The government is committed to increasing social impact investing in the UK, according to its newly-published response to an industry-led report.
Ministers are to work closely with the financial services industry to look at what more can be done to consider the social and environmental impact of investments.
In a statement accompanying the response, Minister for Sport and Civil Society Tracey Crouch said: “People increasingly want to see their savings and investments have a positive impact on society, as well as bring financial returns.
“By utilising the wealth of experience within the financial services industry, we can expand social impact investing to help build a society that works for everyone.”
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In 2016, the government appointed Elizabeth Corley, vice chair of Allianz Global Investors, to lead an Advisory Group looking at how to grow a culture of social impact investment and savings in the UK. The group included senior representatives from across the investment and savings industry.
The report, ‘Growing a Culture of Social Impact Investing in the UK,’ set out five key recommendations for enabling investment to be better aligned with investor values.
It led to the Prime Minister asking Corley to chair a follow-up taskforce to consider what measures the government could take to support social impact investing.
In its response published this week, the government said it will consult on changes to the law to “ensure that social impact is considered in regulatory frameworks and understanding.”
It says it is fulfilling its commitment to increasing awareness of social impact investments through initiatives such as the Inclusive Economy Partnership – led by chief executives from a range of UK businesses and civil society organisations including the National Grid, Nationwide, O2, TechUK, National Council Voluntary Organisations and the Big Lottery Fund.
The government agrees with the Advisory Group report that there is no ‘silver bullet’, but says the areas it wants to prioritise are “practical, achievable and will accumulate”.
It says: “Mainstreaming social impact investment in the UK will be a journey that takes time, but one which government believes has huge potential and is making strong progress.”
As part of its strategy, the government wants to allow pension schemes to “target a minimum percentage allocation towards investments that have an explicit social or environmental purpose”.
Local government secretary James Brokenshire is to consider how social impact investment might help tackle homelessness and provide housing for vulnerable people. The response also says there is a need to promote the social and environmental responsibility of UK businesses. The government has already committed to reviewing the social investment tax relief in 2019.
A progress update will be published in winter 2018.
Social investment platform Ethex, a member of the Advisory Group, says the response marks an important milestone for social impact investing and in promoting its potential value to the UK economy.
CEO of Ethex Lisa Ashford said: “Ethex welcomes the Government’s commitment to support the financial services sector in building a socially conscious investment and savings culture in the UK.
“Social impact investing is finally receiving the attention it deserves and must continue as a strategic focus for both the government and the wider financial sector which, to date, simply hasn’t done enough in this regard.”
But she added that there is still a long way to go to increase awareness of social impact investing in the UK. She said: “Our research shows that half the population feel they do not know enough about positive investment and savings, although 45% were willing to learn more.”
Since its launch in 2013, Ethex has raised almost £65 million through its innovative social impact investment funds in the UK.
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