Karen Wilson has been working at the OECD since 2009 where her work has focused on innovation, entrepreneurship, finance, and most recently social impact investment.

Karen is also a Senior Fellow at Bruegel, an international economics think tank based in Brussels, an Associate Fellow at Said Business School at Oxford University and a Visiting Lecturer at the Stockholm School of Economics in Riga. She is a Board Member and Advisor of the European Foundation for Entrepreneurship Research (EFER), and serves as an expert on the European Commission Horizon 2020 Access to Risk Finance Advisory Group and on the World Economic Forum’s Global Advisory Council on the Creative Economy.

How do you see the impact investing ecosystem in Europe? Is still the case that countries in the European continent is much more behind other countries such as US or UK?

Impact investing has grown tremendously in the past 5-10 years but ecosystems vary significantly across  countries. This primarily has to do with the varying social and financial contexts within countries, the length of time in which impact investment has been active within each country and the role of key high profile champions. For example, Sir Ronald Cohen, who not only led efforts to development social impact investment in the U.K. over the past decade but went on to Chair of the Social Impact Investment Taskforce, established by the G8 under the U.K. Presidency in 2013, which has spearheaded a global effort to develop the market.

However, it is not just about key champions, it is important to build a well-functioning impact investing ecosystem. These means having appropriate framework conditions in place that enable the effective functioning of the market with intermediaries helping to connect investors and investees, as in the mainstream financial market. It is important that the public and private sectors work together in facilitating the development of the market. It takes time to develop an ecosystem, and the social impact investment still is new in many countries.

In that respect, the US and UK started earlier and the markets are further developed. Also, in the UK, the government has played a key role in developing the ecosystem by supporting the creation of intermediaries such as Big Society Capital, providing support for social entrepreneurs and tax incentives for impact investors.

What has been the most important development in Europe (or in the different European regions) during the last 10 years?

The growth in social entrepreneurship across Europe over the past decades has been one of the drivers of the need for impact investment, in parallel with the increasing interest and leadership of family offices and foundations in Europe to support entrepreneurs seeking to address social, environmental and economic challenges.

In addition to these broader trends, there are have been multiple developments across Europe, especially in the past couple of years. The Social Impact Investment Taskforce (now Global Steering Group) has helped to catalyse impact investment in a growing number of countries in Europe. Earlier this year, Portugal joined existing members UK, France, Germany and Italy but activity has grown also in a broader range of countries including Belgium, the Netherlands, Switzerland and the Nordic countries. A number of countries have created National Advisory Boards to bring together stakeholders in the social impact investment market and identify ways to further development the market. In addition, new approaches and financing instruments are being developed in a number of countries to address a variety of growing social needs including youth unemployment and issues related to the refugee crisis.

What are the challenges and opportunities for impact investing in the future?

It is important to remember that social impact investment is about addressing social needs and in more efficient and effective ways. It is not about the financial instruments. Social needs are growing and public budgets are getting smaller.  We need innovative new approaches to solve social needs.

There is a lot of enthusiasm about impact investment but it is important to look beyond the hype to actual data and examples to understand what works and what doesn’t in different sectors and contextual situations.

Currently there are various efforts to collect data within countries but these are not internationally comparable. Also, there are too few examples of how social impact investment works in different sectors, within different country contexts and using different financial instruments.  Organizations like the OECD can play an important role in defining the data and indictors needed and setting up a process for international collaboration on data collection. In addition, the development of more detailed case studies would be useful – ones that delve beyond the surface into the real lessons learned.