Put social need at heart of impact investing to grow market: OECD

Tue Feb 3, 2015 11:11am EST
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By Astrid Zweynert

LONDON (Thomson Reuters Foundation) - The fledgling market in investing for social good needs to base its decisions on target groups' needs and analyze what works and why in order to grow globally, the 34-nation think tank the OECD said on Tuesday.

Social investment has become increasingly relevant as the public funds on offer in many countries decline and the problems facing some groups in society increase, the Organisation for Economic Co-operation and Development(OECD)said in a report.

Much of the discussion about social impact investing (SII) has been dominated by which financial instruments are best suited rather than looking first at the needs of the beneficiaries, said Karen Wilson, the report's lead author.

"You need to locate what the needs are, what the social issues are and then find innovative ways to address these problems," Wilson told the Thomson Reuters Foundation.

The report aims to lay the groundwork for an international framework to help assess investments that can provide a measurable social benefit as well as a financial return.

Core areas for SII are populations at risk in sectors such as health, employment and education, housing, criminal justice and family services, the report said.

It provides data on social needs and spending in the United States, Britain, Japan, Australia, Canada, Germany, France and Italy to illustrate the gap that SII could fill.

There is high demand for impact investments in affordable housing, for example, as one in 10 people in OECD countries have trouble meeting the cost of accommodation, the report said.   Continued...