Shifting the Lens – a new report by Bridges & Bank of America Merrill Lynch on de-risking impact investments
Bank of America Merrill Lynch and Bridges Ventures have issued a report which reveals a set of practical risk mitigation tools for impact investment. Entitled, Shifting the Lens: A De-risking Toolkit for Impact Investment, the report aims to shift the lens on this important sector to focus on how innovative investments can be de-risked to […]
Bank of America Merrill Lynch and Bridges Ventures have issued a report which reveals a set of practical risk mitigation tools for impact investment. Entitled, Shifting the Lens: A De-risking Toolkit for Impact Investment, the report aims to shift the lens on this important sector to focus on how innovative investments can be de-risked to attract much 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.
Clara Barby, Head of Impact at Bridges Ventures, said: “One way to reduce the sense of risk is to wait for impact investment strategies to prove themselves, but we don’t have time – some of the societal challenges that impact investments can address are too urgent. By clarifying some of the key risks and exploring features that will mitigate them, we hope that more investors can participate in the market and more impact-driven organisations can access the capital they need.”
“The development of a robust market for impact investment is an important progression in creating a healthy economy,” added Andrea Sullivan, Head of Corporate Responsibility, EMEA and Latin America, Bank of America Merrill Lynch. “Impact investment is currently still a niche activity and, in order to broaden the market, it’s essential to clarify and mitigate the associated risks so that we can connect more capital with need. This report aims to spark a meaningful discussion on impact investment as a strategy for long-term financial and social return, and ultimately bring innovative ideas and new players to the market.”
The research was conducted by Bridges IMPACT +, the advisory arm of Bridges Ventures that seeks to promote the growth of the sustainable and impact investment sector by offering practitioner-led advisory services.
A copy of the report can be accessed here.
Press contacts
Bank of America Merrill Lynch
Rianne Buter
020 7067 0016
Bridges Ventures
Claire Aslett
020 3219 8825
Notes to Editors
Bank of America Merrill Lynch (www.bankofamerica.com)
Developing solutions for social and environmental challenges is at the core of Bank of America Merrill Lynch’s responsibility platform. In more than 100 markets around the world, the company partners with employees, clients and stakeholders to make financial lives better. Bank of America Merrill Lynch focuses on responsible business practices, environmental sustainability, advancing opportunity in local communities through education and employability programmes, investing in global leadership development, and promoting cultural understanding. By harnessing our intellectual resources, sharing knowledge and connecting capital with need, we are providing opportunities that effect positive change. Learn more at www.bankofamerica.com/about and follow us on Twitter at @BofA_Community.
Bridges Ventures (www.bridgesventures.com)
Bridges Ventures LLP (“Bridges Ventures”) is a specialist fund manager dedicated to using an impact-driven investment approach to create superior returns for both investors and society at large. Bridges Ventures has raised seven funds to date which total £340m: Sustainable Growth Funds I, II and III, the Bridges Sustainable Property Fund, the CarePlaces Fund, the Bridges Social Entrepreneurs Fund and the Bridges Social Impact Bond Fund.