Schroder BSC Social Impact Trust plc
Impact Report 2023
Marketing material
Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
It is a privilege to share this second annual impact report with you and I feel humbled by the work showcased throughout. I invite you to dip or dive into the report, to explore how SBSI has catalysed, supported and measured impact this year. Through the purchase of a single, freely tradable share, SBSI offers exposure to hard-to-access high-impact assets and managers, with ongoing portfolio management, engagement and governance disciplines. Our intention is to create a successful example of how impact investing can both address social needs and create resilient financial returns, earning a place in many kinds of portfolios. SBSI’s investments support partnerships between UK fund managers, social organisations, and the communities they serve. In addition to delivering this high frontline impact and resilient financial returns, the SBSI team is committed to working with new investors developing their impact strategies. By attracting a wider base of shareholders, we aspire to grow the Company, to expand the pool of capital dedicated to social impact investment and to help democratise access to this market. Against a backdrop of a national cost of living crisis and global market volatility the Company’s investment strategy has created a portfolio with two crucial impact attributes. First, the ability to deliver vital services for people who need it the most. More than 90% of the people reached by frontline organisations are from disadvantaged, underserved or vulnerable backgrounds. Second, proven resilience to difficult economic conditions. SBSI’s portfolio delivers essential government-mandated services and derives a substantial proportion of revenues from government- The Schroders BSC Social Impact Trust plc (SBSI) exists to connect public market investors to a diversified, resilient portfolio of social impact investments addressing entrenched social issues in the UK. Chair’s Introduction
Contents
Chair’s Introduction
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1 Introduction
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backed sources, which have been historically stable through economic cycles. This is reflected in the Company’s Net Asset Value, which has grown 8.2% from inception in December 2020 to March 2023. SBSI’s strategy is to invest in and partner with organisations with strong track records of creating impact, and with fund managers that can demonstrate effective use of capital to support social organisations’ resilience and growth. SBSI is currently fully committed, and has worked closely with fund managers and external partners to ensure that we manage and report impact in line with industry best practice. We were pleased to work on a verification exercise for our first Impact Report, led by Bluemark. The review found that SBSI’s report reflected a robust approach to impact strategy and management, and identified areas for development that this year’s report addresses in detail across expanded assessment of sustainability, diversity and inclusion, and learning and engagement in SBSI’s key asset classes. We also welcomed the FCA’s Sustainable Disclosure Requirement consultation, which signals the regulator’s commitment to supporting the integrity and growth of the impact and wider sustainability investment markets in the UK. Transparent labelling and disclosure of impact products are essential for the impact investment market to grow healthily. The proposals offer a good foundation and we have been in dialogue with the FCA and other stakeholders to consider how these labels can be further developed. We were particularly encouraged by the Sustainable Impact label’s proposed focus on ensuring investments have a clear theory of change for achieving impact, and robust measurement and management processes to follow through. These elements have been fundamental to our investment strategy, which this report covers in detail. As ever, we see SBSI’s Impact Reports as part of a conversation with our shareholders and other partners that supports the Company’s success and also helps to grow the market for social investment. We’d welcome your feedback, and look forward to working with you in the coming year.
2 Impact Themes
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2.1 Reducing Poverty and Inequality
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2.2 Good Health and Well-being
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2.3 Education, Training and Decent work
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2.4 Just Transition to Net Zero
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3 Asset Class Deep Dives
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3.1 Debt and Equity for Social Enterprises
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3.2 High Impact Housing
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3.3 Social Outcomes Contracts
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4 Impact Management
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5 Environmental, Social and Governance Risk Management
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6 Equality, Diversity and Inclusion
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Appendix: Methodological notes
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About the Schroder BSC Social Impact Trust plc
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Susannah Nicklin Chair
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
Introduction The Schroder BSC Social Impact Trust plc
(SBSI, ‘the Company’) is a quoted investment company accessible to any investor, providing capital for high quality and high impact social investment to support resilient, equitable, flourishing communities in the UK.
SBSI opens up access for public investors, by providing a listed asset structure, alongside deep knowledge and networks across social organisations and fund managers. Our intention is to grow the Company over time to serve both our impact and financial objectives. Expanding the Company’s shareholder base and increasing in scale will enable more deployment of capital to an attractive pipeline of social investment opportunities while also supporting liquidity in the shares and reducing cost ratios. We believe this is important in creating a virtuous cycle of lowering the barriers for investors and creating a demonstration effect to ‘crowd in’ more investors.
The UK faces entrenched social issues that require targeted investment at scale.
