UK risks losing place at vanguard of impact investment movement

The UK risks falling behind as a leader in impact investment unless significant new actions are taken.

This is the warning contained in a report published this week by a group of leading figures in the UK impact investment movement. The report, The Rise of Impact: Five steps towards an inclusive and sustainable economy, was published this week by the UK National Advisory Board on Impact Investing.

“The UK has long been a leader in this emerging field,” writes Michele Giddens, co-founder of Bridges Fund Management and chair of the board (and one of the WISE100 women announced last week), in the introduction to the report.

“But in recent years, some of the big leaps forward have happened elsewhere. We want the UK to remain in the vanguard of this movement.”

The UK has been recognised as a global leader in impact investing – investing for social and financial returns – since Gordon Brown’s Labour government commissioned the first UK Social Investment Taskforce in 2000. The world’s first social impact bond was launched in the UK in 2010, and Big Society Capital, the world’s first social investment bank, was also created in the UK in 2012.

Since then, Japan has launched its own social investment wholesale bank, Brazil's government is developing a national policy for social finance and a group of European institutional investors have committed to investing in line with the UN's Sustainable Development Goals. 

This report provides a vision and a plan for putting purpose at the heart of our economy

The report highlights that with £150bn currently in impact investments, the UK has “one of the largest and most vibrant impact economies in the world” which is “poised for growth”.

The report’s authors state: “We estimate that we could influence an addition £3trn to incorporate impact to some degree over the next decade, of which £300bn could be channelled into investments that are helping to directly address critical social and environmental challenges.”

They add that this could establish the UK as a global hub for impact investment, attracting talent and capital, and “strengthening the UK’s place in the world in a post-EU era”.

A jump-start for investment in deprived areas

The report suggests that more investment should be directed into parts of the UK that are falling behind, jump-started by a £2bn Inclusive Economy Catalyst Fund established by the government.

It recommends “Pensions with Purpose” should be developed by defined contribution pension schemes to help savers invest in line with their values.

The government should place more value on gaining social value with its £240bn public procurement budget, the report says.

Sacha Romanovitch, board member and CEO of Grant Thornton, said:

“Imagine a world where everyone could say ‘I know where my money goes and the positive impact it has – as a taxpayer, saver, consumer’. A world where investing with impact is not at the expense of financial return.

“This report shows this is already emerging and provides a vision and a plan for putting purpose at the heart of our economy. When this happens, we’ll build markets people trust and, in turn, that will drive innovation. We’ll have environments that enable business and people to flourish. We’ll have dynamic organisations, growing sustainably.  We’ll have a vibrant economy.”

The UK National Advisory Board on Impact Investing is part of the Global Impact Investment Steering Group of 15 member states plus the EU, which is chaired by impact investment ‘godfather’ Sir Ronald Cohen.