Social Finance and Impact Investing: Measuring Non-Financial Returns

There are a number of non-financial return factors that have a clear impact on global well-being, and ultimately on financial returns, which should be included in investment considerations. These include:

• externalities - the impact on those not directly involved in a transaction or decision – and how this might affect outcomes
• social investment – including social impact bonds and the Universal Owner Hypothesis
• the idea that institutions which address non-financial questions effectively will also provide improved financial outcomes (certainly in the long term).

The initial focus of this Working Party will be on Social Impact Bonds, including:

• what they are
• what work already exists on the topic
• different examples from around the world and how they are treated differently
• how to measure the Social Impact included in the return
• possibility of interaction with peer-to-peer/group investing
• how actuarial techniques can be applied to improve the financial and non-financial returns
• interaction with ESG/SRI (in particular development of positive ESG measures, as opposed to negative screening “not investing in tobacco and weapons”).

We will also compare how actual Social Impact bonds are performing in various parts of the world, in both financial and social terms.

Outputs:

• Presentation at the Momentum Conference 2015
• Likely presentation at Asia Conference 2016
• Presentation and discussion at Risk and Investment Conference 2014.