Ethical investing, responsible finance, ESG, impact investing, social investment…you have more than likely heard at least one of these terms. And it’s these fields – as well as social entrepreneurship – that are likely to underpin Europe’s green recovery and drive forward regenerative economies where communities are empowered, inequities are quashed, and environmental degradation is addressed. 

Many individuals disillusioned with the failure of capitalism to resolve global challenges have been seeking alternatives, solutions that offer a competitive return on investment or profit while generating a positive social or environmental impact. Impact investing is no longer an elusive field: It has grown five-fold since 2018 in the UK. According to Sir Ronald Cohen, the Chairman of the Global Social Impact Investment Steering Group, the sector has reached a “tipping point”.

So, let’s dive deeper. What are the latest trends in this growing sector? 

The Search for Diverse Teams Has Taken a Front Seat

Any company seeking early career talent must embrace social responsibility and sustainable business in a genuine way to attract diverse Gen Z and Millennial workers. This is particularly relevant for the social impact sector as it hopes to offer opportunities within socio-economically disadvantaged groups and to younger generations struggling with high university debt and navigating the world of unpaid internships. 

To embody the values that the sector represents, it is crucial that these social enterprises and impact funds are representative of the diverse communities which they serve. 

However, after the Black Lives Matter protests in 2020 and the pandemic, which exposed further racial inequalities, the social sector in general reflected on its shortcomings in achieving diversity, especially at the senior leadership and board level.

In the UK, many organisations in the social sector have suddenly adopted a more inclusive recruitment approach, celebrated the contribution of black-led initiatives, and encouraged D&I training for employees. And different organisations have emerged to help transform the social impact space. Take Charity So White, a POC-led campaign group seeking to tackle institutional racism, or Diversity Forum, which is a collective on a mission to drive inclusive social investment in the UK.

As a recruiter in the social impact investment space for a number of years, I’ve noticed the sector has become ultra-aware of language and lexicon. This has led to far more gender-neutral job descriptions, decisive job titles, less jargon, the offer of more flexible working hours, and salaries declared on job descriptions. 

But with hiring biases still very much alive, some organisations have taken their initiatives further. Good Finance – a collaborative project helping charities and social enterprises navigate the world of social investment – set up an Addressing Imbalance project and Diversity and Inclusion plan. The idea is to improve the access to information about social investment for Black and Minority Ethnic-led organisations. 

The Transition of Human Capital Across Sectors 

The social impact sector is rapidly adapting and growing as those seeking alternatives to their mainstream commercial roles bring their skill sets to the table and join the impact revolution. The types of people Careers4Change helps transition are usually searching for eudaimonic happiness and turning to more rewarding roles which align with their aspirations and purpose. The likelihood is that they don’t have experience in charities or non-profit organisations, but they can leverage their corporate knowledge to pursue a more meaningful path. 

Armed with up to 20 years’ experience in banking, for example, and a passion for social impact, mid-career professionals are well suited to social investment sector leadership positions. Many engage in fellowship programs at Acumen or LGT Impact Ventures to understand the nuances of deep-rooted social issues before diving into a full-blown career. Others become coaches for social entrepreneurs seeking a business mindset, such as through Ashoka or School for Social Entrepreneurs. 

This transition of human capital breaks down the barriers between the public, private, and social sectors so they can collaborate and achieve greater impact more rapidly. What’s more, I’m beginning to see another trend: Social sector professionals are seeking opportunities in mainstream investment firms that are setting up impact investment funds and becoming ‘intrapreneurs’. 

Merging of Sectors & Investors Shifting Focus to Social Impact Investments 

As well as shifting human capital, cross-sector business partnerships are on the rise. For example, The Schroder BSC Social Impact Trust, with a listing on the London Stock Exchange, will enable more investors to access social impact opportunities in private markets.

This is just the beginning of the interest that mainstream investment firms are showing towards reshaping and transforming investment agendas, paying attention to measuring the impact of their investment decisions through impact-weighted metrics.

Despite the social investment ecosystem having established mission-driven businesses for decades, they will benefit extensively from asset managers and family offices allocating capital in the direction of impact investment. And during the pandemic, this field of social impact investment grew significantly. More money flowed into sustainable investment funds than ever before as the role of social enterprises, impact investment, and tech for good was never more needed. 

As the interest in social investment funds increases and impact measurement metrics are fully established, longer-term partnerships between the public, private and social sectors will emerge to tackle social challenges such as affordable housing or access to finance. Impact entrepreneurs are at the forefront of rebuilding the economy post-pandemic, and I truly believe that purpose-driven businesses are the future. 

This article is authored by Sheena Pentin, founder and director of Careers4Change, which is a specialist recruitment consultancy connecting diverse, purpose-driven individuals with social investment firms, trusts, foundations, and charities.