Two perspectives on the innovation are provided here, from the public and financial sectors. From a public-sector perspective, the innovation will establish a change management vehicle within established institutions with the capability of collaborating with both local and national actors and expertise. The model is also acknowledging the connection between public and private sector, and the need to find cooperative models that incentivise both parties to reach better outcomes and save public expenditures. Most examples of SIBs around the world outsources service provision and thereby techniques for improved outcomes to private organisations (for-profits or non-profits). The model we developed increases the chance for network effects, bringing a wider transformation of the public sector towards strategically supported innovation focusing on better outcomes. Innovation in public sector is not new, but the strength in the SIB model is the systematic approach in defining and focusing on outcomes together with implementation support and performance management, which is often lacking in public sector. In addition, the use of carefully designed P4P contracts between involved actors is a powerful tool to align incentives.

The external investment is important for risk sharing and not least to focus all involved parties to work towards improved outcomes. From a financial perspective, a sustainability bond with a SIB component is something entirely new. While SIBs have been proven useful to drive innovation and focus on outcomes in the public sector their overall impact has been limited due to the size of contracts. At the same time, the rapid development of the green bond market shows that the investors are interested in impact investing, once the issues of complexity and scale have been overcome. The SBIR model provides the basis for an innovative financial instrument and investment platform to finance both preventive and early intervention projects in various social domains together with larger social infrastructure investments. This allows for the instrument to be scalable and attractive to a wider and larger group of potential investors, including institutional investors, who have not considered SIBs as an investment opportunity until now. The SBIR is therefore a structured product combining the elements and security of a green bond with the opportunity for slightly higher financial returns coming from the SIB component.

The project team is now working together with involved actors to implement the innovation and make it operational by April 2018. The implementation phase includes the following key components: - Working with the seven participating local authorities to perform analysis and prepare for a final decision to be included in the SIB (decision deadline end of November 2017). This includes analysis of sick leave patterns to verify the business case locally for authorities that were not part of the initial project and procuring the part of the intervention that will be provided externally.

- Finalising the P4P contracts between investors and the project organization and the project organization and local authorities

- Preparing the formal decisions at SALAR and RISE to set up the joint venture (preliminary known as the Project organization)

- Setting up the financial instrument and defining a social infrastructure investment

- Investor dialogue

The path to this stage in the innovation process has required utilization of accumulated knowledge in several fields. This includes experience from the first Swedish SIB in Norrkoping, from working with innovation and development in local government, financial markets and financial instruments. An important source of inspiration for parts of the model has been through contacts with the Finnish innovation agency SITRA and with Social Finance in the U.K. The fundamental driver for developing this innovation comes from experience of the challenges for the public sector when it comes to reaching better outcomes, and a belief in the potential of more stringent intervention logic as well as implementation and evaluation support as means to that end. The methodology to develop the innovation was to put together a team of different competences and to work iteratively under a tight time frame with clear project management to keep up the pace. The results of the pre-study has been presented in conferences and video presentations as well as through written reports. As the project enters the next phase and becomes operational, the results will be spread continuously through relevant channels. The aim is to both address professionals and policy makers. Through a Nordic informal SIB network and other European as well as international contacts, it will be possible to spread the results to an international audience.

The project that resulted in the innovation was led by SALAR and the EIB but also included Kommuninvest, RISE and consultancy firms Lumell Associates and Impact Invest Scandinavia and the local authorities Botkyrka, Kungsbacka and Nynashamn. Each party contributed with its specific competence in a truly complementary manner. SALAR was key in communicating with local authorities and regions, while the EIB and Kommuninvest provide knowledge and advisory support in financial instruments and contacts in financial markets. RISE, as a state-owned network of research and technology organization, took the role as guarantor for robustness of needs assessment, evidence base of services and evaluation model. As a long-time collaborative partner to SALAR, Lumell Associates performed the analyses and acted as co-project managers with SALAR. Impact Invest Scandinavia arranged investor meetings to ensure that the product met market demand and standards.

