments?

It hasn’t yet because there are still a lot of challenges in bridging the gap between investors and social impact projects. What the fund really needs to address is creating an objective standard.

Sure, investments into the environment can be good because they are good for the environment, but how do you actually value them economically?

We need to be able to quantify the impact. You can talk about social returns, but that is often a very limited measurement.

Why is this fund looking at Cambodia and where do you see investment potential?

Generally speaking, and because I represent Hong Kong investors, we have to consider China’s One Belt, One Road policy that identifies Cambodia and ASEAN countries as instrumental to its success. We will be largely focused on real estate development programs, but we are not limited to that.

The reason why the Chinese like real estate and infrastructure investments is because the investments are a lot higher and are generally an easier sell. But we can focus on tech and youth entrepreneurship, and possibly package a bunch of start-ups or enterprises into one product that will suit the risk appetite of the investor.

What is Cambodia’s risk profile as being an emerging market?

For risk, we have to take in a lot of factors. One of them is largely the political risks. That is something that is really sensitive for investors. Compared to other developing countries, Cambodia has a really uncertain environment.

I am not saying it is too risky. But generally speaking, we still prefer democratic societies. And if they are not, we have to see a lot of other factors that would support stability.

What Cambodia needs to do is to show investors that it is stable. We need some sort of confirmation.

This interview has been edited for length and clarity.