What if you could make a significant difference in the world while growing your wealth? That’s the power of social impact investing. In this article, we’ll explore the history of social impact investment, its profitability, the size of the market, and the role of Better Society Capital.
The History of Social Impact Investment
Social impact investment may be a relatively new movement in the UK, but its roots can be traced back throughout history. Ethical investing, in various forms, has been present for centuries and provides context for the evolution of social impact investment.
It all began in the 18th century in the USA when the Methodist movement, a denomination of Protestant Christianity, stood against the slave trade, smuggling, and conspicuous consumption. They refused to invest in companies involved in liquor, tobacco, or gambling. This marked the start of socially responsible investing.
In the UK, social investment appeared even earlier. The Sir Thomas White Loan Charity in Leicester, which still operates today, made loans to local businesses in the mid-16th century, making it the earliest example of social investment in the country.
The 1960s saw socially responsible investing gain traction as protesters of the Vietnam War demanded that university endowment funds divest from defense contractors. A powerful sit-in at Columbia University in New York in the 1980s redirected billions of dollars away from South Africa during Apartheid.
By the end of the twentieth century, ethical lenders like Unity Trust Bank and Triodos Bank were operating in the UK. The new millennium brought forth initiatives by the government and the social and business sectors, seeking to intentionally address pressing social issues through investment. In 2012, the first social impact investment bank, ‘Big Society Capital’ (later renamed Better Society Capital in 2024), was launched using money from dormant bank accounts in the UK.
Is Social Impact Investing Profitable?
When it comes to social impact investment, financial returns and positive impact outcomes don’t always have a linear or inverse relationship. The risk-return-impact dynamic varies across different impact business models, and the evidence base is still being built. However, it’s important to note that financial gains and positive social impact are not mutually exclusive. In fact, social impact investing has the potential to generate significant returns while making a difference.
The Size of the Social Impact Investing Market
According to Better Society Capital, the social impact investment market’s total value reached £7.9bn by the end of 2021, witnessing a 20% increase since 31 December 2020. This figure represents the outstanding value of social impact investments, taking into account the balance sheet amount. It considers the capital drawn down, capital repaid, and valuation adjustments like property value write-ups or loan write-offs. The market continues to grow, presenting more opportunities for investors to contribute to positive social change.
The Role of Better Society Capital
Better Society Capital has a compelling mission – to increase the amount of money invested in addressing social issues and inequalities in the UK. They achieve this by investing themselves and enabling others to invest for impact. Since 2012, they’ve played a crucial role in growing the social impact investment market, which has expanded tenfold to nearly £8bn. This capital has supported social purpose organizations in tackling a range of issues, including homelessness, mental health, and fuel poverty. Better Society Capital demonstrates that investing for social impact can go hand-in-hand with achieving financial returns.
Invest in a Better Future with Social Impact Investing
Now that you understand the power of social impact investing, why not explore how you can make a difference while growing your wealth? Discover the potential of social impact investments and be part of the movement towards a fairer and more inclusive society. Learn more about social impact investing on our investment platform and start making a positive impact today.
Remember, your investment choices matter. Let’s create a better world together!
