From a statement of belief to a bias towards action at the GIIN Investor Forum
Governmental support for social investment in the UK, the pivotal role of Big Society Capital and the decision to make social investment a central theme at the G8 hosted in Britain earlier this year, were commended by Luther Radin, Jr, CEO of the Global Impact Investing Network (GIIN) during the plenary on the Impact Investing Ecosystem.
Later, in a keynote address, Nick Hurd MP quantified the ambition of the UK government in the social investment marketplace, through its creation of Big Society Capital, which was endowed with £600m to operate in a market valued at £200m.
“It was a big statement of the belief that the market would respond,” he said, and part of an agenda seeking to deal with the issue that “mainstream capital markets barely interconnect with the social sector”.
Delegates at the GIIN forum heard diverse speakers reflect on the developments taking place within a growing impact investment ecosystem. But there was also a note of caution around ushering newcomers too suddenly into the social investment marketplace.
Speaking on the panel on the impact investing ecosystem, Annachiara Marcandalli, managing director of Cambridge Associates, a leading investment advisor to foundations and endowments, private wealth, and corporate and government entities, expressed the need to take a step back before encouraging social investment.
“It’s not enough that investors simply include impact investment in their portfolios,” she said. “I would rather they develop a firm understanding of what they are getting involved in, and invest because they know what they are doing.”
Investors need to realise that this is a market that is developing, and you don’t want a curious investor, be it an individual or an organisation, to lose out in such a way that they feel swindled, explained Marcandalli. “If you’re just predicating on the results and you see a horrible loss you’re never going to touch the sector again,” she said.
This was a viewpoint echoed by Audrey Choi, Managing Director of Global Sustainable Finance at Morgan Stanley, who spoke in a session on social investment for beginners.
In response to a question around how financial advisors should treat clients interested in impact investment, she said: “You need to be very clear about the level of risk and reward, and be clear about the sort of product that someone is comfortable with... You don’t want to do something that convinces someone that impact investing isn’t for them,” she continued.
But Nick O’Donohoe, chief executive of Big Society Capital, took issue with Marcandalli’s suggestion and emphasised the need to move from concept to implementation.
“We need a bias towards action,” he said. “It’s not until you act in this space that you find problems and hurdles. We need the critical mass to start building data, and throwing up issues, we need to build a precedent or we may well go on conceptualising forever,” he continued.
O’Donohoe later commented that although he broadly agreed with the position of Marcandalli, it was crucial that people practise to learn: “I think there does need to be a leap of faith,” he said.
Commenting further, Marcandalli said that she agreed with the need for a bias towards action, but held to the dangers of spooking potential investors. And on her priority list for progress, she highlighted the introduction of policy statements around social investment, which would see institutional investors clearly set out the purpose of their assets, and exactly how that purpose will be achieved.