To ensure approval from various stakeholders both interviews and more in-depth regular dialogues and workshops were carried out. Starting the project, several interviews with researchers, experts and employees were carried out to assure that, primarily the intervention design, rests on the prime current state of knowledge. Throughout the project, regular dialogues with representatives from the occupational health services sector were held. Separately, investor meetings and workshops were conducted. Among the goals of these meetings was to secure interest from parties which will become vital later on. Due to these dialogues, the stakeholders will be very much informed when it comes to finding investors and service providers. Feedback regarding procurement and model design were also considered.

The results and insights from the initial project includes:

- In-depth knowledge of drivers of short term sick leave in three local authorities in Sweden

- Identification of key barriers for institutional investors to make SIB investments

- Decision on (publicly funded) follow-up study in seven health care regions on long-term sick leave with method that mimics the analyses carried out in this project

- Preliminary decision from SALAR and RISE to participate in the establishment of a joint intermediary organisation - Preliminary decision from two institutional investors to participate in the new SBIR

- Preliminary decision from seven local authorities to participate in the new SIB

- Draft documentation for the proposed financial instrument - Draft documentation for the proposed procurement of services from external provides

The results and impacts that are expected going forward includes:

- First large scale Social infrastructure/SIB platform (>€100m) that is backed by institutional investors

- Introduction of new services for proactive sick leave management in the public sector in Sweden

- Lowered sick-leave prevalence and sick-leave costs in seven local authorities in Sweden

- Positive financial outcomes for local authorities, private providers and investors

- A model for testing, evaluating and scaling new interventions with external investment.

The major challenge in this cross-sector project was to balance demands from the public and private sector (i.e. investors from the finance sector and the private welfare companies). This type of cooperation is not common in Sweden and was novel for all participating parties. Apart from adjusting communication and holding common meetings to bridge the differing viewpoints, the key towards solving this issue was to coalesce the two sectors’ approaches and methods to innovation. The private sector are more used to incentives based on profitability. They also have a larger risk appetite and are more experienced in valuing risk. On the other hand, the public sector are more used to incentives based on quality and are less experienced dealing with financial risks and risk valuation. Hence, both approaches to incentives were included in the model to assure both parties of the robustness of the model.

A necessary condition for highly innovative projects of this considerable scale within this sector is to have clear-cut support from well-known institutions within the field. As stated above, the respect within and knowledge of the public sector (SALAR) and financial sector (the EIB and Kommuninvest) gives the project a seal of approval and facilitates all contacts. The inclusion of RISE lends credibility in terms of evaluation of the effects and legitimacy towards the state level. Due to the large scale of this project, it was also necessary to have previously performed smaller pilots in order to establish a track records towards all parties and gaining valuable experience. The SIB in Norrköping was designed and implemented by SALAR and Lumell has been running for two years with thorough evaluation. Lessons from this project has been enormously important when performing this project. The 3 pilot municipalities within this project also served a similar purpose.

As the model is generic, it should be useful for many different social challenges in many countries. Areas that are considered in Sweden includes enhanced education and work place training for immigrants, interventions for the long term unemployed to name a few. Having the intermediary organisation in a national model with a connection to all major stakeholders in national and local government should facilitate both scaling of successful examples and developing interventions in new areas. The financial model is also expected to be useful in many different situations. In contrast to the model of the intermediary organisation, which is adapted to the Swedish context, the concept of a sustainability bond and the methods of creating one are more easily adopted to countries with different and less developed welfare systems.

A key success factor when working in a multi-sector project such as this one is to make sure that the intermediary/project team include competences from all concerned sectors. This team should then constitute a clear core working group, drawing the best from each party’s knowledge and experience. This has been key when putting together all different sector specifics, using and interpreting various language and term and, above all, in order to have factual knowledge deep enough to really grasp the issues. Of course, working together in such a multi competent team is not without complications, as issues with understanding can arise in the team. This is why it is even more important to put in sufficient time in learning to understand each other and each other’s specialist language and terms and expectations. If not, the benefits from the multiple competencies are harder to take advantage of.