Shifting the Lens

A collaboration between Bank of America Merrill Lynch and Bridges, 'Shifting the Lens: A De-risking Toolkit for Impact Investment' aims to shift the lens on the social and impact investment sector, to focus on how innovative investments can be de-risked to attract broader flows of capital.

At the 2013 G8 summit, Prime Minister David Cameron described the power of impact investment as “tackling the most difficult social problems”. This put impact investment growth squarely on the global agenda and led to the establishment of the dedicated G8 Taskforce. Yet despite the compelling ‘win-win’ of generating both a financial and social return, the addition of an impact lens to investment propositions has increased the concern of risk for many mainstream investors, deterring or even prohibiting many from pursuing impact investments.

The report will be launched today at an event hosted at Bank of America Merrill Lynch’s European headquarters, to be opened by the Minister for Civil Society, Nick Hurd, and illuminates the key risk factors that are deterring investors from gaining exposure to impact investments. It also identifies seven de-risking features that can mitigate these factors; from catalytic guarantees, which governments and foundations are well-placed to provide; to specialised brokering services and credible distribution platforms. The result is a de-risking toolkit for impact investment products, brought to life by a catalogue of 20 case studies highlighting de-risking features already at work.

Through these practical examples, drawn from around the world, the report aims to encourage collaboration amongst asset owners, advisors, product developers and government, in order to broaden the impact investment market.

While demonstrating that a track record of sufficient financial return is a key step for mainstreaming impact-driven investment strategies, the report provides another approach to achieve greater participation: that of adjusting the risk side of the equation and ‘de-risking’ impact investments, thereby creating a more accessible investment for a wider range of investors.

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