Banking On Social Innovation: An Interview With Caroline Anstey, Global Head Of UBS And Society

Caroline Anstey, Global Head of UBS and Society and former Managing Director of the World Bank spoke to Adam Lent, Ashoka’s European Director of Research and Innovation, about a revolution in finance that currently is driving social change.

The daughter of Oscar-winning documentary filmmaker Edgar Anstey, Caroline grew up in London, gained a PhD in history and then worked in the dynamic worlds of politics and journalism, first as an assistant to the former Prime Minister James Callaghan and then on BBC Radio’s flagship current affairs show Analysis. Her unique background contributed to the design of a hugely influential career at the World Bank, where she became a force for modernization and opened the Bank’s data to the public. Caroline believes firmly that the financial sector can drive social change by becoming more open as a sector and by directing investors and expertise to the many great ideas ready to scale.

Adam Lent: What were the key lessons you learned while at the World Bank about addressing the big social challenges we face?

Caroline Anstey: Firstly, that the problems are so big that they cannot be solved by governments or by aid agencies alone. They have to be addressed by the private sector. So you really need to build good relationships between government and agencies and private finance to generate change.

And secondly, that innovation allows you to boost your development and leapfrog over challenges that might otherwise take years or decades to solve. The best example, of course, is the way mobile communications has brought so many beneficial changes to African countries without them having to pass through the fixed landline stage.

So it’s very welcome that we are seeing a democratization of development where new ideas can come from the tech sector in California or social entrepreneurs in Nairobi and any number of other places rather than just from academia or international experts. There’s a huge disruption to sectors like energy and water provision that will be driven by social innovators. That is something banks, including UBS, want to be part of.

Lent: Do you think the private and financial sector is ready and able to back these efforts to address social challenges?

Anstey: Yes, absolutely. It always used to be the case that public flows of money into development dwarfed private flows. Today you see private individuals seeking out investments with social purpose and you see large institutional investors like the pension funds that are increasingly committed to dedicating a percentage of their investment to securing environmental and social returns. It’s happening on both sides.

Lent: And what do you think is driving that shift?

Anstey: There’s a growing awareness that good financial returns are intimately bound up with social return. Investors are recognizing that you need a social license to operate as well as a formal, financial regulatory license. If you look at things like the growth of Fair Trade or the organics movement, there is clearly a shift underway in how people think about their role as a consumer and as an investor. That opens up a whole raft of opportunities to address these big challenges. The myth that used to be very common in finance that you can either do good or do well but not both has been proved wrong.

Lent: Social innovation, like all innovation, is a risky business. How can you incorporate social innovation into your products when clients are looking for steady or good returns?

Anstey: By building an investment market that isn’t necessarily focused solely on start-ups but on taking proven ideas to scale. The finance sector has to find innovations that are ready for the backing that will allow them to scale up. We feel that there is a great deal of expertise in banking that can offer mentoring to innovators.

Lent: Finally, what do you think governments can do to encourage this flourishing of social innovation and investment?

Anstey: When I was at the World Bank I led the move to open up all of the Bank’s data to the public and that encouraged governments to do the same. So, for example, the Kenyan Government followed suit and that spawned an enormous growth in tech hubs where start-ups used that data for all sorts of applications such as financial inclusion, more efficient healthcare and effective schooling. An open data system can spur innovation and is an absolutely crucial step for governments looking to address social challenges.

UBS and Ashoka have partnered up to launch the UBS Social Innovators program – an international, multi-year search and support package for social entrepreneurs looking to scale their social businesses. Follow the conversation online by searching #UBSInnovate on Twitter.