£7.7bn needed annually to meet the growing demand for care 1
£16.9bn needed annually to tackle the housing crisis 2
Every investor in the Company contributes to this, by
£65bn needed to insulate UK homes by 2035 3
Providing new capital through each fundraise
Local social organisations are often best placed to tackle these challenges in their communities, by partnering with government and investors to develop new cost-effective solutions that are tailored to disadvantaged groups. Many of these solutions are ready to scale with the right investment, but struggle to find it. Options are generally limited to mainstream retail finance that are often a poor fit, or very small private markets that are inaccessible or costly to manage for most investors. Social impact investment is highly focused on these issues, growing tenfold over the last decade to an estimated market size of £7.9bn in 2021 4 . Many investors though lack access to the private markets that finance many of the highest impact social organisations 5 .
Participating in secondary trades to enhance liquidity and open up social investment to new investors
Amplifying the signal effect of the Company to catalyse wider change in the UK’s financial system
1 Social Care: Funding and Workforce (parliament.uk) 2 https://bigsocietycapital.fra1.cdn.digitaloceanspaces.com/media/documents/BSC_Mapping_ the_Market_-_D13_-_Amends_made_2.pdf 3 REPORT (greenfinanceinstitute.co.uk) 4 Market data | Big Society Capital 5 https://www.impactinvest.org.uk/wp-content/uploads/2023/04/Estimating-and-describing- the-UK-impact-investing-market.pdf
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
How SBSI supports positive social impact
Impact investments must have a clear, measurable rationale for how investment is intended to contribute towards positive social change. In the social investment market this is often referred to as a “Theory of Change”, which forms the basis of the UK’s emerging criteria for Sustainable Impact Investments. SBSI’s Theory of Change sets out how capital is deployed through funds and co-investments, in partnership with fund managers, to frontline organisations with strong track records of working on critical social challenges, enabling them to grow and become more resilient, to deliver solutions for vulnerable, disadvantaged and underserved people across the UK.
SBSI engages with investors of all types to raise capital
Capital is deployed through funds and co‑investments
Addressing critical social challenges with investable models and major funding gaps
To deliver solutions for vulnerable and disadvantaged people across the UK £98m in social outcomes and savings 27,000 people housed 94% of people are disadvantaged, vulnerable or underserved 276,000 people reached since SBSI launch
To strengthen frontline organisations
£87m raised and fully committed
168 frontline organisations, with 30 year average track record Supporting growth and resilience for
£35m in Housing
Reducing poverty, inequality and homelessnes
£41m in Debt and Equity for Social Lending
SBSI works to expand access to impact investment for retail and institutional investors
Good health and wellbeing
£8.3m in Social Outcomes Contracts
Organisations draw on deep local knowledge and networks
Education, Training and Decent Work
10 Funds with deep knowledge and networks SBSI oversees fund manager engagement to support best practice
A Just Transition to Net Zero
in affordable, decent homes
Big Society Capital support and networks for social organisations and investors https://www.goodfinance.org.uk/
Map Key
Most deprived
Underpinned by robust management of impact and risk
Least deprived
Portfolio Investments
Knowledge and financial returns enables SBSI to deliver more and better impact investment and crowd in more capital
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
Progress Report Card SBSI targets deep, scalable positive impact for disadvantaged and vulnerable people in the UK, by connecting investors with opportunities that have an unmet need for capital. We assess progress for all investments, and for the Company as a whole, towards this mission.
What we look for
Progress summary 2023
Progress summary 2022
What Important positive
On track 100% of capital deployed in line with thesis and aligned with at least one UN SDG
On track 100% of capital deployed in line with thesis and aligned with at least one UN SDG
outcomes, meaningful to those experiencing the issue and addressing at least one SDG Who Beneficiaries, who are disadvantaged and/or vulnerable
On track 94% of beneficiaries from
On track 90% of beneficiaries from disadvantaged or vulnerable groups
disadvantaged or vulnerable groups in year (targeting minimum 60% at portfolio level year on year) On track Scale – in year investments reaching more than 168,000 people Depth: All investments providing services with high potential for deep and sustained positive impact Area for improvement Impact measurement extension ongoing, focus on enterprise level impact (growth and resilience) On track £98m (cumulative) savings generated through improved and more accessible services 27,000 people housed (cumulative) Area for improvement Assessment of outcomes in Housing (ongoing, in-year focus on counterparty resilience and tenant service quality) On track ESG measurement and management extended to include Equality, Diversity and Inclusion surveying and action plans, CO2 emissions and environmental monitoring Area for development Alignment with UK Sustainable Disclosure Requirements once published
How much Significant depth of impact, in
On track Scale – in year investments reaching more than 160,000 people
making meaningful improvements for people, and high scale of impact, through reaching a large number of underserved people
Area for improvement Extend outcome measurement in portfolio segments with limited data on depth of impact (ongoing) On track £55.6m savings generated through improved and more accessible services 19,000 people housed with Fund support Area for improvement Assessment of outcomes and performance in Housing (ongoing)
Contribution Significant improvement or additional benefit as a result of investment and activities
Risk Fund managers must assess and mitigate the risks that may prevent the intended outcomes occurring
On track
Priority area Assessment and deeper engagement
with investees on ESG Risk Management (achieved)
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
Investing and managing for impact
This report highlights what we are learning about good practice in impact management, focusing on key elements to strong performance.
