The Capital Market Authority, headed by Dorit Salinger, several weeks ago published a circular entitled, "Statement of Expected Investment Policy in Investment Institutions." The circular, which will become binding, states, "As part of the declared policy that it publishes, an investment institution shall state whether it addresses aspects of responsible investment in determining its investment policy, and if so, shall list these aspects." A source involved in social investments says that it is now clear that what is involved is "a revolutionary measure that will change the situation in Israel."
What does this mean? The Capital Market Authority, which published this draft in early September, explains that "responsible investments" are "investments that take social welfare into consideration, in addition to considerations of profit, including in this context rules of corporate governance supporting environmental protection, social justice, and preservation of human rights."
The draft also states, "This issue has recently been occupying a greater place in global public discourse in general, and in investments in particular." The Capital Market Authority wants all investment institutions to address this aspect. At the same time, this does not necessarily mean that investment managers will make such investments, or even consider making them.
In any case, Yaron Neudorfer, CEO of Social Finance Israel, a company dealing with impact investments, including an analysis of social bonds, says, "The Capital Market Authority's measure is no less than a revolution that will change the situation. It won't happen in a year, but it will happen later." Neudorfer adds, "This is an ostensibly passive measure, but a market will emerge as a result that will bring Israel to a place that the world has already reached - a social capital market." Neudorfer clearly has a major interest in a social market in Israel. The largest and best-known investor in social bonds is Sir Ronald Cohen, who initiated the founding of Social Finance, a non-profit organization that currently operates three permanent branches: one in the UK, one in the US, and one in Israel. The idea is far ahead of its time; only insubstantial sums have been raised, and it has not yet proved itself as a stable and profitable investment instrument. Neudorfer, who manages the Israeli branch, says, "This is important now, because the entire world is moving to a new place - all the social matters have been financed by the government or philanthropy up until now, and neither of them is enough. If we can recruit investors and investments for social matters, it will therefore open a huge store of possibilities for financing social issues."
Published by Globes [online], Israel Business News - www.globes-online.com - on October 16, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017