Big Society Capital Impact Report

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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