Developing the social impact market - Four insights into the Taskforce's work
Saving and investing for positive social impact is still a relatively small part the UK investment landscape. However, there is strong and growing demand for opportunities for people to express their social views in the financial choices they make. For the social impact market to achieve its potential, we have identified four key areas of focus—the development of investment opportunities at scale, nurturing of competence and confidence, better reporting of non-financial outcomes and making it easier to invest. Work to achieve these is ongoing and in recent months we have seen exciting and meaningful progress.
The UK government in 2016 set up an independent advisory group to help the investment industry engage better with individuals. The aim was to help stakeholders support people in targeting social outcomes through their investment decisions. As chair of that group I am pleased of the progress made by hundreds of industry participants, often on their own time, who have offered their energy, insight and dedication. Among those are senior members of our four key working groups — Jamie Broderick, Will Goodhart, Olivia Dickson, and Amanda Young—who I was delighted to welcome to a Taskforce conference last month in London. Below, in short individual blogs, each offers vital insights into their work.
Elizabeth Corley, Chair, Social Impact Investment Implementation Taskforce.
Working Group 1: Investing at scale
Jamie Broderick – former CEO UBS Wealth Management (UK)
There is so much going on to enable the kind of scale we anticipate will eventually be necessary as social impact investing continues to grow. It’s impossible in a short blog to detail them all, but I can briefly highlight three key areas of focus. The first is crowd funding, which overlaps with social lending, charity lending and community investment. Crowdfunding is not currently a significant financing option for social organisations but we believe it can become so and could be the key to democratizing social impact investment. Another important area is taxation. Community Investment Tax Relief and Social Investment Tax Relief are excellent initiatives but need to simplified. Finally, we feel that the broader aim of increasing visibility and building scale could be supported through procurement processes, especially by government, in which social impact is expressly included.
Working Group 2: Competence and confidence
Will Goodhart - Chief Executive of the CFA Society of the UK
We have been working hard to implement some 14 recommendations relating to competence and confidence that came out of last year’s advisory group report. We are collaborating with financial industry regulators, aiming to ensure they continue to hone their capabilities and eventually embed social impact in guidance, rules and policies. With the investment community, we are taking steps to encourage integration discussions around social impact into business as usual, and we are working with the FCA and FOC to ensure a joined-up approach is property communicated. We are also exploring the potential development of a competency framework, so that financial professionals can obtain the qualifications they need to support the market’s growth. In a separate approach to building confidence in the asset class we are collating and analysing return histories for different types of investment.
Working Group 3: Better reporting
Olivia Dickson - Non-executive Director of the Royal London Group, and a Non-executive Director of the Financial Reporting Council.
The great news is that last year’s report is already starting to change things. The Financial Reporting Council has accepted the report’s high-level recommendations and has committed to including consideration of reporting on impact in its ’future of corporate reporting’ project. In government we have seen the Department for Business, Energy and Industrial Strategy commit to lead a review of corporate reporting of social and environmental issues. In June, the Department laid before parliament Section 172 (Companies Act) legislation which required companies to report on their consideration of social and environmental issues. Still, we have a way to go. We lack a shared language for talking about social impact and we have no standard way to define and measure impact. Impact measurement is context- specific, for example, being very different in mental health than in housing. On the basis of our ‘call for evidence’ we intend to publish a report on the Landscape for impact reporting and for this to create the foundation for concrete proposals that can be taken forward in these areas.
Working Group 4: Making it easier for people to invest
Amanda Young - Head of Global ESG Investment Research, Aberdeen Standard Investments
To broaden access to social impact investing, we are focused on raising awareness in the consumer and retail markets. We have seen some excellent initiatives, for example from Social Investment Scotland, which recently leveraged Social Investment Tax Relief and the Enterprise Investment Scheme, to launch a new fund aimed at stimulating social entrepreneurship. We need to continue building on these kinds of efforts. We want to make it easier for pension trustees to get on board and are working closely with the Pensions and Lifetime Savings Association to looking closely at what trustees need. A really interesting area of work is also focused on data, and how we can use it to engage more effectively with people and empower them, starting from a social issue they care about rather than the financial product itself. And critically, we need better education and guidance, so we are currently collaborating with the Investment Association to develop a view of the product landscape. If we can build confidence and raise awareness we expect the choice of investments – and willingness to invest – will continue to grow.
If you would like more information about the Taskforce or find out how to get involved you can contact the secretariat via email.