Gone are the days when it was a simple choice between people or profit. Now, those with a bit of cash to spare can invest their wealth in a way that benefits the planet and communities.
Bristol is at the forefront of this shift away from more mainstream financial services towards social investment – a growing sector that is estimated to be worth at least £1.95bn in the UK.
Home to Triodos, the UK’s ethical bank, Bristol Credit Union, Resonance and others, the city matches innovation with an ethical conscious, and a desire to carve its own way, putting it in a prime position to champion alternative finance. It even established its own currency in 2012.
“Alternative finance ‘Bristol style’, as exemplified by the Bristol Pound, is a not-for-profit social enterprise that is more interested in helping local independent businesses to thrive than in lining shareholders pockets,” says Stephen Clarke, co-founder and director of Bristol Pound CIC.
“The Bristol Pound is one of the biggest schemes in Europe and (as far as we know) the only local currency that you can use for your local property taxes, your bus and train fares, your utility bills and your everyday needs in 800 plus member businesses.”
He reveals that plans are afoot to enable people to get loans in Bristol Pounds.
James Berry is the CEO of Bristol Credit Union (BCU), a mutual, local banking provider that provides access for local people and organisations to affordable loans and safe savings accounts.
He describes alternative finance as “many things to many people, but with at its core lies the shared aim of making money work for people and planet, rather than it being an end in itself”.
Berry says the near-meltdown of the financial system in 2008/09 was a wake-up call to many who have subsequently chosen to be more thoughtful with their investments, whether its opening a saving account with BCU or investing through a fund like Resonance.
Looking to the future, he adds: “The need for alternative finance to scale-up whilst retaining its values means we’re likely to see an increased need for organisational capital to support that growth.
“BCU has just launched the first deferred share issue of its kind by a credit union in the UK. There is likely to be further innovation in the tech space, where Bristol is also very strong.
“Indeed, bringing together Bristol’s tech and alternative finance scenes could unleash a groundswell of new activity, and really drive both sectors forwards.”
Resonance has been a pioneer in social investment for more than 15 years and CEO Daniel Brewer has seen the sector grow significantly in that time, with further expansion predicted.
“When most people invest their money, they usually think of investing in cash, stocks and bonds,” explains Brewer.
“We believe that there is another way that individuals and institutions can invest, and this is into social enterprises, where their investment helps facilitate growth both from a financial perspective, but also in terms of social impact.”
The team at Resonance create and manage social investment funds that focus on the needs of social enterprises and deliver a financial return and impact for their investors.
They also work with social enterprises to help make them more sustainable and enable them to grow, as well as enabling them to get ready to take on investment or finance for the next stage of their journey.
Brewer continues: “Bristol has always been a pioneering city, open-minded to new ideas and innovation. It is not only home to significant wealth, both in terms of finance and skills, but there is also a long- established network of individuals committed to investing their resources to bring about long-term positive social change.
“Bristol is also a city that has faced persistent poverty and inequality, and is the home to some of most deprived communities in the UK. In response to this, it has developed a thriving social enterprise sector committed to supporting these communities in innovative ways.”
He adds that social investment can genuinely make a positive difference, while offering a return on investment, although – like any investment – it does come with risks.
As the UK’s largest social bank, Triodos Bank has been at the forefront of a movement championing “sustainable finance” for more than 30 years.
Managing director Bevis Watts says that finance, and how it is directed, has a huge impact on the shape of our economy and society.
“We have been described as a ‘challenger bank’ in the past,” he says. “But, for us, the term ‘challenger’ really relates to a new breed of start-up banks looking to provide competition.
“We should scrutinise what difference they are really offering. While we do need greater diversity in banking it is important to remember that alternative models already exist. What we really need to do is build the pressure to change banking at scale to promote a fairer and more sustainable society.”