“Innovation disturbs administration.” This was one of the lasting remarks made by Sir Ronald Cohen at last week’s MaRS Global Leadership event, where he shared his insights on the development of social finance in the United Kingdom and abroad.
Innovations have the ability to disrupt entire markets and systems, and the innovation of social finance has the profound ability to drastically change political and financial administration. According to Sir Ronald, social finance disturbs administration because it requires a complete shift in traditional mindsets in order to solve our pressing social and environmental challenges.
How did this mindset shift occur in the UK? What were the contributing factors to the growth of the UK market? How do we accelerate this shift here in Canada? In his talk, Sir Ronald explained what has led us to this pivotal moment and where he anticipates social finance will go next.
Government as an enabler
The development of the social finance market in the UK is strongly attributed to proactive government leadership and the government’s ability to recognize opportunities for collaborating and enabling innovation (the very same innovation that could disturb it).
Sir Ronald explained how important it is for governments to provide citizens with the means to innovate and tackle social issues. He described the UK government’s instrumental role in the development of the world’s first social impact bond and the allocation of unclaimed assets left dormant in bank accounts toward a pool of capital for impact investing. Similarly, in Canada, provincial and federal governments will be important actors in supporting the growth of the social finance sector.
Measurement is critical
Sir Ronald stressed that measurement has and will continue to be critical to the successful development of the social finance sector. His reasoning is two-fold.
Sharing across the pond
Sir Ronald recounted the development of the UK’s Social Investment Task Force nearly 14 years ago and the importance of shared learning among industry leaders and stakeholders. This learning led to the ability to collaborate and back some of the many tremendous social finance “firsts” that have come out of the UK over the past two decades.
Going forward, Sir Ronald stressed the importance of continuous learning and sharing insights across borders, which is one of the aims of the Social Impact Investment Taskforce established by the G8 countries and chaired by Sir Ronald himself.
The MaRS Centre for Impact Investing serves as Canada’s non-governmental representative on the taskforce. Global sharing of best practices—whether in measurement, financial product development or in intermediation and market-building activities—will continue to support the momentum of impact investing and support lasting shifts in both mindsets and actions.
We look forward to continuing the global dialogue on impact investing and to learning from our peers across the globe as we continue to support Canada’s robust and growing social finance sector.