UK social impact investing market surpasses £5bn

Big Society Capital data shows social impact market has grown from £850m to £5bn over an eight-year period

The UK’s social impact investing market has grown six-fold since 2021, to top £5.1bn in 2019.

Data from Big Society Capital has shown the market has grown from £850m to £5bn over an eight-year period with much of the growth coming from alternatives to traditional bank lending. This has soared 20-fold from £169m in 2011 to £3.4bn at the end of last year.

Big Society Capital noted in a statement that the diversity of the social impact investment market has enabled different types of investor to enter the market, and increased the availability of finance options for social enterprises and charities.

See also: – Green Dream with Resonance’s Simon Chisholm: The lowdown on social impact investing

In another example of the area’s growth, the number of transactions made in the sector increased by 18% year-on-year to more than 5,000 in 2019, with investment coming from a broad range of institutions, including venture capital funds, social banks, social property funds, charity bonds and specialist lenders.

Big Society Capital also said social property funds, which use investors’ capital to create positive social impact by  for example, providing specialist, supported housing for people with learning disabilities, now account for the largest segment of the market – 42% of the £5.1bn total. These vehicles were established just eight years ago.

Stephen Muers, interim CEO of Big Society Capital, commented: “It is very pleasing to see the substantial growth in the market to the end of 2019 and the growing popularity of the different investment options available, encouraging a broader spectrum of investors into this market to create greater positive change for people across the UK.”

Venture investing was also another sector seeing considerable growth of nearly 50% year-on-year as investors back innovative companies looking to tackle social issues such as preventing mental ill health, childhood obesity and the ageing population.

Big Society Capital also noted the importance of social impact investing amid the Covid-19 pandemic. Many social enterprises and charities have faced a perfect storm of rising demand for their services and falling income due to the pandemic; social lending has been a lifeline during these challenging times, and demand is likely to continue.

“The impact of Covid-19 has been both social and economic,” added Muers.  “I believe it will be a key driver in shifting investors’ focus from a purely financial return to one that delivers a social impact too. I expect social impact investment to play an increasingly important role as an engine of the economic recovery.”

Avatar

Natalie Kenway

Natalie is global head of ESG insight for ESG Clarity and has been an investment journalist for 16 years. She won Editor of the Year at the Aviva Investors Sustainability Media Awards 2021, and was Winner...