The Implementation Taskforce is a focal point for engagement and cohesion around these issues to ensure as many recommendations of the Advisory Group come to fruition and that sustained industry engagement continues at sufficient pace.
There are already a number of ongoing, active contributors focused on growing social impact and sustainable finance in the UK. These include:
The UK National Advisory Board on Impact Investment to the Global Impact Investment Steering Group: In 2013, under David Cameron’s presidency of the G8, the Prime Minister launched an independent Social Impact Investment Taskforce with the objective of “catalysing a global market in impact investment”. The Taskforce created National Advisory Boards for each member state which continued when the Social Impact Investment Taskforce was expanded into the Global Impact Investment Steering Group in 2015.
Accounting for Sustainability: The Prince’s Accounting for Sustainability Project was established by HRH The Prince of Wales in 2004 “to help ensure that we are not battling to meet 21st century challenges with, at best, 20th century decision making and reporting systems”. A4S aims to inspire action by finance leaders to drive a fundamental shift towards resilient business models and a sustainable economy.
This Taskforce will aim not to duplicate what these groups do but rather co-ordinate development, celebrate and champion best practice across our five key areas and commit to quality, clarity, authenticity and integrity as the market grows.
MAKE IT EASIER FOR PEOPLE TO INVEST
The relatively slow rate of growth of the social impact market led the Financial Conduct Authority in 2016 to call for input on whether regulatory barriers had impeded its development. A few months earlier the government had asked the Law Commission to look into pension funds’ consideration of social impact when making investment decisions. In both instances, a number of relatively minor impediments were identified, but the overall finding was that the obstacles were primarily structural and behavioural, suggesting efforts to build awareness around social impact investing will be useful in promoting the market’s growth.
If the social impact investment market is to achieve its potential, investors must also be confident investments will perform in line with expectations. Communications materials and labels can be useful tools to build on the existing narrative around ESG investing and its increasing mainstream success, while public relations efforts could help journalists engage with the topic. Journalist feedback shows that articles on social impact investing would best sit in the personal finance, money, investing, and finance and economic sections of publications.
This work is led by Amanda Young, Head of Global ESG Investment Research at Aberdeen Standard Investments
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. However, investors must be confident investments ‘do what they say on the tin’, based on insight into investment targets and their performance. Equally, 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.
Efforts to improve education will help drive the market’s expansion, allowing more issuers to raise social capital, more intermediaries to structure social capital into investment products and more advisers to assess social capital investments for their clients.
This work is led by Will Goodhart, Chief Executive of the CFA Society UK.
DEVELOP BETTER REPORTING OF NON FINANCIAL OUTCOMES
There is a need for a common set of standards and language through the social impact investment chain. From investment management 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.
Following a call for evidence, in October 2018 the working group published the Better Reporting Landscape report. The report captured the fragmented impact reporting landscape identifying 16 different reporting approaches as well as several trends which have the potential to drive coalescence in impact reporting.
This work is led by Olivia Dickson and Paul Druckman, Non Executive Directors of the Financial Reporting Council.
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.
Challenges include giving enterprises and companies the tools they need to fund effectively and aiming for efficient capital formation, which can help bridge the gap between the sometimes modest requirements of social organisations and the larger scale needs of the investment community.
This work is led by Jamie Broderick, former CEO of UBS Wealth Management (UK).
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.
The advisory group for this report is committed to building on the valuable work already undertaken, and plans regular reviews of progress across the various initiatives recommended here, alongside increased collaboration with parallel efforts, hopefully creating a whole that is greater than the sum of its parts.
This work is led by the Implementation Taskforce Steering Group.