Investments 

All pension funds should offer social investment: report

A report has called on the financial sector to do more to encourage investment into the social sector, building on what it said was the UK’s already leading role in the area, including by requiring all pension funds to offer a social investment pension option.

The Taskforce on Social Impact Investment was established during the UK’s presidency of the G8 last year and has now published its findings, suggesting that the UK is building the most attractive environment in the world for ‘impact investors’.

The report stated that the social investment market here is growing by 24 per cent annually, but an additional £1bn of investment may be needed by UK social enterprises and charities by 2016.

It called for key initiatives in six areas to develop the market further, including alongside the call for greater social investments through pensions calls to:

• improve the capacity of social organisations to appropriately use investment to scale their impact, specifically through the creation of a social impact and scaling fund and the expansion of the Investment and Contract Readiness fund;

• promote a new culture of government procurement that encourages innovation and prevention, specifically through launching a hub for prevention and innovation and creating a social prevention and innovation pilots fund;

• make it easier for businesses delivering social value to be recognised by launching a Social Economy Commission and establishing a Social Performance Certifier;

• provide a combination of grants and investment to intermediaries, by establishing a blended capital facility; and

• encourage greater transparency around lending into deprived communities, particularly from large financial service institutions.

Nick O’Donohoe, chief executive of Big Society Capital and chair of the UK Advisory Board to the Social Investment Taskforce, said: “In the UK there is much more that needs to be done to ensure that charities and social enterprises can access appropriate investment, and to enable more socially-minded investors to enter the market.”

Daniela Barone Soares, chief executive of Impetus-PEF and chair of the working group on building the capacity for impact, recommended much more investment in, and support for, organisations to build ‘outcome-producing’ capabilities, for the good of investors and investees.

Toby Eccles, development director of Social Finance and chair of the working group on recommendations on procurement, said: “If you were to design a model to keep innovation out of government, present procurement practices would be hard to beat.

“Major change is required if we are to move away from a one size fits all approach to services that fit the needs of the people using them rather than the needs of the system.”

FTAdviser’s annual social responsibility investing event is being held in London on 14 October. For information email claire.tolman@ft.com.

Comments