Within each issue area, we look for: – Fund managers that demonstrate good impact practice and an ability to structure investments to align financial and social value – Enterprise models that can reach disadvantaged or vulnerable people, generating revenue by delivering significant positive impacts for people and savings for society and government This strategy means SBSI’s financial performance is dependent on achieving deep, scalable and sustained impact.
SBSI starts with the social issue, then identifies investment and enterprise models that can provide sustainable solutions. We then find and support fund managers who can channel investment to those enterprises. We help these fund managers balance the needs of investors with those of social enterprises, charities and social purpose organisations, to build a track record of success that can attract more capital over time.
User Voice Involving the people for whom an organisation exists to serve in the planning, delivery, and assessment of products and services. Throughout the portfolio this is crucial to ensuring that services are designed with people’s needs well understood, and are accountable to end-users and the public Partnerships SBSI’s impact is dependent on providing suitable financing to organisations that are in the right position to address important social issues. We look for fund managers that engage with social organisations to develop financial solutions that are fit for purpose, and social organisations with market leading track records of working locally with disadvantaged and vulnerable communities Holistic Assessment Financial and Impact performance is highly dependent on fund managers’ ability to assess and monitor the full spectrum of potential impacts, and impact related risks of investments Sustainability Environmental sustainability is interlinked with social impact. Our Portfolio Manager has engaged with key initiatives, including the Impact Investing Institute’s Just Transition to Net Zero consultation, and uses these insights to support our investees to take appropriate steps to reduce and measure emissions Equality, Diversity and Inclusion Tackling inequality is central to SBSI’s theory of change. This is dependent on SBSI and its partners being able to understand social issues in depth, and draw on diverse knowledge, experience and networks. Advancing good practice on equality, diversity and inclusion at every level within the Company, including within Schroders, Big Society Capital, and underlying fund managers, is crucial to this
Impact as a source of value
Financial drivers and risk mitigation
Impact return and risk mitigation
Historical revenue stability with a high weighting of government sources
What: Significant need such as housing and health and social care
Wh o : Targeting more vulnerable and disadvantaged groups.
Targeting areas that deliver significant savings for government and society
Sweet Sp o t
H o w mu c h: High social impact that also delivers significant public savings
Asset ba c king on lower risk/ return investments
C o ntributi o n: Significant change in life chances versus the status quo
Majority weighting to investments with inflation linkage or correlation
Risk: Mitigated through proven delivery track records alongside local knowledge
The Impact Management Project (IMP) Framework for assessing impact SBSI uses the IMP Framework for assessing impact at fund and frontline company level. This Impact Report summarises impact against five core dimensions throughout.
SBSI focus
IMP dimension
What What outcomes do business activities drive, how important are these outcomes for people or planet?
Important positive outcomes, meaningful to those experiencing the issue and addressing at least one SDG.
Who Who experiences the outcomes?
Beneficiaries, who are disadvantaged, underserved and/ or vulnerable
How much How much of the outcome occurs in terms of scale depth and duration? Contribution What is the enterprise’s contribution to what would likely happen anyway? Impact Risk What is the risk to people and planet that impact does not occur as expected?
Significant depth of impact, in making meaningful improvements for people, and/or high scale of impact, through reaching a large number of people Significant improvement or additional benefit as a result of investment and activities
Fund managers must assess and mitigate the risks that may prevent the intended outcomes occurring
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Impact Report 2023 | Schroder BSC Social Impact Trust
Schroder BSC Social Impact Trust plc | Impact Report 2023
IMPACT THEMES
CASE STUDY: Real Lettings Property Fund
Reducing Poverty and Inequality
More than a quarter of a million people, half of them children, are homeless and living in temporary accommodation. Local authorities have a statutory obligation to provide this accommodation, but the standards can vary significantly. One in six homeless households are placed in emergency B&Bs and hostels which can both be high cost and lead to poor outcomes. The Real Lettings Property Fund was developed by Resonance and homelessness charity, St Mungo’s to provide homes and personalised support for people in temporary accommodation or at risk of homelessness, helping them become more independent.
