Impact Investing Institute’s Sarah Gordon steps down amid ‘fast-closing’ window of opportunity

UK body’s first CEO says relationship-building will be key for her successor, as “activist” institute seeks to up its ambition – and works towards its eventual closure. 

The UK’s Impact Investing Institute will see its first change of leadership since it was founded in 2019, with founding CEO Sarah Gordon stepping down to join the London School of Economics as a visiting professor.

The Institute is in the final stages of recruiting her replacement, with executive director Sarah Teacher and policy and strategy director Bella Landymore appointed interim joint CEOs. Gordon continues as advisor during the transition to a successor.

A former business editor at the Financial Times, Gordon hopes to join LSE’s Grantham Research Institute in the spring of 2023, focusing on mobilising private sector capital for public policy priorities, and on rebuilding trust between journalism and business.

 

Winning the battle

The Impact Investing Institute was created in 2019, with four objectives: to strengthen the market infrastructure for impact investing, increase capital invested for impact, improve effectiveness of that capital, and make it easier for individuals to invest for impact.

A brief outline of the new CEO role, advertised in autumn 2022, said the ideal candidate needed “credibility with financial and social sector decision-makers, and at senior levels of policymaking” and “a balance of intellectual agility and humility in order to build relationships across communities and sectors”. It did not specify a salary. 

I think of conversations I was having in 2019 with people who were just utterly dismissive of impact... and who are now complete converts

In its next phase the Institute would “really need to up the ambition”, such that all investors would seek to deliver maximum positive impact, Gordon told Pioneers Post

“I think of some of the conversations I was having in 2019 with people who were just utterly dismissive of impact even as a concept, let alone would even consider adopting it as an investment approach – and who are now complete converts. So we are winning that battle. But I’d like it to be faster.”

There was “still too pervasive a misconception” that impact investment required sacrificing financial return, she added.

Collaborating with others had been “one of the real joys” of the job, Gordon said, and as a catalyst for some of that collaboration, the Institute had been “very effective”. 

Her successor would need to take a “very collaborative approach to working in our space… and build on the credibility and the reputation that we've established over the last three years to up the ambition over the next three to five years”.

 

Sign of success

The ultimate goal was always that the Institute would one day not be needed, Gordon said. “The best sign of our success will be when the Institute can close.” 

Asked when that might be, Gordon said it depended on how quickly things moved. There was a “window of opportunity”, partly thanks to upcoming UK general elections, planned within the next two years. A possible change of government was “always an opportunity for more radical and ambitious change,” she said.

 But the window was “fast closing”: despite the urgency of the worsening climate crisis, not enough was being done. 

Early on in her new role Gordon told Pioneers Post that a key goal would be persuading pension funds to invest for impact. To date, 17 pension funds, investment consultants and fiduciary duty managers, with over £16.8bn in assets, have signed up to its Impact Investing Principles for Pensions

Our role is not to produce consensus, it's to really drive change

Other milestones include successfully advocating for a green sovereign bond; work to drive more foundation endowment capital to impact; and helping advance place-based impact investing. The government’s Levelling Up white paper, proposing a 5% target of investing in local areas for local government pension scheme funds, had given “a real impetus and momentum” to the Institute’s place-based impact investing programme.

It has also been working on new criteria as part of its Just Transition Finance Challenge, which will help investors to align products and investments to a ‘just transition’ to net zero. A public consultation on the criteria is expected for next month.

 

Activist approach 

The Institute had “a really good funding pathway” for the next two to three years, said Gordon, with support from 15 financial services supporters, some foundations, the City of London Corporation and the UK government. This, she said, was part of the reason she was standing down now. 

“For a not-for-profit, particularly in the current challenging environment… that's a really good position to be in.” 

The mix of funding, rather than one based on membership fees, allowed the Institute to be more “activist” in its approach, she said: “Our role is not to produce consensus [among members], it's to really drive change.”

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