The UK Advisory Board said the creation of a UK Inclusive Economy Catalyst Fund could stimulate local economies that have seen “decades of underinvestment” by pumping billions of pounds of private money into tackling issues around social care, affordable housing and climate change.
In a report, titled ‘The Rise of Impact: Five Steps Towards an Inclusive and Sustainable Economy’, the board claims to have found ways to unlock an extra £300bn of investments in the UK.
If the government and investors do not act the UK risks being left behind other countries such as the Netherlands where a fund of €2.8trn (£2.5trn) AUM has already been set aside for sustainable impact investing, it warned.
The panel is made up of key industry players including Saker Nusseibeh, CEO of Hermes Investment Management, and David Blood, co-founder of Generation Investment Management.
Former MP Hazel Blears and Cliff Prior, CEO of Big Society Capital and former CEO of UnLtd, also sit on the panel.
It represents the UK’s voice at a global steering group of 15 states and includes the EU, all chaired by Sir Richard Cohen.
The group’s chairman, Michele Giddens, said impact investing had shown its value across different asset classes and achieved strong returns in the process and could help boost the large parts of the UK population feel “left behind” by economic growth.
Giddens, who is also a partner a Bridges Fund Management, added: “If investors, business leaders and policy makers all consider social and environmental impact alongside financial value then we can start to redress these issues.
“This is an incredible opportunity to evolve our traditional investment model and release billions of pounds to reduce inequality, protect our scarce resources and stimulate innovative new solutions.”
How to solve the problem of sustainability
Other recommendations include harnessing the £1.7trn of assets tied up in DC pension plans by creating ‘Pensions with Purpose’ which allow savers to invest “in line with their values”.
It has also called on government to place more emphasis on social value when procuring public services and for more support businesses that have a positive contribution to society and the environment.
Large asset managers could also allocate more capital in line with the UN Sustainable Development Goals, it added.
The report follows Good Money Week and news focusing on the industry’s overcomplicated jargon which is said to prevent investors allocating their money in sustainable products.
Around £150bn of assets are committed to impact investing in the UK currently, with panel member Sacha Romanovitch, CEO of Grant Thornton, claiming sustainable investing was the key to a more successful economy.
She said: “We’ll have environments that enable business and people to flourish. We’ll have dynamic organisations, growing sustainably. We’ll have a vibrant economy.”
