'The voice of the customer is vital': Lord Victor Adebowale on his new Commission on Social Investment
The UK social investment market has always been linked to the growth of social enterprise. But lately, there's a sense that that direct correlation is slipping, writes Lord Victor Adebowale. The Social Enterprise UK chair on why he's kicking off an 'open dialogue' on what can create the most positive change.
It is over 10 years since the government proposed to create a social investment fund, evolving under the coalition into the creation of Big Society Capital. Over that time, there has a been a significant amount of activity in growing the social investment market and providing finance to social enterprises, charities and voluntary organisations. This domestic development has mirrored the wider global growth of impact investment and how financial markets can create returns beyond profit, an area in which the UK has taken a significant global role.
At the same time, the social enterprise sector itself has also gone on a journey. We have emerged out from the shadow of the “third sector” into a major economic actor in our own right. Social Enterprise UK’s Hidden Revolution report in 2018 found that there are now over 100,000 social enterprises in this country, contributing £60bn to the UK economy and employing 2m people. This is huge progress in a short space of time and justifies those who believe, like I do, that social enterprise is the future of business.
From the beginning there has been a clear link between the social investment market and growing the social enterprise sector. In its 2011 vision for “Growing the Social Investment Market”, the coalition government laid out clearly the role of the market to help social enterprises and other social ventures to create positive change in our society. With the development of the global impact investment space, there is a sense that this direct correlation is slipping. It is vital that the social enterprise sector reasserts its importance in tackling the key challenges we face as a country and an economy and how vital progressive social investment policy that caters to their needs is in enabling this to be achieved.
We have proved that social enterprise can work in every sector and in every community. Now the challenge is to break into the mainstream of the economy
We are now entering a new phase of the social enterprise sector. We have proved that social enterprise can work in every sector and in every community. Now the challenge is to break into the mainstream of the economy, so markets work to benefit our whole society and we tackle the climate emergency. This challenge is one that we cannot afford to duck, and we don’t have much time to do it. According to the IPCC, we have just 10 years to reduce our carbon emissions to levels that avoid the worst of climate change. Making the right finance available to the social enterprise sector is essential.
That is why it feels right to me that we take stock and ensure that the right types of finance are available for the next stage of growth of the social enterprise sector. Financial markets are vital enablers of the economy but they do not achieve outcomes on their own – they are only successful if social enterprises are successful. They are only having impact when social enterprises have impact. We need therefore to hear what social enterprises need – the voice of the customer is vital in ensuring that we are on the right track, and that the right mix of investment and market players is being brought to bear in enabling their success.
Financial markets are vital enablers but they do not achieve outcomes on their own – they are only successful if social enterprises are successful
To do this I am launching a new independent Commission into Social Investment, which I will chair, alongside a group of independent commissioners drawn from social enterprise, financial services and academia. I am confident that together, we can find out what is needed to make sure that we unleash the potential of social enterprise.
In my role as chair of Social Enterprise UK, I have heard many opinions on the current state of the investment market. I’m not going into this work with any preconceptions, but with a simple goal – to ensure that financial markets and specialist social investment policy is maximising its potential to move the needle on the dial in growing the social enterprise sector. And that we are able to articulate the business case for why this growth, both economically, socially and demographically, is vital for the UK’s future prosperity. I am grateful to the support of Fusion21 in undertaking this project. As a social enterprise themselves, they know how important this issue is.
With a new government in post, and with another round of dormant asset money to be allocated, I don’t want us to lose out on the opportunity to shape future government policy. With this in mind, we are aiming to report in the autumn of this year after a call for evidence, witness sessions and further research. The report will be resolutely forward-looking, and will be focused on making high-level, practical recommendations on what can create most positive change. I want this to be an open dialogue between social enterprises, social investors, mainstream financial investors, academics and experts. If you want to support the Commission, then please get in touch with Social Enterprise UK who will be providing the secretariat.
Despite all the uncertainty of the past few years, we can be sure of one thing. Our economy needs more social enterprises in it if we are to have any chance of delivering a sustainable future for our country and our planet. This Commission will help us ensure that we have the tools in place to make this a reality. We have no time to lose.
Find out more about the commission on the Social Enterprise UK website.
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