Taskforce calls for action to unleash $1 Trillion in social impact investment

The Taskforce on Social Impact Investment, established by UK Prime Minister David Cameron under the UK’s presidency of the G8, and chaired by Sir Ronald Cohen, is today launching its Taskforce Report in Downing Street, London, alongside Chancellor of the Exchequer, the Rt Hon George Osborne.

The Report, entitled Impact Investment: The Invisible Heart of Markets – Harnessing the power of entrepreneurship, innovation and capital for public good, calls on governments and the financial sector to take action to unleash $1 trillion of private sector impact investment to tackle social problems.

The UK Chancellor of the Exchequer the Rt Hon George Osborne, has described the Report as, “compelling and comprehensive”, and that he “looks forward to implementing many of its proposals.”

The report highlights the potential that impact investment has to help solve some of society’s most pressing issues, such as caring for children and the elderly, community regeneration, financial inclusion, housing and prisoner reoffending. Social Impact Investments are investments made into businesses and social sector organisations, directly or through funds, with the intention of generating a measurable, beneficial social and environmental impact alongside a financial return.

The report lays out several clear recommendations, devised by government and private sector experts from across the G7, EU and Australia, which include:

• Encouraging pension funds and providers of tax-advantaged savings schemes and products to include impact investments as part of their offering.
• Enabling impact-driven businesses to lock-in their social mission through legal forms and removing regulatory obstacles around fiduciary duty.
• Expanding regulatory and tax incentives offered for investment in social enterprises and charitable organisations, enabling investors to offset their impact investment income against tax.
• Establishing a kitemark for impact investment products to make them quality certified, accredited, recognisable and differentiated in a complex marketplace.
• Developing social impact bonds and development impact bonds.
• Appointing a senior government Minister to champion impact investment within and beyond government.
• Reforming legal and regulatory frameworks for charitable organisations to help them to embrace entrepreneurial risk-taking and innovation where it furthers their mission.
• Publishing better and clearer data about the cost to government of addressing social issues to encourage more impact investment participants to the market place.

The report also:

• Calls on charitable foundations and trusts to allocate part of every charitable endowment and high net worth investment portfolio to impact investments.
• Encourages mainstream investors and the wider public to engage in impact investment by providing some investment protection.
• Calls on investors, including foundations, pension funds, sovereign wealth funds and independent investment managers to consider impact, risk and return in making investment decisions. Where investors wish to invest in impact-driven businesses, they can encourage them to pursue specific measurable social impact.
• Calls on the G20, ASEAN, OAS, and the African Union to put on their agendas the development of social impact investment
• Calls on Inter-governmental institutions such as the World Bank, IFC and regional development banks to play a leading role in a new market for social impact and development impact bonds.
• Calls on the United Nations, as it resets its Millennium Goals in 2015, to support impact investment as an innovative way of tackling social issues that constrain private sector development and economic growth.

Commenting on the Report, the Chancellor of the Exchequer the Rt Hon George Osborne, said:
“This is a compelling and comprehensive report. It not only demonstrates the UK’s leadership in the crucially important issue of social investment, but it articulates what still needs to be done to unleash new funds. This report sets out a clear plan of action for governments and markets and I look forward to implementing many of its proposals.”

Commenting on the Report, Sir Ronald Cohen said:
“ This is not about increasing or reducing public expenditure, but helping government to benefit from innovation and private sector capital in order to achieve more impact with the money it has. In driving the achievement of impact, social impact investment harnesses the forces of entrepreneurship and capital and the power of markets to do good. It brings the invisible heart of markets to guide their invisible hand.”

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