In 2023, the fund entered into 15-year leases with the experienced housing association Notting Hill Genesis for over 50% of its property portfolio. Another smaller and innovative partner Capital Letters are also taking on leases from 2023. St. Mungo’s continues to manage the remainder of the portfolio, with the intention to transfer the remainder over the course of this year. The transition has been well-managed over the course of 2022 and was driven by St. Mungo’s organizational focus shifting toward high needs homeless individuals requiring alternate models of investment and support.
266,000 +7% yoy 7 disadvantaged people provided with essential services 6
SBSI attributed share 22,000
SBSI NAV aligned to theme
Lower-income people in the UK face multiple barriers to accessing essential products and services, including housing, energy, food and finance, and often have to pay more than higher income households. This ‘poverty premium’ costs the UK more than £2.8 billion a year 8 . Inflation has placed further pressure on lower income households. SBSI’s investments provide essential services and housing that are tailored to disadvantaged and underserved groups, directly contributing to the UK’s goals to reduce poverty and inequality.
595 people at risk of homelessness housed
Positive impact on support networks and relationships
£75m Fund (SBSI £6.6m)
Real Lettings Property Fund
Financial drivers and risk mitigation
Impact return and risk mitigation
Yields to investors are generated from rent from Real Lettings properties, a large proportion of which comes from government backed Local Housing Allowance
What: Transitional accommodation and tailored support
Wh o : People at risk of homelessness
H o w mu c h: 259 homes
Sweet Sp o t
Support services for tenants help minimise rental arrears
C o ntributi o n: By taking a holistic approach to homelessness, the fund aims to achieve long-term changes in people’s lives Risk: Delivery risk of working with vulnerable tenants, mitigated by 60+ year track record of working on homelessness
UK SDG national targets SDG 1 No Poverty Target 1.4: Secure housing tenure for all by 2030
Current UK level: 13% of the national population do not have secure tenure, predominantly people from lower income and disadvantaged backgrounds An estimated 271,000 people were homeless in England at the start of 2023, including 123,000 children 9 , while the number of people living in temporary accommodation has grown by 74% in the last decade Current UK level: 15% of housing below decent homes standard, with lower income people most at risk, reduced from 18% in prior year 10 (sdgdata.gov.uk) Unsafe housing costs the UK an estimated £760m annually 11
All investments made on basis of upgrading existing properties to EPC band C by 2025, or band B for new developments
SBSI portfolio contribution: High Impact Housing
User Voice
Provision of affordable, decent homes for 26,698 disadvantaged, vulnerable and lower income people at risk of insecure tenure and/or sub-standard housing (increased from 19,000 in prior year) Growth driven by new developments and acquisitions by funds in the year
Resonance has embedded user voice in its homelessness funds by working closely with St Mungo’s and regularly surveying tenants. As a result of engagement with St. Mungo’s, Housing Partners across its fund and tenants, Resonance developed a Resource Hub
to enable support Housing Partners to share best practice advice, support and helpful tips on how they can support tenants. They have also launched a tenants forum, which plans to meet on a frequent basis.
SDG 11 Sustainable Communities Target 11.1: Safe, affordable housing and
basic services for all by 2030
Paul’s story of Homelessness
6 Cumulative figure since SBSI launch 7 YoY change compares results in year for 2022 (159,000) with in year results for 2021 (148,466) 8 https://fairbydesign.com/wp-content/uploads/2022/11/NOV_22_Local-poverty-premium-summary- report_v02.pdf 9 https://england.shelter.org.uk/media/press_release/at_least_271000_people_are_homeless_in_ england_today#:~:text=Posted%2011%20Jan%202023&text=New%20research%20from%20Shelter%20 shows,England%20are%20without%20a%20home 10 https://sdgdata.gov.uk/ 11 Building Research Establishment, 87741 Cost of Poor Housing Briefing Paper.indd (bre.co.uk)
See Resonance’s full impact report here .
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
IMPACT THEMES
CASE STUDY: Bridges Social Outcomes Fund, SPRING
Good Health and Well-being
Over 15 million people in the UK live with long- term health conditions, accounting for 70% of national NHS spending 14 . Services targeted at improving health and well-being for people with long-term health conditions have the potential to reduce both health inequalities, and the strain on public health and care services. Bridges Social Outcomes Partnership supported local authorities
and NHS bodies in Northamptonshire to pioneer a new social prescribing programme called SPRING, which works to create sustained lifestyle changes and improved self-care for people living with long-term health conditions. The service is now underway and social prescribing workers from four experienced delivery partners are supporting people to access specialist services.
