The Social Impact Investing it consists of innovative policies from at least two points of view.
- First, why involve various actors, both public and private: no longer just the State, but also private investors, financial intermediaries, non-profit organizations.
- Secondly, because they allow you to achieve a double goal: a strong social impact it's a economic gain, thus benefiting the individual investor as well as the entire community.
There is now ample evidence, in fact, that the social growth stimulates the growth of the real economy.
Today the times are ripe for this type of approach as, over time, it is vThe opposition between giving charity and making a profit has ceased. In the past, parting social/business it has accustomed us to wealthy subjects who, on the one hand, aim for profit without necessarily paying attention to the ways in which it is generated and, on the other, aim to feel good about themselves by giving charity to hospitals and parishes.
Today, on the other hand, the scarcity of public resources is pushing towards a different mentality, one according to which doing philanthropy while making profit is not only possible, but also convenient.
This is demonstrated by the concrete tools that social innovation has already allowed to be tested in countries such as Great Britain and the USA: social impact investments (Social Impact Investing, in short YES).
It's a broad investment range (loan-based or equity based) based on the assumption that private capital can intentionally contribute to creating, even in combination with public funds, positive social impacts and, at the same time, private economic returns. The salient points of the SIIs are: intentionality to produce an impact and therefore a social change; measurable goals; orientation towards outcome (change perceived in the entire community) rather than towards output (quantity of services provided); economic return for investors.
Contrary to popular belief, SIIs are tools suitable not only for emerging markets but also for mature ones, as they manage to cover the gap between the demand for welfare and the inadequacy of public resources. A gap dangerous, which affects the G8 countries: in the next ten years, in fact, they will have to face a strong need for uncovered welfare spending. Impact investing can become the scope of connection between the need for incompressible services, the inadequacy of public resources, the profit-seeking of investors.
It is evident that this is a significant leap forward, a lot beyond that achieved in the past with the introduction of the concept of social responsibility and investments based on SRI and ESG criteria ().
- SRI: the Social Responsible Investing rely on screening systems that they exclude from investment sectors deemed not to be socially responsible, such as weapons and gambling (SRI).
- ESG: an even more advanced step are these based on environmental, social and governance impact assessment.
- The YAY, instead, they represent a further step because they are specifically built with the iintention to obtain a return and a social change.
The term is significant Impact Investing was coined in 2008 by JP Morgan and the Rockefeller Foundation: finance today is beginning to have an interest in the Social impact mainly because it concerns investments with a high rate of decorrelation (for example, less subject to the so-called country risk) and therefore with less immediate returns and sometimes - but not always - lower than those of the market, but in any case less volatile.
SIIs have not only been theorized and designed, but also initiated and tested. The first country to use them was the United Kingdom, where in 2010 the Government developed the first YES B (Social Impact Bonds), then followed by United States, especially from the city of New York (2012).
