L&G CEO to head UK ‘mission-led’ impact finance review

Nigel Wilson, Chief Executive of insurer, Legal and General (L&G), is heading up a major UK government review to catalyse ‘mission-led’ business – profit-driven enterprises committed to social impact – and has announced a working group of nine experts.
L&G whose group includes Legal and General Investment Management, has become increasingly active in corporate governance and impact finance.
Wilson, who earned £4.7m in 2015 after receiving an 11% pay rise, recently told the FT that big companies’ executive pay was not ‘fit for purpose’. LGIM voted against one in five UK companies in 2015, with half those votes cast against remuneration policies. LGIM also voted against four company chairmen last year for insufficient progress in increasing the number of women on their boards.
Earlier this year, Legal & General Capital, which finances the insurer’s direct investments, and PGGM, the Dutch pension fund manager, jointly invested £600m to build rental housing across the UK, providing over 3000 homes to help tackle the country’s affordable homes crisis.
The new review into mission-led businesses is sponsored by the Cabinet Office, which develops policy around social investment. It has the ambitious aim of doubling the size of the mission-led business sector in the UK over the next decade. Minister for Civil Society, Rob Wilson, says building on the government’s social investment activity to help businesses embed social impact “could create value for shareholders”.
He added that it could revolutionise the way the UK solves some of its biggest social challenges like old age care, dementia and unemployment.
The review seeks to distinguish between businesses that are intentionally/strategically mission-led and businesses that engage in corporate social responsibility initiatives. Itwill consult on why businesses might choose to become mission-led, how these businesses could grow over time, the challenges they might face and how to address them.
Wilson, said: “To get us to a solid set of recommendations to grow mission-led businesses to double their size in the UK economy, we have appointed a high calibre panel of experts. I’d like to thank the panel in advance for their time and energy to positively disrupt this market.”
However the review has already attracted criticism, Peter Holbrook, CEO of the UK’s largest social enterprise body, Social Enterprise UK, said the panel was missing authentic voices and was an attempt to broaden the social investment market at the expense of the traditional social enterprise sector.
He said: “We acknowledge that social investment is a market with currently too few takers. One good response could be to improve the product. Another good answer could be to build the capacity of start-ups to increase supply of investment-ready social enterprises. A further one could be to build awareness amongst commissioners to create more opportunities. All of these could be a good use of limited resources, but judging by the nature of the review team, the Government intends to broaden the social investment market by watering down the definition of what ‘social’ is. Quick fixes tend to turn out as bodged jobs. The expert advisory panel is missing authentic voices of recognised, established and trusted social businesses. The insights of those who have set about protecting a social purpose, with or without success, is critical.”
The call for evidence closes on 8 July. The evidence gathered will contribute to the mission-led business review and it will publish a report with recommendations in autumn 2016.

Misson-led business expert panel members

Nigel Wilson (CEO, Legal & General Group plc.)
Natalie Campbell (Founding Partner, A Very Good Company)
Luke Johnson (Founder and Chairman, Centre for Entrepreneurs)
Loughlin Hickey (Trustee, Blueprint for Better Business)
Andrew Goodman (Partner, McKinsey & Company)
Marcello Palazzi (Founder, Progressio Foundation)
Antony Ross (Partner, Bridges Ventures)
Annika Small (Co-founder, Centre for Acceleration of Social Technology)
Frank Welvaert (Managing Director, Johnson & Johnson Corporate Citizenship Trust)
Monique Villa (CEO, Thomson Reuters Foundation)