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‘Huge potential’ for UK pension funds in social impact investing

Written by Matt Ritchie
10/06/2013

There is huge untapped potential for UK pension funds to take advantage of social impact investing, according to an advocate for the practice, and central government has shown support for the strategy.

Prime Minister David Cameron last week hosted a meeting of public and private sector representatives, ahead of the G8 Summit, to discuss impact investing as a means to address social and economic development domestically and internationally.

Global Impact Investing Network managing director Amit Bouri attended the meeting. Afterwards, he told Pensions Age the event had been a “landmark gathering” for the impact investing field.

“The Prime Minister was signalling a clear support for impact investing, and wanted to highlight the fact that the future of impact investing will be driven by the exchange of ideas and collaboration amongst all the different parties – financial institutions, foundations and governments,” Bouri said.

The GIIN facilitated a letter co-signed by more than 90 asset owners, asset managers, and service providers, to highlight the willingness of the private sector to play its part in driving impact investing.

Bouri said impact investing can bring financial returns to investors while achieving positive social outcomes. While some UK pension funds were becoming involved, there was room for significant growth.

“I think we’re still at the tip of the iceberg,” he said. “There’s a huge untapped potential for institutional investors to participate in this market. But I think the biggest barrier first is awareness.”

The GIIN is working to increase awareness and improve the level and quality of data in the market, but Bouri said governments also have a role to play.

Governments can “bring visibility” to the opportunities in impact investing, and introduce regulation that supports the flow of impact investment.

Supporting the movement of capital directly into impact investing is another boost government can provide, Bouri said.

The UK government had been “at the forefront” of this, through helping to facilitate social investment bank Big Society Capital, and through the Department for International Development’s programme to help drive impact investment in Sub-Saharan Africa and South Asia.

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