Social Impact Investment market poised for take-off
Research released today presents to cities aiming to support the global growth of the Social Impact Investment market (SII) (1) and become financial centres for the market, a clear road-map to success. The Cabinet Office has endorsed the research, with Kieron Boyle, Head of Social Investment saying: "Around the world, markets are increasingly asking the question of how they can maximise social value alongside financial value. The UK is seen as the most advanced country in the world for offering a robust infrastructure and support for social impact investors and enterprises. This research clearly highlights social impact investment’s potential."
The research, by PwC for the City of London Corporation, identifies a three-stage process to becoming a mature global financial centre for SII and highlights the key development challenges, so cities can evaluate their individual strengths and weaknesses in social impact investment.
Currently, although globally there are several strong domestic markets – such as London, New York and Luxembourg - the SII market has yet to coalesce around a global financial centre. The estimated size of the SII market globally is in excess of $12bn with significant growth potential (2). This research identifies opportunities for leading financial centres around the world to develop and expand their SII offerings and deepen their involvement in this market, providing valuable social and financial returns.
There are six essential features which any city will need to excel in in order to become truly global: knowledge and expertise, innovation in products and instruments, maturity and attractiveness of financial markets, favourable environment, social impact standards and reporting, and international connections.
In particular, cities looking to move to the global stage as the SII market grows must broaden their appeal and increase their offerings to retail investors. A supportive regulatory and policy environment is a key part of this. The report also identifies adherence to global standards such as the GIIRS and IRIS indicators used in the US, and the LuxFLAG certification in Europe (3) as important. This will allow different social impact investments to be comparable as is the case with mainstream investments and provide some form of track record, thereby increasing investor knowledge, and potentially, appetite and take up of social impact investments.
Speaking at the launch of the report, Mark Boleat, Chairman of Policy & Resources at the City of London Corporation said: “Social Impact Investment is a dynamic, expanding field. Financial centres looking to broaden their offering and appeal to the maturing financial markets now have guidance to help them identify their strengths and weaknesses in this nascent market and track their progress on the path to success.”
Notes to editors
- Social Impact Investment is defined by the G8 Social Impact Investment Taskforce as “those forms of investment financing that intentionally target specific social objectives along with financial returns and measure the achievement of both”. For more information about Social Impact Investment, please see the City of London’s FAQs page: http://www.cityoflondon.gov.uk/business/supporting-local-communities/Pages/Social-investment-FAQs.aspx
- Research by JP Morgan and the Global Impact Investing Network (GIIN): ‘Eyes on the horizon’ (May 2014).
- The lack of a standard measurement of social impact to assess the effectiveness of a product or programme remains a challenge for the global SII market – especially the UK, which unlike other global financial centres does not have a standard accreditation model. Without this, funders find it difficult to compare investments in social value terms on a consistent basis.
Bella Longman, Media Officer, City of London Corporation
Tel: 020 7332 1906 / Mobile: 07809 334 327
About the City of London Corporation
The City of London Corporation provides local government and policing services for the financial and commercial heart of Britain, the 'Square Mile'. In addition, the City Corporation has three roles: (1) we support London’s communities by working in partnership with neighbouring boroughs on economic regeneration, education and skills projects. In addition, the City of London Corporation’s charity City Bridge Trust makes grants of more than €15 million annually to charitable projects across London and we also support education with three independent schools, three City Academies, a primary school and the world-renowned Guildhall School of Music and Drama. (2) We also help look after key London heritage and green spaces including Tower Bridge, Museum of London, Barbican Arts Centre, City gardens, Hampstead Heath, Epping Forest, Burnham Beeches, and important ‘commons’ in south London. (3) And we also support and promote the ‘City’ as a world-leading financial and business hub, with outward and inward business delegations, high-profile civic events, research-driven policies all reflecting a long-term approach. See www.cityoflondon.gov.uk for more details.
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