10,243
+51% yoy
SBSI attributed share 1,186
people provided with health and care services
87% of participants improve their wellbeing after 6 months
Bridges Social Outcomes Fund II
Up to 5,500 people supported to 2027
SBSI NAV aligned to theme
An estimated £31billion in funding is needed to meet the UK’s rising demands for social care by 2030. Meanwhile between £3000-4000 is spent per person on healthcare annually 12 . SBSI invests in organisations providing health and care services and additional early intervention support to reduce both poor health outcomes and the strain on public health and care institutions. Crucially, SBSI’s portfolio tackles health inequalities in the UK, through a focus on local social organisations that tailor support for underserved and vulnerable people.
Financial drivers and risk mitigation
Impact return and risk mitigation
Local authority and NHS body funded payments based on agreed milestones focused on improving health and well-being outcomes
What: Social prescribing programme to create sustained lifestyle changes and improved self-care W ho : Individuals with long-term health conditions in Northamptonshire How Much: Programme expected to support 5,500 people over its lifetime. 766 people had started as of January 2023. 87% of participants improved their wellbeing after 6 months Contribution: This programme increases accessibility, quality of the intervention, duration and value for money compared to the previous model Risk: Execution risk: Programme requires significant coordination across a number of services, mitigated by partnership ongoing engagement with local government
Outcomes drive savings for NHS and government
Sweet Sp o t
UK SDG national targets SDG 3 Good Health and Well-being UK National Target – No one left behind.
SBSI portfolio contribution: Social Outcomes Contracts
Collaborative design streamlines referrals and administration across multiple delivery partners
Support the most disadvantaged young people through high- quality local services 13
Portfolio organisations averted 109,931 days of care through early intervention to date, and saved £15.5m in health and care costs to government
14 https://www.england.nhs.uk/blog/making-the-case-for-the-personalised-approach/
User Voice
The partnership gathers feedback from frontline staff so that they can track progress with participants and identify additional areas of support needed to address health concerns. Early on this process found that a high proportion of participants had acute mental health needs. In response the partnership put together a programme of “first aid mental health training” for staff.
12 Social care funding gap - The Health Foundation 13 UK National Government Corporate Report: Implementing the Sustainable Development Goals, July 2021
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
IMPACT THEMES
CASE STUDY: Rathbones Charity Bond, Thera Trust
Education, training and decent work
Social organisations reaching vulnerable and underserved people frequently integrate employment, education and training services into a wider programme of support tailored to specific needs. This multi-dimensional approach can help organisations to diversify income streams, ensure services are joined up and more efficient, and improve outcomes for people.
Thera Trust is a national leader in supporting people with learning disabilities. SBSI made a £1.7m investment in a charity bond raised by the Thera Trust to provide a range of support services. Thera operates through 31 companies across the United Kingdom, providing access to housing, financial advocacy, employment and training, care and support.
10,344 +17% yoy people provided with education, training and employment support
SBSI attributed share 3,038
Jordan Allen, Service Quality Director, Thera Just having someone who has that lived experience of a learning disability is really important and that’s what the people we support see when they look at me. I’ve been in their position and accessed the same support as they have.
SBSI NAV aligned to theme
SBSI investments support social organisations empowering disadvantaged and underserved people to improve educational outcomes and access better training and employment opportunities.
215 people with learning
Rathbones Charity Bond
£1.7m SBSI Investment
3,260 people supported annually
disabilities gained paid employment
Financial drivers and risk mitigation
Impact return and risk mitigation
Diverse income streams, including long term local authority contracts for care support provision
What: Improved access to housing, employment, financial wellbeing and community networks
SBSI portfolio contribution:
W ho : Individuals with a learning disability and their families or carers (indirect beneficiaries)
Bridges Social Outcomes Fund, West London Zone: 1,505 at risk young people provided targeted support, up from 702 people last year. West London Zone services to date indicate deep positive impact. 36% improved to get back on track with national standards targets for English. 25% improved up to national standards for maths. Bridges Evergreen, Skills Training: 6,570 learners in apprenticeships and other jobs and learning programmes, up from 5,400 in prior year. Bridges Social Outcomes Fund, Refugee Better Outcomes Partnership: 366 refugees in programme in first year, 12 have entered into employment. Rathbones Charity Bond, Thera Trust: targeted support for 3,800 people with learning disabilities
Sweet Sp o t
How Much: 3,260 people with learning disabilities supported in 2022
Financial confidence assessed annually by Investing for Good and given highest rating, based on 10 years of revenue surplus
UK SDG national targets 17 SDG 4 Quality Education Target 4.1: Quality education
Contribution: Targeted approach to underserved beneficiaries who would otherwise be marginalised, often providing long term, in-depth support Risk: Drop-off/Evidence risk that positive outcomes are overstated or not sustained, mitigated through internal monitoring and external assurance from Investing for Good
Current UK level: 30% of 16-year-olds leaving school without basic qualifications 15
outcomes for all children by 2030 SDG8 UK target: Decent work for All
Strong track record in raising and servicing four charity bonds since 2015, with 2020 bond being oversubscribed
User Voice
Thera prioritises ‘lived experience’ to ensure it delivers on its mission. The Quality Company (a specialist company that is part of Thera Group) employs people with lived experience of learning disability to assess the services
provided by Thera support companies. This is also reflected in company leadership, with 38% of executive director level roles held by people with lived experience of learning disability.
