Music to our ears

Daniel Brewer – When we align profits with social impact all of society benefits.

Social impact investing will become mainstream within the UK if the aims of a new report are achieved. ‘Growing a culture of Social Impact Investing in the UK’ is published today by an Advisory Group to the Department of Culture, Media and Sport and the Treasury.  The findings highlight that there is a strong and growing interest among individuals in seeing their investments and savings do social good, as well as produce a financial return. Senior representatives from 50 firms across the financial services industry have looked at how they can make it easier for people to invest and are exploring what the industry can do to encourage greater social impact investment.

Responding to Pensions Expert about the report Karen Shackleton, Head of Pensions for Purpose says, “Social impact investment is an approach whose time has come. This comprehensive report, provides some fascinating insights into the challenges facing fund managers when launching impact investment products. It also teases out the barriers to entry from the investor’s perspective. The report provides clear recommendations on how the UK can move forward, 

by raising investor awareness and facilitating the launch of new investment products. If asset owners can take an informed approach when considering impact investment, we could see sizeable allocations being approved over the next 3-5 years.

At Resonance, this is a welcome milestone towards our Vision of a world where all are empowered to invest in enterprise for positive social impact. Over 15 years of offering investment opportunities in this sector we have been noticing an increasing desire among investors to support companies which are both profitable and make positive contributions to society. A survey last year by Good Money Week put the proportion of UK investors feeling this way at 62%.

In the retail world, to guide their purchasing, consumers can spot product labels such as ‘Fairtrade’. Correspondingly investors look for effective social impact reporting and it’s vital that such reports measure social impact in a way that is meaningful and transparent. This is not easily done. Our experience has been that while there is no problem in reporting simple measures, for example in the case of our Property Funds c1,000 people have been housed, other measures are less easy to define. Nevertheless, by digging deeper with our partner Real Lettings (social lettings firm run by St Mungo’s) we have been able to show that 100% of tenancies have been maintained for at least 6 months giving the stability needed for significant numbers of our residents to sustain jobs or make positive moves towards employment.

This has given further confidence to investors, such as local authorities, who have gained access to higher quality, more affordable rental housing, enabling council taxpayers’ money to be diverted away from expensive temporary accommodation.  Furthermore, this intervention has moved people away from the ‘revolving door’ by providing families who are at risk of homelessness, dignity, self-confidence and a new start. Yet investors allocating to funds such as these can still achieve a market rate risk-adjusted return.

Resonance believes that social impact at this level is the start of systematic change and aligns well with the United Nations Sustainable Development Goals (SDGs) adopted by the international community in September 2015 to end poverty, protect the planet and ensure prosperity for all.