Social Impact Investing has hit – or is about to – its "Hush Puppy" moment

Friday 20 May 2016

“The success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts” - Gladwell

Social Stock Exchange Family Office Event: Oikocredit, Big Society Capital & more - by Gary Mead

Bart Van Eyk, Director Business Development, Loans and Equity, Oikocredit

The Hush Puppy Law:  Not invented – but certainly popularised by Malcolm Gladwell – the ‘tipping point’ is now firmly in the lexicon. In his definition of “the law of the few”, he says that “the success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts”. In his eponymous book he gives the example of the quintessential brand of suede shoe, the previously unfashionable Hush Puppy. In the 1990s the brand became a fashion item, one that’s never gone away, thanks to a few well-known personalities adopting it. Impact investing has hit – or is about to – its Hush Puppy moment.

That was the view I took from the latest Social Stock Exchange event, the Family Offices Conference, held in London on 10 May. Good-humoured, relaxed, informal, all the speakers had a “particular and rare set of social gifts”. Stephen Brenninkmeijer, chairman of the Social Stock Exchange whose family is behind the Dutch clothing retailer C&A, kicked off proceedings by reminding the packed audience that family offices play a “pivotal role” in impact investing, before introducing Cliff Prior, CEO of Big Society Capital.

The conference then moved onto an interesting panel session, ably moderated by Ingrid Stange, founder and chair of Partnership for Change, who asked the panel members – Brenninkmeijer, James Perry (CEO of Panahpur), Ben Goldsmith (CEO of Menhaden Capital), Kavita Gupta (Head of Impact Investments, Amplifier Strategies), and Sian Ferguson (Trust Executive with Sainsbury Family Charitable Trusts) – to consider their own personal journeys to impact investing. Brenninkmeijer, who modestly described C&A as a “simple retailer”, said that in the 175 years of the business being “a force for good” had always been a slogan of the company. Gupta discussed the aligning of values and the cultivation of values, while Perry thought that the late 20th century’s “focus on purely financial returns” had led to growing inequality, in turn creating social instability. For Goldsmith and Ferguson, creating investment opportunities in technologies combatting global warming was a no-brainer; it’s the direction the world is moving in.

It was refreshing to encounter a banker who has a sense of social mission – there are precious few of them – and Alexander Hoare, Trustee of Golden Bottle Trust and Partner with C. Hoare & Co., next spoke about the Peterborough prison Social Investment Bond, a courageous venture backed by Hoare to rehabilitate offenders, focusing on the nature of the return: which of course is not measurable purely in pounds and pence. For him, the emphasis is on the “uncorrelated returns” offered by some impact investments, which “just keep giving back steady returns” no matter what the wider market turmoil may be.

The second panel session, moderated by Benjamin Firmenich of Impact Finance, moved to some practical case studies of impact investing. Denise Cockrem (CFO, Good Energy Group); Bart van Eyk (of Oikocredit); David Gorman (of Capital for Colleagues); Mark Crossley (of Standard Gas); and Seb Beloe (of WHEB Asset Management) all had some good insights, but what stays with me is the sheer vitality and variety of the companies springing up, seeking capital to do the right thing, by investors, workers and the world. Oikocredit is well-known, but it was especially fascinating to hear about the growth of the smaller entities, particularly Standard Gas – of which I reckon we’ll be hearing a lot – recycling waste to produce energy via some novel technology. Cockrem highlighted the UK’s strategic vulnerability regarding energy, 60% of which is imported. “Three years ago we were the ‘token green’” but, as the big energy producers/distributors have consistently disappointed customers, “people are joining us because of service”. The finale was breathtaking: Rhea Silva showed a video about Chototel, a really clever idea of providing ultra-affordable housing.

The big issue underlying all this remains a work-in-progress: how to move this market from the side-lines to mainstream – how to get that Hush Puppy moment. That obsesses us all. Finding the right investors; moving away from the traditional metrics of assessing companies; providing products so that retail investors can get in and exit simply; all these and more are necessities. And the biggest impetus will be the involvement of (more and more) people with a particular and rare set of social gifts.

Gary Mead - Social Stock Exchange - May 2016

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