Big Society Capital promotes social impact bonds

The chairman of Big Society Capital and the Portland Trust, told delegates at an event at the Financial Times offices last week that sustainable and ethical investment was not just a trend but could be a “game changer”.

At the event, marking National Ethical Investment Week, Sir Ronald said: “I cannot stress enough how important it is to tackle social issues.

“Investing in social impact bonds is becoming a way to unlock the balance sheets of pension funds, charitable foundations, insurance companies, high net-worth individuals and philanthropic foundations alike.”

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He said many investors and advisers have questioned the social and financial benefit of many so-called ethical investments in the past, but said by connecting a social performance – such as reducing the likelihood of youths re-offending and re-entering the prison system – to a financial return, social impact bonds have given social enterprises access to the markets.

Sir Ronald added: “Likewise we have given investors with deep pockets something that provides them with profits, with a purpose.”

Shabbir Razvi, director of London-based International Finance Solutions Associates, said: “Things cannot always be measured in money – this is where advisers and providers face a dichotomy. It is easy to look at figures or growth in wealth, but is the growth benefiting society and investors? From providers to advisers and government there has to be commitment to provide information that shows the societal impact.”