15 https://sdgdata.gov.uk/
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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Impact Report 2023 | Schroder BSC Social Impact Trust
Schroder BSC Social Impact Trust plc | Impact Report 2023
IMPACT THEMES
CASE STUDY: Bridges Evergreen, AgilityEco
Just Transition to Net Zero
SBSI’s investment in Bridges Evergreen has helped the Fund provide long term growth capital and expertise to impactful businesses. This includes AgilityEco, which has become a leader in energy efficiency and fuel poverty services. AgilityEco works closely with local authorities, housing providers and charities, providing energy efficiency upgrades and local energy advice for people at risk of fuel poverty, a need which has soared in the last two years. In addition to responding to urgent needs now, Agility Eco has also focused on positioning to help address the long-term challenge of the transition to net zero. Heat pumps are expected to play a critical role in the move away from gas heating, and in 2022 AgilityEco acquired a stake in the heat pump specialist Alto Energy to boost its presence in the market.
User Voice
Bridges and AgilityEco monitors customer satisfaction, which is central to delivering a high-quality service and maintaining high referral levels from clients including local authorities. Customer satisfaction has averaged 9.2 out of 10 since investment. AgilityEco also operate an advice service, LEAP, which includes telephone advice and in-home consultations, and offers a gateway to other services provided by AgilityEco and its partners.
£67m +254% yoy Savings and incomes generated for underserved communities and people at risk of fuel poverty 16
SBSI attributed share £5.35m
57,535 metric tonnes per annum CO 2 avoided
SBSI attributed share 5,788
Trust NAV aligned to theme
Moving the UK to net zero emissions by 2050 will require an estimated £6 trillion in investment over the next 30 years 17 . This unprecedented level of financial mobilisation also offers huge opportunities for positive social impact, by creating more and better jobs, reducing inequality and revitalising communities. Investments that combine positive social and environmental outcomes are also more likely to gain wider community and public buy-in, which is vital to a successful transition. SBSI invests in organisations leading the drive towards a more sustainable, fair economy, and creating new opportunities to reduce emissions and social inequality at the same time. At present SBSI has categorised energy efficiency and energy generation focused investments that work with lower income communities as ‘Just Transition’ investments. We intend to review the portfolio in 2023 using the Impact Investing Institute’s Just Transition Finance Challenge Criteria, alongside further engagement with SBSI’s underlying fund managers to enhance environmental and sustainability management across the portfolio.
Over 90,000 households since Trust investment
Average £531 annual savings per household
Bridges Evergreen
Financial drivers and risk mitigation
Impact return and risk mitigation
Energy efficiency and low carbon services to vulnerable households, primarily through the government backed Great British Insulation Scheme, with the latest round from 2023-2026 expected to provide £1bn investment annually Positive long-term outlook supported by the government’s statutory targets of net zero emissions by 2050 and no fuel-poor household living in an inefficient home by 2030
What: Support to provide low-carbon services to help reduce energy bills and manage finances
W ho : UK households facing fuel poverty
UK SDG national targets SDG 7 : Affordable and clean energy for all by 2030
How Much: 90,200 households served since investment, average annual savings of £531 per household Contribution: Measures to combat fuel poverty which also contribute to the UK’s Net Zero journey Risk: There is risk that the expected impact is not in line with what occurs at the household level: this is mitigated through ongoing assessment of savings data
Current UK level: Fuel poverty at 14.4%, up from 13% in prior year. Average fuel poverty gap £443 per household, up 31% year on year 18 Current UK level: 59% of UK homes do not meet
Trust portfolio contribution: Debt and Equity for Social Enterprises, High Impact Housing
Sweet Sp o t
Energy efficiency services provided to 45,557 households at risk of fuel poverty in 2021-22, and over 90,000 cumulatively since SBSI investment All new housing developed within portfolio meets minimum standard
SDG 13 Pathway to net zero emissions by 2050 requires all UK housing at minimum energy efficiency level (EPC rating C) by 2028
Investment to support growth and enable Agility Eco to meet increased market demand
minimum energy efficiency level 19
16 Figure calculated includes total community benefit funds generated by renewable energy assets, and estimated energy bill savings per household for AgilityEco clients receiving energy efficiency services and advice, including 44,643 households served in 2021 receiving two years of savings to date, and households served in 2022 receiving one year of savings. 17 https://www.lse.ac.uk/granthaminstitute/financing-a-just-transition/ 18 https://www.gov.uk/government/statistics/annual-fuel-poverty-statistics-report-2023 19 https://www.ons.gov.uk/peoplepopulationandcommunity/housing/articles/
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
CASE STUDY: Rathbones Charity Bond, Coigach
SBSI’s investments in Rathbone Charity Bonds support the market for charities raising capital from public bond markets. This includes Coigach Community CIC, a community interest company which owns and operates a 500-kw wind turbine on a remote peninsula in the north-west Highlands of Scotland. Coigach’s charity bond refinanced higher cost loans used to install the turbine. The community of Coigach faces many challenges common to remote locations including: a lack of affordable housing, decreasing levels of health provision and a fragile economy reliant on the traditional industries of fishing and crofting.
