The Implementation Taskforce has been charged with bringing the recommendations from 'Growing a Culture of Social Impact Investing in the UK' to life.
In December 2016, the UK government set up an independent Advisory Group chaired by Elizabeth Corley (Vice Chair of Allianz Global Investors) to answer an important question:
How can the providers of savings, pensions and investments engage with individuals to enable them to support more easily the things they care about through their savings and investment choices?
The Advisory Group published their report ‘Growing a Culture of Social Impact Investing in the UK’ in November 2017 making recommendations in five key areas.
Make it easier for people to invest.
Improve deal flow and the ability to invest at scale.
Strengthen competence and confidence within the financial services industry.
Develop better reporting of non-financial outcomes.
Maintain momentum and build cohesion across initiatives.
In March 2018 the Prime Minister commissioned an industry taskforce to progress the recommendations in the report.
The Taskforce is now working on generating a faster rate of innovation in the financial services industry to provide products that give savers and investors the opportunity to make a social impact.
The UK National Advisory Board on Impact Investing (“UK NAB”) and the Implementation Taskforce on Growing a Culture on Social Impact Investing in the UK (“Taskforce”) are pleased to be exploring a joint future in a new organisation for social impact investing in the UK.
Make it easier for people to invest
The relatively slow rate of growth of the social impact market led the Financial Conduct Authority to examine whether regulatory barriers had impeded its development and the Law Commission to look into pension funds’ consideration of social impact. In both instances the overall finding was that the obstacles were primarily structural and behavioural. Efforts to build awareness around social impact investing will be useful in promoting the market’s growth.
Improving deal flow and the ability to invest at scale
The natural starting point in expanding the social impact investment market in the UK is to ensure there are sufficient opportunities to invest. The financial services industry has a key role to play in identifying opportunities supported by government in its capacity as a driver and enabler of social outcomes Efforts to improve education for issuers, intermediaries and advisers will help drive the market's expansion.
Strengthen competence and confidence within the industry
Social impact investment is a relatively new concept that spans financial and social behaviours, and practitioners are on a journey to better understand how the two can be integrated. Investors must be confident investments ‘do what they say on the tin’ and the industry, government and regulators must protect the market’s integrity, so that current and future issuers can rely on it as a source of funding.
Maintain momentum and build cohesion across initiatives
There is significant momentum in the development of the social impact investment market, including rising demand, an expanding range of products and better systems to monitor performance and social outcomes. To encourage the sector to accelerate its progress, stakeholders must commit to taking the necessary steps to embrace the opportunities ahead.
Develop better reporting of non-financial outcomes
There is a need for a common set of standards and language through social impact investment. From reporting on predicted and actual social impact to the information provided by capital raisers to investors, ratings agencies and indexes, consistent and reliable reporting formats are key. The UN’s SDGs are an invaluable resource in creating reporting data elements across a range of social activities.
The Spectrum of Capital
The ‘spectrum of capital’ is a way of mapping the broad range of risk/return strategies in sustainable and social impact investing, from investing for maximum profit to so-called ‘concessionary’ investment – the option that financial return can be traded off for social return. The range of investment objectives goes to the heart of the challenge in formulating a tight definition of social impact investing, and to the confusion among some investors about the level of financial risk involved. Certainly, in early stage social impact investing, as in early stage conventional investing, there is a higher level of risk, and the maturity of an investment will often be a factor in weighing financial against social returns.