Developing a Global Centre for Social Impact Investment

The Developing a Global Financial Centre for Social Impact Investment report says the SII market now appears to be reaching a level of maturity, with the potential to progress to a more global market.

Previous research has estimated a total global SII market to be worth more than $12bn in 2015 with significant growth potential.

The new report, commissioned by the City of London Corporation and produced by PwC, explores what measures leading financial centres in this field – such as London – might take to support and enable such global growth.

The research develops a three-stage model for a global financial centre, with particular consideration of London’s current position.

The research finds that London is seen as a strong national financial centre for Social Impact Investment (SII) , specifically in terms of its financial markets and regulatory, policy and legal environment, and has potential to become a global financial centre for SII.

However to move to stage two, the report said London also needs to address a number of aspects including accreditation models, enabling greater retail investment, and technical assistance models.

The City of London Corporation said it has been actively engaged in helping UK SII market growth through:

• Initiating and managing our own £20m SII fund to encourage and stimulate the market, with some £7.4m committed to date;

• Working closely with partner organisations such as the Cabinet Office and Big Society Capital to set up the Social Investment Research Council, supporting evidence-based policy to help improve the regulatory and fiscal framework needed to underpin the marketplace, such as the Social Investment Tax Relief and adaptation of the ‘Financial Promotion Regime’;

• Promoting social enterprise procurement within City businesses, developing with partners the award-winning ‘Buy Social’ Directory, championing business volunteering within social enterprises to develop the capacity of social organisations to access investment and secure contracts; and

• Through the City Bridge Trust, developing, implementing and managing the £1m ‘Stepping Stones’ investment-readiness fund which helps social sector organisations take on SII finance.

The report said in order to move into stage three of the process, London requires the “ability to attract greater international supplies of capital”.

It said this capital could be derived from a range of investors including “Government, charitable trusts and foundations, impact investing funds, mainstream financial investors and development finance institutions”.

The third stage in the process of becoming a global financial centre for SII involves “combining the international supply of capital, with attracting international demand for SII capital from the global community of social sector organisations and others delivering these impacts”.

This capital could be derived from a range of investors including “government, charitable trusts and foundations, impact investing funds, mainstream financial investors and development finance institutions”.

The third and final stage in the process of becoming a global financial centre for SII involves “combining the international supply of capital, with attracting international demand for SII capital from the global community of social sector organisations and others delivering these impacts”.

Impact Investing Australia (a Not for Profit organisation established to develop the market for impact investing in Australia) said that the market over the next decade is estimated to be valued at A$32 billion within Australia alone, and between US$500 billion to US$1 trillion globally.

Download 'Developing a global financial centre for social impact investment' full report (3.11mb)