A panel of public and private sector leaders, including former Labour MP Hazel Blears and the heads of Hermes Investment Management and auditor Grant Thornton, have today released a series of recommendations on using investment to tackle social and environmental challenges in the UK.
The National Advisory Board on Impact Investing (NAB) has called on the government to create a £2bn Inclusive Economy Catalyst Fund, to jump-start opportunities in communities which have seen “no real income growth”.
It has also backed the launch of “pensions with purpose”, which will invest savers' money into businesses and opportunities which aim to further a social or environmental goal.
“Impact investing has shown its value across multiple sectors and asset classes, achieving strong returns on investment while also financing new solutions to some of the UK’s most difficult social and environmental challenges,” said Michele Giddens, chair of the NAB and co-founder of impact investing private equity firm Bridges Fund Management.
Recent political events have highlighted that large segments of the UK population feel left behind by economic growth. If investors, business leaders and policy makers all consider social and environmental impact alongside financial value then we can start to redress these issues.
The NAB believes that if the recommendations in its report are followed, this could attract an extra £300bn of investment for socially and environmentally focused businesses.
The Catalyst Fund, for example, could rake in tens of billions of private investment over five to 10 years, the report estimates, for issues such as social care, affordable housing and climate change.
Meanwhile defined contribution pension schemes in the UK are predicted to grow six-fold to $1.7 trillion over the next two decades, and three quarters of these pension fund members have already said they would prefer to save in a social investment fund. A further 44 per cent said they would do so even if their final retirement pot ended up eight per cent smaller.
The NAB has also asked the government to place more emphasis on social value within public procurement.
Members of the 13-strong NAB include Generation Investment co-founder David Blood, Hermes Investment Management chief executive Saker Nusseibeh and Grant Thornton chief executive Sacha Romanovitch.