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Corporate Governance

Godfather of investing for good says capitalism leaving people behind

Lee Mannion

11 Jun 2018

“Having a system which creates negative social and environmental consequences which governments then spend a fortune trying to set right just doesn’t make sense”

By Lee Mannion (Thomson Reuters Foundation) | 11 June 2018

Sir Ronald Cohen arrived in Britain from Egypt a penniless refugee and rose to become one of the country’s richest and most influential businessmen, all thanks to venture capital.

So it is a surprise to hear the 72-year-old pioneer of investing for social good describe the very system that enabled him to haul himself out of poverty as a root cause of growing inequality in the country.

“I went into venture capital because it was going to create jobs, and it did that,” he told the Thomson Reuters Foundation in an interview.

“But I also realised as I progressed that the gaps between rich and poor were getting bigger through entrepreneurship. It wasn’t dealing with the issue of those who were left behind.”

Cohen already had a highly successful career in private equity when the British government approached him in 2000 to explore how investments could be drawn to poorer areas of the country.

As a refugee and “sixties kid”, he says he had always been interested in how fair society is, and he has campaigned ever since to make investors consider the impact of their capital as well as the return.

“Having a system which creates negative social and environmental consequences which governments then spend a fortune trying to set right just doesn’t make sense,” he said.

There is mounting evidence the world is coming round to his point of view.

Impact investing, which generates measurable social or environmental benefits alongside financial returns, has doubled in the last year according to figures released last week by the Global Impact Investing Network, an industry body.


Cohen chairs the Global Steering Group on Impact Investment, which lobbies governments for supportive legislation and works to attract investors.

He said impact investing had become mainstream a lot faster than he expected, but governments had been slow to pick up on its potential.

“What hasn’t happened as fast as I hoped is for governments to understand the importance of this and to help implement it at scale, and that’s what we are working on now,” he said.

Although he has worked with governments, Cohen thinks they are incapable of solving social problems on their own, citing the electric vehicle maker Tesla to make his point.

“It’s unimaginable ambition to want to change the car industry. But now there isn’t a manufacturer in the world who doesn’t have a hybrid,” Cohen said.

“One entrepreneur can have an impact that governments … could never have. They (governments) are risk averse, fear failure, slow to move, want to pilot everything and increase it incrementally and that is not a way that you innovate at scale.”

Cohen has advocated strongly for a form of investing known as social impact bonds, which funnel private capital into projects usually funded by governments and charities.

Investors only receive a return if predefined results are achieved and the bonds have raised ethical questions about profiting from development projects such as absorption of refugees and preventing violence against women.

He says the mechanism is still being perfected, but adds, “if you have 108 (social impact bonds) in different countries, it’s not happening because it’s a bad thing”.

Overall, Cohen sees the success as on investing for social good as “the beginning of a paradigm shift which is going to change the flow of capital in our whole system”.

“Over 10 or 20 years, it will become unacceptable for a company or an individual to seek just to maximise return without taking into account the impact they create,” he said.

(Reporting by Lee Mannion @leemannion. Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women’s rights, trafficking, property rights, climate change and resilience. Visit
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