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The Role of Institutional Investors in Social Finance
Hebb, Tessa
Hebb, Tessa
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Abstract
"This policy brief focuses on Canadian pension funds as a source of potential capital in for Canadian communities. It examines how other jurisdictions have approached this issue and looks for possible policy options that will encourage such investment. There are three primary means of engaging Canadian institutional investors, particularly pension funds in impact investing for social finance. They can be encouraged, incentivized or compelled to take such action. Encouragement can range from clarifying fiduciary duty, requiring ESG disclosure, to reinforcing the need for a ‘social license to operate’ that large pension funds will require given their dominant role in the Canadian economy and tax exempt status. With the exception of the US Community Reinvestment Act no other institutional investors throughout the world have been required through regulation to make mandatory community investments. Rather these investors have been encouraged and incentivized to make such investments. I strongly recommend that the Task Force on Social Finance put forward policies that encourage and incentivize impact investing by institutional investors in Canada rather than compelling such action."
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Preprint
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2010-10-08
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With permission of the license/copyright holder