Investing for Impact: The Economist Impact Investing Europe Conference
On Purpose London Associates Francesca Spoerry and Katie Fish, who are currently in their placement with Big Society Capital, recently attended the Economist Impact Investing Europe conference, and here they share their three main takeaways from the event.
On 15th June, The Economist gathered more than 200 leading financiers, institutional investors, policymakers, academics, impact investors and philanthropists in London, to analyse the main obstacles and opportunities presented by impact investing. As both of us are new to the sector, we went to learn more about the main players in the market and to get a better understanding of what the market will look like in a few years so we can place BSC and ourselves in the best position to help accelerate positive changes.
One general theme from the conference, which surfaced repeatedly, was the role of government and policy makers in tackling our national and global social and environmental challenges. Some argued that governments need to create legislation to encourage private capital towards solutions like impact investments, whilst others argued that for impact investing to develop, the demand needs to come from consumers themselves, at least to begin with. Other solutions were proposed, such as by Michele Giddens from Bridges Ventures who suggested that it was up to the regulators to be asking questions such as: ‘do you offer impactful investment products in your portfolio, and if not, why not’. She argues that asking the difficult questions would be half the battle in growing the impact investing market. LGIM called for more clarity on ESG and impact investments not infringing on fiduciary duties and for better and more consistent reporting. As a whole, there seemed to be very little consensus about what would help accelerate impact investing into the mainstream, and even more fundamentally, there was also some disagreement about whether it should even be brought into the mainstream.
A second theme emerging from the conference relates to this point. Perhaps inevitably in a discussion of mainstreaming, the idea of the democratisation of capital and the individual investor came through strongly from several speakers. Nigel Kershaw from Big Issue Invest talked about the need to pull the mainstream towards impact investment rather than the other way around. He stressed that the discussion should focus on transparency and allowing ordinary people to affect their own lives by the way they save, adding that it is only by pursuing this route that we will see systemic change. Equally, Charly Kleissner of Toniic noted the power of democratising impact to create systemic change. For Kleissner, this is about providing true access to products, the need to create more products around impact investing and through the support of initiatives like the Social Stock Exchange. Laurie Spengler from Enclude, reminded attendees to remember that money never sleeps and we should be aware of for who and what it is working. Quite revealingly, in a quick poll around the room only 30–40% of people admitted to consciously thinking about where they put their own money.
However, investor motivations are generally shifting. Recent research from Ethex reveals that over 50% of the population are investing positively or interested in doing so, and that better education on how to make positive savings and investments could significantly grow the market.
One final theme emerging from the day was the sense of an overall lack of consensus on the key risks to the sector and the barriers to mainstreaming. This was clearly revealed by a number of poll questions that were posed and answered during the day. One poll asked respondents about the number one risk to the sector: 31% felt the key risk was a lack of knowledge and distribution in the financial industry, 24% felt it was green or impact-washing, and 22% a lack of measurement data on impact. Another question asked about the number one priority if the sector is to scale up: 41% felt that trust in the ability of the sector to deliver impact and returns that are real and competitive was essential, whereas 33% thought impact products that increase and democratise investor access was crucial.
Despite these differences in opinion, what there was general consensus on was that impact investing is here to stay, that impact is becoming an increasingly important part of how investment capital is deployed, particularly for women and millennials, and that investors and intermediaries not currently thinking about impact are already well behind the curve.
