On 15 September, the Social Impact Investment Taskforce established in 2013 under the UK’s chairmanship of the G8, launched its highly anticipated report Impact Investment: The Invisible Heart of Markets.
This report calls on governments and the financial sector to take action to unleash US$1 trillion of private sector impact investment to tackle entrenched social problems.
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. It lays out several clear recommendations, devised by government and private sector experts from across the G7, EU and Australia.
Key recommendations include:
- Removing existing constraints on the growth of impact-driven organisations, and providing better recognition, tools and support to those seeking to deliver social impact at scale.
- Removing of barriers to the flow of capital into impact investment, particularly from foundations and pension funds.
- Incorporating the measurement of social and environmental impact into the performance reporting of governments, business and charities. This requires a paradigm shift in capital market thinking, from its current two-dimensions of ‘risk’ and ‘return’, to incorporate a third, ‘impact’.
- Unlocking the potential for impact investment to help deliver better social outcomes and economic growth in developing countries, by incorporating it in their domestic policies and by giving it growing prominence in international aid and foreign investment.
- Greater leadership from across society – including businesses, foundation, community organisations, impact entrepreneurs, investors, governments, global organisations as well as individual citizens – to catalyse a dynamic global social impact investments movement. Government leadership is particularly critical to remove barriers, build capacity, catalyse investment activity and harness the power of the market to address critical public policy challenges.
“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” said Sir Ronald Cohen, Chair of the Social Impact Investing Taskforce. “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.”
Australia is one of eight countries participating in the G8, in addition to the EU. Impact Investing Australia co-founder Rosemary Addis is Australia’s representative on the Taskforce.
To coincide with the Taskforce report launch, each country participating in the Taskforce has published its own report outlining what is needed in the various domestic contexts to accelerate and deliver the market for impact investing. Australia’s report Delivering on Impact: The Australian Advisory Board Breakthrough Strategy to Catalyse Impact Investing – maps a bold strategy to tackle some of our most pressing social issues through impact investing and acts as the launch of dynamic program of activity.