Social impact investment needs more government support
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A newly published review called on the UK government to provide more support for social impact investment and for asset managers to boost the number of impact investment products they make available to investors.
Commissioned by the Department for Digital, Culture, Media and Sport, the report has revealed that the range of impact investment opportunities is limited despite figures showing increasing interest amongst investors.
The review, which was led by chair of Allianz Global Investors Elizabeth Corley, was based on impact investment feedback sourced from 60 of the industry's professionals. According to Ms Corley, it signalled that the government and financial services industry should be making it easier to meet increasing demand.
Commenting on the report, Ms Corley said: "We are talking about an economic system and a marketplace that needs to move forward."
She added: "There is risk aversion across the value chain, whether it’s financial advisers, stewards of capital or the asset owners."
The report has suggested that financial advisors need to demonstrate a long-term commitment to boosting the reputation of the social impact investment industry through promotion of an increased number of products.
It is also recommended within the review that the government should work harder to co-invest in the private sectors in order to encourage greater investment into social products by taking a first-loss position, ensuring that it will be the first to lose should their be a default and thus boosting interest in social impact investment even further.
The term social impact investment, as defined in the review, includes any investment in shares or the loan capital of firms that both keep track of and report their impact on society. Currently, Britain's impact investment sector is worth £150 billion and includes investment in the social housing sector, social businesses, green bonds and renewable energy.