Sir Ronald Cohen: South Korea joins impact investment “revolution"
Impact investment is gaining momentum across the Asia-Pacific. In February, the Republic of Korea joined the movement by becoming the 17th member country of the Global Social Impact Investment Steering Group (GSG).
The steering group’s chair and “godfather of social investment”, Sir Ronald Cohen, was at the launch of Korea’s new National Advisory Board on Impact Investing. At the event, Sir Ronald highlighted that the launch was important for the future of impact investing in Asia, which was held as part of the Asia Pacific Impact Investment workshop convened with the British Council and the United Nations Economic and Social Commission for Asia and the Pacific.
Sir Ronald said: “Korea is among the pioneers in the region to recognise the opportunity of impact investment as a central approach to harness the power of entrepreneurship and innovation to solve social and environmental issues.
“This movement is truly an evolution in thought and a revolution in means. I am delighted that Korea has joined the revolution.”
“This movement is truly an evolution in thought and a revolution in means. I am delighted that Korea has joined the revolution”
Pioneers Post spoke to Sir Ronald after the event.
You have been in the Republic of Korea for the launch of a new National Advisory Board (NAB) for Impact Finance, how has this come about?
Korea is the 17th NAB and it has come about as a result of [the chair and impact finance expert] Professor Chul Woo Moon working to set up the board over the past couple of years. The reason for this is that Korea is becoming increasingly interested in using impact investment to tackle social issues. The aim of the board is to bring together all of the interested parties in achieving this.
How big a role has the Korean government taken in supporting the development of the Korea NAB? Who else has been involved?
The Korean government has been supportive. Parliamentarians came to the inauguration and we had several meetings with government officials whilst I was there to talk about how different social issues might be tackled through impact investing. The issues on officials’ minds are the ageing population and unemployed youth.
The Korea NAB is going to focus on establishing on a wholesale impact fund. What will this aim to achieve?
The provider of wholesale impact finance will aim to fund a lot of organisations and initiatives which address a range of social issues in an outcomes-based way. The framework for this is just beginning, but the government has made $50 million available, which needs to be matched with equal amounts from the private sector.
What can Korea learn from other countries’ experiences in setting up wholesale funds, including the experiences of Big Society Capital in the UK?
In terms of learning from other countries’ experiences, Big Society Capital is now five years old, and it has funded more than 40 impact organisations, many with very significant amounts of money. This experience is very relevant to Korea. We expect there will be continued exchange of information with Big Society Capital.
From my visit – where I had the opportunity to meet some of the organisations which are involved with impact investing – it seems to me that impact investment is catching on
What is the existing social enterprise/social entrepreneurship landscape like in Korea and how will the Korea NAB engage with it?
From my visit – where I had the opportunity to meet some of the organisations which are involved with impact investing – it seems to me that impact investment is catching on. Most of the organisations I came across were profit with purpose [rather than not-for-profit].
So, in terms of the work of the NAB and the new wholesale provider, it’s not specifically focussed on the not-for-profit sector?
It is both. In the UK, Big Society Capital is mainly not-for-profit because the legislation that brought it into existence focussed mainly on the not-for-profit sector. In Korea, it is more evenly balanced.
Do you think that is a more positive starting point?
I think five years on, we have seen the development of profit with purpose tackling major social issues at scale. Social entrepreneurship is being defined today without restriction in terms of corporate structure, but by the social issue being tackled. I think it is a more appropriate starting point.
I understand that the wider Asia-Pacific region is a priority area for the Global Steering Group, could you tell me more about steering group’s activities in the region and the challenges and opportunities?
Broadly speaking, we are interested in helping any country which is interested in pursuing impact investment. There is a lot of interest in the Asia-Pacific region and across the whole of Asia. In the meeting we had in Korea, there were people from 13 countries.
Beyond the launch of the Korea NAB, what other big developments can we expect to see in impact investing in 2018?
It is very difficult to scale social impact bonds without having independently managed, outcome payment funds so we are endeavouring to catalyse a billion-dollar outcomes payment fund for education in India and a billion-dollar outcomes payment fund in Africa and the Middle East. This is money from us, from official aid, philanthropic sources and corporate CSR allocations which pays out on the achievement.
This would aim to attract $700 million of investment into development impact bonds and social impact bond funds, which would seek out entrepreneurs with innovative ideas about improving attainment levels at every level of education. The reason I think this is important for the field as a whole is that its emphasis on measurement of outcomes is crucial to the achievement of significant impact. And these outcome funds would bring home much more widely the shift to optimising three dimensions instead of the traditional two dimensions of risk and return. Optimising instead risk, return and impact.
As part of its commitment to doing good by doing well, the GSG will soon be announcing a partnership with the British Council to bring people together through art and culture in order to foster social impact.