Big Issue Invest takes Social Impact Investment to the House of Lords with pension and insurance providers

Big Issue Invest (BII) recently hosted a social impact investment event in the House of Lords for Pension and Insurance sector leaders, highlighting its dedication to unlocking social and economic opportunities through enterprise. The event was attended by chief executives, chief investment officers, and heads of sustainability from over 20 financial institutions with the focal point comprising a panel of Pension and Insurance experts; Linda Zuberi, Head of responsible investment at Beazley, Aileen Matheson, Chief Investment Officer at Aspen and Charlotte O’Leary, CEO of Pensions For Purpose. 

Lord Bird, founder of the Big Issue and a champion of the social movement for over 30 years, opened the event, emphasising his ongoing efforts in the House of Lords to drive social justice and create a Ministry of Poverty Prevention, a holistic cross-ministry solution to the causes of poverty. 

This event followed the April co-signing of a Financial Times letter calling on the next government to establish national and local community growth funds. These funds aim to attract private and institutional investment into sectors delivering social impact. 

7 outcomes pension and insurance providers need to know

Social impact and financial returns go hand-in-hand

The panel discussion underscored the necessity of achieving social impact alongside financial returns, focusing on sustainable, impactful investing. However, the integration of impact investing into financial decision-making presents challenges such as defining impact, overcoming organisational inertia, alignment with fiduciary duties, and engaging professional trustees and advisors. The panellists stressed the need for systems thinking and support from investment consultants and professional trustee firms to drive catalytic change. 

It’s important to be clear on the difference between impact and social impact

During the panel session, participants agreed that impact investing involved an intentional additional impact on people and the planet alongside market-rate returns. Social impact is a narrower definition, focusing on positive social outcomes. The conversation also explored how organisations incorporate impact investing within illiquid markets, which allows for flexibility and selective impact integration. 

Be clear on your social impact investment strategy

The panellists debated the merits of finding impact within asset allocation strategies versus creating dedicated impact portfolios. Both approaches have their advantages and challenges. Different strategies for pension funds were discussed, including creating impact sleeves versus constructing top-down portfolios based on sustainable development goals. The former approach was felt more suitable for early-stage incorporation of impact allocation, while the latter requires a deeper understanding of interconnected risks. 

For pension funds embarking on social impact investing, the advice was to define their purpose and construct impact investment approaches accordingly at the outset, rather than being market takers. Passionate advocacy and support from stakeholders are crucial in driving impact investment strategies. A focus on responsible business can make the case for impact investing easier, despite initial challenges. 

Investment consultants play an important role in championing social impact 

The important role of investment consultants was discussed, emphasising the need for their enhanced education for example on positive social impact to integrate impact philosophy into their advice. Currently, their focus is often narrowly on financial returns possibly due to concerns about fiduciary duty and contractual arrangements.

There is a difference between ESG and impact investing

The distinction between ESG and impact investing was also discussed. ESG was described as a risk assessment framework focused on specific reported KPIs for reporting an organisation’s good citizenship, whilst impact investing requires intentionality to generate a positive impact in making investment decisions. Clear guidance and education for asset owners are necessary to differentiate and promote impact investing. 

Act in the best interest of the end customer 

The panellists also discussed fiduciary duty, emphasizing the importance of considering the end customer. Investments should not only secure adequate financial returns but also positively impact the communities where stakeholders live. This dual focus fulfills fiduciary duty well and responds to growing consumer interest in socially responsible investing. 

Education, advocacy, and strategic alignment are key

With the support of institutional investors and professional advisors, impact investing can drive meaningful change while delivering competitive financial returns. The discussion underscored the need for education, advocacy, and strategic alignment to integrate impact investing more deeply into financial markets. 

Please contact james.potter@bigissueinvest.com for more information on social impact investing with Big Issue Invest.