OECD: social impact investing ‘increasingly relevant’

The Organisation for Economic Co-operation and Development (OECD) has described the growing social impact investment market as “increasingly relevant”. However, in a report the organisation adds that evidence of the sector achieving its aims is needed if it is to reach its potential.

Social impact investing involves investors looking at a double bottom line when considering investment options, the financial return and the social benefits. The sector has grown over the past decade as interest in tackling social issues at the local, national or global level increased amongst individual and institutional investors.

The report states, “Social impact investments has becoming increasingly relevant in today’s economic setting as social challenges have mounted while public funds in many countries are under pressure. New approaches are needed for addressing social and economic challenges, including new models of public and private partnership which can fund, deliver and scale innovative solutions from the ground up.”

Additionally, the report notes awareness of the potential opportunities of social impact investing has grown considerably leading to more players and products within the market. It continues that social impact investment has the potential to provide new ways to “more efficiently and effectively allocate public and private capital to address social and economic challenges”.

The OECD report aims to provide a framework for assessing the social impact investment and focuses on the need to build an evidence base. The paper recommends given that social impact investment is a nascent field, concrete evidence of its impacts is needed.

In particular the OECD calls for further work that demonstrates the gains from this approach, including developing a common agreement on definitions, committing to building the necessary structure for coordinated data collection processes, furthering efforts on the measures of goal outcomes and evaluation of policy.

Photo:  Claudio Jule via Freeimages

Further reading:

Concerns raised over social investment tax relief

Bringing social investment into the mainstream

Social investment risks being ‘stifled’ by regulation

Impact investment ‘developing rapidly’, says UKSIF report

Why impact investment could soon be a trillion-dollar industry