Much is written about the UK's leadership in the impact investment field. Indeed, I have on many occasions discussed the need to maintain this lead and protect our dominance. This is not nationalism but self-interest. As the chief executive of a UK-based intermediary operating solely in impact investment, I know we have a great deal riding on UK leadership.
Progress in the UK does continue, largely because of government-backed initiatives and the rapid entry of angel investors. To this is added the sometimes grudging, sometimes enthusiastic participation of large corporations and financial institutions. On the other hand, I sometimes fear that this leadership verges on arrogance, exacerbated by the advantage of English being the global language of impact investing.
This linguistic dilemma again manifested itself when the G8 Social Investment Taskforce member states reports were released; both the German and French versions were promptly ignored by many of us Anglo-Saxons, whose language skills are not up to deciphering these documents. They were subsequently released with English translations. What is clear is that the French, in particular, have been quietly making enormous progress.
The most eye-catching figure is that the size of the French market is estimated to be approximately €1.8bn (£1.3bn). This compares with published figures for the UK of a few hundred million pounds. Even when I adjust for the different approaches in calculating the two figures, there is only one conclusion: the French market is larger. In terms of structural flexibility and pure innovation, the UK market is probably still well ahead, but it is smaller.
Both markets have a large, state-initiated catalyst: the UK has Big Society Capital; France has la Banque Publique d'Investissement. The French also have a large ethical bank, le Credit Cooperatif, which, unlike the troubled Co-op Bank in the UK, has remained profitable and cooperatively owned. But the main difference is the active engagement of the country's large mainstream financial institutions.
Nearly all have actively managed impact funds and their sums exceed €300m (£220m). Much of this is because of the "90/10" funds, where 90 per cent is invested conventionally and 10 per cent in strictly defined social enterprises. Banks are required to offer these products to individual customers and the uptake has been impressive.
I am not intending to establish the basis for an inferiority complex. The point is rather that we all have much to learn from other countries. As each develops its own path for creating markets where social impact becomes a third dimension to investing, there is no basis for arrogance. I am reminded of a trip I made to the first Toronto Social Entrepreneurship Summit. I was led to believe the Canadian impact investment market was about to be created in the province of Ontario. Later that trip, I visited the predominately French-speaking province of Quebec and found it had been going on for decades. They just didn't talk about it as much – and few Anglo-Saxons read their French papers on the subject.
Rodney Schwartz is chief executive of ClearlySo, which helps social entrepreneurs raise capital