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Govt warned over lack of social impact investment products

Parliament-UK-Government-Dusk-700.jpgThe Government has been presented with recommendations on how to address a dearth of savings, pensions and investment products focussed on achieving social good despite strong consumer demand.

AllianzGI deputy chair Elizabeth Corley led a group of 60 representatives from across financial services and the social sector to increase products available while broadening funding sources for companies targeting social impact.

Corley says social impact investing is an underdeveloped and fragmented market, despite growing demand.

The report, Growing a culture of social impact investing in the UK, has been presented to Economic secretary to the Treasury Stephen Barclay and Minister for Sport and Civil Society Tracey Crouch today.

The recommendations fall into five categories: improving deal flow; financial services industry competence; better reporting; improving ease of investment and creating momentum and cohesion of initiatives within the industry.

Improved training for financial advisers and pension trustees is among the specific recommendations in the report, as well as incorporating social impact into business of the FCA, FOS and other regulators.

The report calls for the Investment Association to develop reporting standards, while also calling for the industry body to lead a cross-sector group for developing product labels for socially responsible products.

Investment Association chief executive Chris Cummings says they look forward to working with our members to deliver the report’s recommendations.

“A growing number of savers are looking to contribute to the greater social good through their investment choices,” Cummings says.

“Making it easier for people to choose from products that have the greatest social impact and employing consistent standards in how those products are rated will help this important segment of the market to grow.”

 The advisory group has said it is committed to building on the work in the report.

“The energy and ideas contributed by the members of the group demonstrate the degree of interest there is in moving social impact investing forward,” says Corley.

Barclay says impact investing is a “win-win” for investors bringing social good and financial returns.

Crouch says she looks forward to bringing social impact investment into the mainstream.

“We want people to make investments that reflect their values and have a positive impact on the issues they care about.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Doubtless customers want to invest in a socially responsible way.

    Question is will they accept increased risk or lower returns as a consequence?.

    • There is no need to. SAs Rom Sandler said, returns are driven by asset allocation rather than stock picking. With modern WRAPs a model portfolio cna be constructed using funds acceptable to a client’s personal beliefs combing different equity and bond funds, with commercial proeprty funds and where felt acceptable gilts too. Standard deviation can then be monitored and portfolios consctructed to match simialr mdoesl which use funds with NO ESG monitoring and surpisingley enough (you might think), the ESG portfolios perform as well if not better.

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