In response, the Coigach Community Development Company – a local charity established by residents in 2010 – led the development of the wind turbine, which started generating electricity in March 2017. Coigach Community CIC donates 100% of retained profit to Coigach Community Development Company, funding a variety of community projects including grants for residents for education, training, wellbeing and support with energy costs. On a longer-term basis, there are also projects to develop affordable housing and transport links and increase employment.
£115k profits generated for community projects
1,763Mwh renewable energy generated
Rathbones Charity Bond
SBSI Investment £241,000
Financial drivers and risk mitigation
Impact return and risk mitigation
Revenues from the turbine’s energy generation benefit from the Government’s Feed In Tariff Scheme, linked to RPI
What: Access to affordable renewable energy and support for community projects W ho : Members of local communities facing rural development challenges How Much: 1.7GWh renewable energy generated in the year to March 2022, with £115k profits donated as community contribution in the same period Contribution: Delivering additional funding targeted to community need Risk: Alignment risk that revenues are not targeted at areas of community need, mitigated through the long-standing Community Development Company, established by residents with a community focus
Sweet Sp o t
The bond is therefore able to pay interest of 5% a year increasing annually in line with inflation (RPI)
Asset-backed: bonds are secured by a first legal charge over the turbine
User Voice
Coigach’s board of directors are elected by the local community. Full membership is open to all local residents, while 12-15 year olds are also encouraged to join as junior members to represent the views of local young people and children.
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Impact Report 2023 | Schroder BSC Social Impact Trust
Schroder BSC Social Impact Trust plc | Impact Report 2023
Debt and Equity for Social Enterprises Asset Class Deep Dive:
Average track record
260,000 Serving more than people SBSI Share 22,226 YOY 13%
Organisations supported
Funds committed
32 years
£40.7m
61
SBSI invests in funds and co‑investments that provide capital to charities and social enterprises targeting high social impact interventions for more disadvantaged groups, primarily funded by government backed revenues.
Map Key
Most deprived
Deprived
Less deprived Average
Least deprived
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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Impact Report 2023 | Schroder BSC Social Impact Trust plc Impact Report 2023 | Schroder BSC Social Impact Trust
Schroder BSC Social Impact Trust plc | Impact Report 2023 Schroder BSC Social Impact Trust | Impact Report 2023
Debt and Equity for Social Enterprises Portfolio
Triodos £2.5m SBSI investment of £5.7m bank capital bond supporting Triodos loan growth Loans to a wide range of social organisations across the UK in healthcare, housing, education and communities
SASC Community Investment Fund £5.5m SBSI investment of £13.4m Fund
Rathbones Charity Bond SBSI investment of £14.9m in charity bonds Broad impact including supported housing, renewable energy generation and broadband connectivity for rural communities
Bridges Evergreen £14.9m SBSI investment
Charity Bank £5.1m SBSI investment in co-investments
Fund
Investments in social organisations providing care, housing, renewable energy
Health and care services; affordable housing for elderly people
Four impact themes: Sustainable Planet, Healthier Lives, Future Skills, and Stronger Communities
What
Vulnerable or disadvantaged beneficiary groups and/or the planet
People with long term health conditions and lower income elderly people
Who
Underserved and vulnerable people in the UK
Vulnerable, disadvantaged or underserved people
Disadvantaged, vulnerable and underserved communities
Development of a facility to care for 44 people rehabilitating from stroke or recovering from serious injury Development of 48 housing units for the elderly, of which 33 to be let at affordable rent Construction of a 20 unit alms-house to provide affordable accommodation for the elderly
Energy efficiency services for 45k households per year at risk of fuel poverty, leading to average annual savings of £531 per household Quality training provision to 6,570 learners, including 30% with no prior qualifications 181 affordable homes provided to moving from poor-quality accommodation or insecure tenancy agreements 18,969 days of quality care, education and therapy per year for young people with significantly improved outcomes Patient, flexible capital alongside hands-on strategic and value creation support, including expert impact measurement, management and reporting
1,234 people reached by 11 social organisations providing essential services including housing, care and training. 19.5 GWh of renewable energy generated annually, enough to power 5,200 homes
