Schroders has announced plans to raise £100m for the BSC Social Impact Trust with the intention of being the first London-listed investment company to deliver measurable positive social impact as well as long-term capital growth and income.
The trust will align with the UN Sustainable Development Goals and focus on investment in high impact housing, which includes affordable housing and specialist housing for vulnerable groups; debt for social enterprises, including charity bonds; and social outcomes contracts between public sector or government bodies and a delivery organisation.
In an announcement, Andy Howard (pictured), global head of sustainability at Schroders, said: “The connection between social impact and investment is deepening and expanding across financial markets. Our clients are looking for new ways to connect their investment goals and sustainability concerns to produce measurable social impact as well as a financial return.
“Our solution offers individuals and institutions exposure to a different type of impact product – a high impact diversified portfolio of specialist investments that help improve the lives of people in the UK. These investments are anticipated to be long term, low volatility and have low correlation to equity market movements.”
Schroders will buy five impact funds and two co-investment debt portfolios totalling around £40m from Big Society Capital, which will form the basis of the trust.
Big Society Capital, which uses the Impact Management Project framework, will be overall responsible for the investment of the fund’s assets and have 25% of the trust’s shares at lunch.
Jeremy Rogers, chief investment officer at Big Society Capital, said: “The current coronavirus pandemic is exacerbating many social challenges from homelessness to domestic abuse. Social impact investing can directly help the charities and social enterprises tackling these problems, for example, by enabling them to provide accommodation and support for those experiencing homelessness and survivors of domestic abuse.
“Now more than ever, investors want their investments to deliver significant local impact. This new trust gives investors the opportunity to access high impact investment solutions with diversified returns away from public markets.”
The trust aims to provide a net asset value total return of CPI plus 2% once the portfolio is fully invested, over rolling three to five-year periods, and is expected to target a portfolio size of £300-500m within five years of initial admission.
In the September issue of the ESG Clarity digital magazine, global head of product, solutions and quant Carolina Minio-Paluello announced the firm would be making impact investment a key focus for the firm after nearing completion of 100% ESG integration of all assets.