Sir Ronald Cohen, outgoing chair of Big Society Capital, has said social investment is gaining traction internationally, with both Nando's and Goldman Sachs launching new social investment products.
Cohen, who will step down from Big Society Capital in January, said there was growing evidence of international interest in social investment.
“The USA has half a dozen social impact bonds,” he said. “Australia and Israel have launched social impact bonds; Canada is talking about one.
“Across the world there is pressure on governments to find different ways to tackle social issues expressing itself in heightened interest.”
He said Robbie Bronzon, the CEO of popular restaurant chain Nando’s, had recently called him about launching a $30m development impact bond for Mozambique.
According to deveximpact, Nando’s has partnered with African mining giant Anglo-America and Coca-Cola to create a Mozambique Malaria Performance Bond, to fund malaria reduction efforts in Mozambique
Development impact bonds are an adaptation of social impact bonds – money from investors is channelled to local public and private service providers. If they achieve set results, the government and donors repay the investors plus a financial return linked to performance.
Cohen also cited a new $250m Goldman Sachs social impact fund to invest in projects that improve the conditions of disadvantaged communities across the US as evidence of growing international interest.
Cohen made the comments at Good Deals 13 during the concluding session to the two-day event, which saw Toby Eccles, development director and founder of Social Finance interview Cohen and incoming Big Society Capital chair Harvey McGrath on the social investment market here and abroad.
In his first public discussion on social investment, McGrath, who will join Big Society Capital in January, warned that there was still a “fair bit of confusion” around terminology in social investment. “Communication awareness and building needs to go on,” he said.
He added: “In the conventional market place for finance, it is not driven by social impact. It’s not a complete full stop. But it is not in the consciousness of those driving funds – this is both a challenge and an opportunity.”
McGrath also said that instinctively he felt successful social investment started with effective interventions: “We must collectively become focused on what intervention works, so we need an evidence base to decide which are scalable. Some won’t be. Some will. My instinct is to start with intervention and bring into play other resources in capacity and restructuring.”