Over 16,000 tenants housed at affordable rents Intensive support including care, education and training, employability and housing provision to more than 7,000 people with health conditions or special educational needs 7,000 rural properties connected with broadband Fund provides additional capital to enable Charity Bonds to reach their target size. The Fund also engages with investees on impact management
Loans have supported 1,900 children provided with education or childcare 161 older people housed and supported in care homes 558 tenants housed in social and community housing
How Much
Flexible, long dated capital provided to small and medium social organisations, supporting growth and resilience
Flexible, long-term capital and technical support to mission-led organisations across the UK
The loans in the portfolio have enabled charities to purchase or develop properties that will provide high-quality, suitable, long- term accommodation and services for their local communities
Contribution
Key Impact Risks and Mitigants
External risk External factors, including Covid-related disruption restrict social organisations’ ability to deliver services and generate revenues. Evidence risk Diverse business models and small social organisations with limited capacity for data collection make it difficult to assess what impact is occurring and to identify areas to improve
Partnership Long term flexible capital provision to enable development and establishment of service delivery models, including flexibility on loan repayments in response to Covid restrictions.
Unintended impact risk Organisations with limited capacity are at risk of insufficient client protection, sustainability and governance processes, leading to negative impact for people and planet.
Holistic assessment Funds assess social impact case alongside wider consideration of potential impacts, including via supply chain, employment, ESG assessment integrated at fund and frontline levels. Portfolio Manager engagement in year focused on enhancing emissions measurement and management and identifying actions for alignment to net zero.
User voice and Partnership Enterprises with greater capacity provide data on user experience, insights are fed back into fund impact assessments by sector, impact model and beneficiary type. Fund manager proximity to frontline organisations allows for high-conviction assessment of impact where organisations have low capacity for impact measurement and reporting.
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
CASE STUDY: Triodos Bank UK bond, Jamie’s Farm
Jamie’s Farm runs residential programmes to help young people facing social and academic exclusion. Users are practically involved in the elements of running the farm and receive therapeutic support in one-to-one and group settings, with a legacy programme working with schools to ensure lasting change. Academic exclusion disproportionately effects young people from lower income backgrounds, and learners
with special educational needs. Exclusions have long-term and short-term consequences affecting academic achievement, mental wellbeing and future prospects. The Triodos loan has helped Jamie’s Farm expand and provide valuable experience and long-term support for over 11,000 people, including opening a new site near London’s Waterloo Station to provide impact right in the heart of the city.
64% of learners back on track on core subjects 6 months after attendance
Support for 1,128 vulnerable people in 2021
Triodos Bank UK (4% coupon)
Financial drivers and risk mitigation
Impact return and risk mitigation
Diverse range of funding sources, including schools and academies, fundraising and grants from long term partners
What: Residential programmes to help enable young people to thrive academically, socially and emotionally
W ho : Young people facing social and academic exclusion
Funding driven through demonstrating success in supporting school key performance indicators including pupil attendance and attainment, pupil behaviour, and reducing exclusions
How Much: 1,128 vulnerable young people supported, with 60% improving their wellbeing in 2020/2021 Contribution: Post-residential support offers follow up and longer-term impact Risk: Potential safeguarding issues are mitigated by high staff-to-student ratios and regularly updated health and safety assessments.
Sweet Sp o t
Increasing reputation of the farm has driven greater demand from schools and client organisations across the country
Olivia’s stay at Jamie’s Farm had an overwhelmingly positive impact on her life. She came back glowing with pride and joy and newfound faith in herself and her abilities. We felt incredibly proud when she was chosen as a Jamie’s Farm Ambassador. The staff at Jamie’s Farm are attentive, non-judgmental and truly understanding of the needs of our young people. I salute and thank them for changing the future, one child at a time.
Olivia’s mum
User Voice
Jamie’s Farm systematically gathers feedback from young people and teachers, including surveying during visits, and six weeks and six months later to assess outcomes and inform
service design. Dialogue with local schools was particularly important over Covid restrictions, leading to an adapted day visit programme.
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
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