British International Investment
27 July 2020

Book review: Nick O’Donohoe on Sir Ronald Cohen’s Impact

Impact – Reshaping Capitalism to drive real change
Sir Ronald Cohen

This article was originally published on Impact Alpha. 

There is nothing surprising about the fact that Sir Ronald Cohen has written a book on impact. What is perhaps surprising is that it has taken so long for him to do so.

Cohen has an extraordinary life story. He was born in Egypt to a Jewish family that was forced to leave the country during the Suez crisis in 1956. They settled in London with very little money and only a rudimentary knowledge of English. Within ten years Sir Ronald (or Ronnie as he insists everybody calls him) was President of the Oxford Union and within twenty years he had founded Apax Partners which went on to become the largest Venture Capital/Private Equity firm in Europe.

The story of this book however begins in 2000 when he accepted, from then Chancellor Gordon Brown, an invitation to chair the Social Investment Task Force which was charged with finding new and innovative ways to use investment capital to solve some of the UK’s most intractable social problems. Ronnie took the lessons he had learnt from decades as one of the UK’s most successful investors and has spent the last twenty years relentlessly driving the development of what is now known as Impact Investment.

This book recounts that journey and it is a story of how Ronnie catalyzed a movement.

The book describes how entrepreneurs, investors, governments and philanthropists have come together over the last two decades to take impact investment from a quaint idea to a central role in mainstream finance.

It’s strength is not just that it covers the growth of impact investment but it puts that idea in the context of something much bigger, namely the need to move to an impact revolution which can drive long term systemic social and environmental change. Currently as we live in a global economy devastated by virus and a world riven by inequality and unfairness that idea has never been more relevant and more powerful.

The book covers how, what Ronnie describes as the age of impact entrepreneurship, has developed over the past 20 years. It carefully considers the roles of the principal actors in the growth of this movement.

It provides detailed and compelling stories of Impact entrepreneurs who are building sustainable businesses that do everything from developing Drone technology to deliver vital pharmaceuticals in Rwanda to building software to help disabled individuals to communicate.

It covers the investors and philanthropists that are providing capital to these entrepreneurs. The new financial companies that have started to support the growth of that investment and new financial innovations, such as impact bonds, that are helping to fund it. It also covers the crucial role of the private sector and governments in enabling impact to be incorporated in capital allocation and the critical role of mainstream investment managers in driving the industry to scale.

Ronnie tells the story of the growth of this movement so well because he has been a central part in so much of it. It was Ronnie who incubated and largely funded many of the companies that have emerged to support its growth. It was Ronnie who played a central part in inspiring not just social entrepreneurs but many of the political, corporate and financial leaders who have put their weight behind this change.

Of course, the journey is not yet over.

Some of the financial innovations described in the book such as impact bonds have grown more slowly than many had hoped for and it is important to understand why that has happened and what we can learn from it. Certainly, the slow pace of change and inertia in government has been a major factor but so too has been the complexity and sub scale nature of many of the transactions.

The perennial challenge of measuring impact in a consistent and verifiable way is still with us. The book points a way forward through impact weighted accounts, but we live in a world where there is still no company required to report in a consistent, independent and audited way any non-financial metrics. It is still a long way from being able to present accounts that adjust for impact.

The book highlights the challenge of meeting the SDGs and the critical role of the private sector in achieving that. However, we live in a world where the continent with the furthest distance to travel in terms of meeting those goals, namely Africa, is not seeing an increase in capital flows but rather, over the last decade, a significant reduction. Despite great ambitions and worthy sentiments, the neediest are still missing out.

But it would be churlish indeed not to recognise the enormous change that has taken place over the last two decades. A change that has been driven by many people but nobody as visibly and as powerfully as Sir Ronald Cohen. His greatest strength is to refuse to accept that there are obstacles to his vision of a better, fairer world, his relentless perseverance and his gifts as an inspiring speaker and powerful advocate. These qualities permeate every chapter in his book.

It is not surprising that the blurbs on the cover are penned by the Head of the IMF, a Nobel prize winner in Economics and Bono. That illustrates how powerful and broad based is the support for Ronnie’s ideas and how important it is that we continue to move towards them.

For anybody who cares about practical solutions to solving the world’s most intractable problems and seeks an overriding narrative that links the kind of world we want to live in with a roadmap for how to get there, this book is essential reading.




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