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ESG

U.K. government, financial industry need to work on social impact investing — report

The U.K. government and the financial industry need to support and increase the number of social impact investment opportunities in the market, recommends a new independent review.

The recommendation is one of five made in the review report, "Growing​ a Culture of Social Impact Investing in the U.K.,"​ which was led by Elizabeth Corley, chairwoman of Allianz Global Investors, and an advisory group of 60 senior representatives from across the financial industry and social sector.

"We have to improve the deal flow and the ability to invest at scale," said Ms. Corley in a telephone interview. "The U.K. has been one of the pioneers … the challenge is finding investible opportunities at scale — and even if people have the intention or desire to do it, finding these opportunities, doing due diligence, looking at intended outcomes is a very specialized skill area."

Another recommendation is that the government and industry should also strengthen social investing competence and confidence within the financial services sector. Ms. Corley said there is a need to continue to improve education at the industry level with criteria and accreditation, as well as work with regulators such as the Financial Conduct Authority and the Pensions Regulator, so they are more comfortable reviewing and approving initiatives with a social aspect to them.

An increase in the reporting of the growth of the social impact investment market is necessary, to give a better understanding of non-financial outcomes, the report said. Ms. Corley highlighted the need for consistency in how outcomes of social impact investment is reported and assessed. "We need a language for looking at non-financial risks to evolve … it is important that the U.K. is part of a global initiative there," added Ms. Corley.

The next recommendation is to make it easier for people to invest. Part of that is labeling, simplicity of language and education, said Ms. Corley. Pension board trustees should also work with employers and providers to develop best practices for better engagement with participants, said the report.

The final recommendation is to maintain momentum and build cohesion across initiatives. This is about "systemic change," and "we have got to keep talking about it," said Ms. Corley. She added that there was so much enthusiasm and momentum following the completion of the review that those involved with Ms. Corley said the advisory group should not be disbanded.