Big Society Capital Impact Report

Impact Report 2023 | Schroder BSC Social Impact Trust plc

Schroder BSC Social Impact Trust plc | Impact Report 2023

Environmental, Social, and Governance Risk Management Summary

Environmental

Summary 2022-23

Social Outcomes Contracts

No residual risks or issues identified in the reporting period Where applicable, risks appropriately mitigated by fund managers and enterprises in line with the SBSI’s ESG approach and Big Society Capital’s Responsible Business Principles.

Materiality: Low Social Outcomes Contract investments focus on provision of services in low environmental impact sectors including care, education and health and well-being. Investments include ancillary use of vehicles for the delivery of services, but these are not deemed to be material Potential material issues: – None identified

High Impact Housing

Materiality: Medium Investment in built environment construction and management results in exposure to comparatively high emissions sectors. In addition, the UK’s existing affordable housing stock is typically low energy efficiency. Potential material issues: – Extreme weather event and temperature damaging infrastructure of portfolio assets – Construction standards tightening to meet sustainable regulation resulting in unanticipated increased costs for property investments – Unexpected costs to retrofit existing building stock due to increased regulation on energy efficiency Mitigants: – Fund manager’s ESG approaches – Alignment with UK environmental standards and regulations – Ongoing monitoring of regulatory requirements – Application of ESG tools specific for Social Property to better enable the identification of gaps and mitigants for social property investments – Assessment of Fund strategies and progress towards improved energy efficiency in line with regulatory requirements and the UK’s net-zero pathway – Well-established infrastructure and geographical spread in the UK which limits severity of impact of irregular extreme location-specific weather events Materiality: Low Investments are predominantly service based with limited environmental impact. Limited business models involve the built environment and housing with higher environmental risks (mitigated in similar ways to High Impact Housing). Potential material issues: – Unexpected costs to retrofit due to increased regulation on energy efficiency impacting asset-based business models – Unexpected costs due to carbon taxing and fuel duties Mitigants: – Standard loans for community assets less likely to be affected given lead-in times for new regulation and short loan tenors. More likely to result in lending opportunities. – Mortgages for community assets may be affected by additional costs, however, lending to more established organisations and loans is secured.

Liquidity assets

Materiality: Medium Potential material issues:

– Ecological impacts of project development: Renewable energy generation involves land acquisition, permitting, and engagement with local stakeholders to address concerns about potential environmental and community impacts Mitigants: – Investments in liquidity assets must demonstrate at minimum negative ESG screening, alignment with TCFD requirements, and suitable policies to ensure engagement with regulatory requirements for community consultation (e.g. Section 106 requirements in the UK) and conservation

Debt and Equity for Social Lending