Impact Report 2023 | Schroder BSC Social Impact Trust plc
Schroder BSC Social Impact Trust plc | Impact Report 2023
Equality, Diversity and Inclusion (EDI)
Engagement SBSI’s portfolio manager actively engages with underlying fund managers throughout due diligence, investment and portfolio management stages of the investment process. Our engagement seeks to ensure that the organisation’s investment approach, processes and operations minimise negative and maximise positive impacts for people, communities and the planet. These aims and beliefs act as the foundation of our engagement approach with fund managers and other stakeholders that contribute to the achievement of SBSI’s investment objectives, which are outlined in Big Society Capital’s Engagement Policy . The policy was updated in 2023 to comply with the new Investment Firms Prudential Regime (IFPR) disclosure requirements to note the Company’s voting behaviour. 100% coverage: SBSI’s portfolio manager held annual impact conversations with all portfolio fund managers in 2022. Conversations focused on fund specific insights, learnings and challenges in the year and portfolio and market wide agendas, with a particular focus on evolving sustainability and ESG standards, and identifying actions for fund alignment to net zero emissions. Alignment with evolving Environmental, Social and Governance regulatory frameworks and standards SBSI has been closely monitoring the evolving landscape of ESG regulatory frameworks. In January 2023, Big Society Capital and Schroders submitted responses to the Financial Conduct Authority (FCA) on its consultation paper on the Sustainability Disclosure Requirements (SDR) and shared the response with fund managers. As a long-standing impact investor, Big Society Capital also contributed to the responses and discussions held by other key players in the impact investing industry such as the Impact Investing Institute, Global Impact Investing Network (GIIN), and British Private Equity and Venture
Capital Association (BVCA) to augment the views of the impact investing industry. The response primarily focused on how to improve the Sustainable Impact label, offering the expertise in impact investing developed over the last 10 years.
SBSI total Scope 1-2 emissions per £1m invested: 9.5 metric tonnes Benchmark: MSCI Global equities, 59 metric tonnes
Tackling inequality is at the heart of the SBSI’s mission. Over 2020-21 the Trust’s portfolio has delivered substantial progress in reaching diverse communities, with more than 90% of the people reached by portfolio organisations coming from vulnerable, underserved or marginalised backgrounds. Ensuring Equality, Diversity and Inclusive approaches at every level within the Company is also crucial to our mission. Following a detailed independent review, Big Society Capital launched a five-year action plan for Equality, Diversity and Inclusion in 2021. The initiatives of this plan will flow through to the management of the Company. Embedding EDI in SBSI’s investment process Our hypothesis is that more diverse fund managers will lead to more diverse-led frontline organisations, who will in turn generate greater outcomes for underrepresented groups. There is a proven business case for this: organisations that are more diverse and have inclusive cultures often have better performance and greater innovation. There is also an impact case, as we are likely to have a greater positive social impact if we are more representative, diverse, and inclusive as a sector. And the reasons go beyond any economic rationale: it simply is the right thing to do.
Specifically, we are building in EDI considerations across our investment strategy, process, portfolio management and reporting. Considering both EDI- related policy and evidence of inclusive practice, our approach includes: 1. Systematically considering how our investments contribute to specific EDI goals being set within our asset classes. 2. Looking at fund EDI policies, and, crucially, understanding how fund managers lives those policies in practice. We want to understand the equalities impact of proposed investment strategies, and how EDI is embedded in in Fund investment processes. 3. Track progress against these goals by engaging with our managers on EDI in portfolio monitoring and data collection. In 2022, Big Society Capital asked some of the largest fund managers in the portfolio to share data on diversity within their organisations and, for the first time, also on their portfolio companies. The findings below include the responses from 60% of the SBSI’s portfolio.
Big Society Capital has published voluntary Task Force on Climate-Related Financial Disclosures (TCFD) disclosures for two consecutive years ahead of the mandatory requirement. TCFD disclosure will become a formal requirement for Big Society Capital starting with the Financial Statements for the year ending 31 December 2023, which will be published in 2024. SBSI currently reports greenhouse gas emissions data for 52% of the portfolio. We believe this represent a relatively high level of coverage for the profile of frontline investments in the portfolio, the majority of which are small and medium sized social organisations, rather than larger listed companies that are the current focus of emissions disclosure requirements. We are currently working to extend coverage across the remainder of the portfolio over the coming year given its priority ahead of the mandatory TCFD disclosure and as a key metric identified under the EU’s Sustainable Finance Disclosure Regulation (SFDR). The 2022 TCFD disclosure for Schroders can be found here. Big Society Capital became a PRI signatory in 2023. The organisation also participates in asset class-wide initiatives, for example, the Equity Impact Project and Sustainability Reporting Standards with respect to housing funds. (SBSI estimate based on reporting for 52% of the portfolio, Benchmark MSCI All Countries World ACWI)
Summary of EDI fund manager survey findings 26
>75% Over-45
>75% White
Non-Disability
> 75% Male
100%
100% n = 2
100% n = 1
80%
67% n = 3
60% n = 5
60%
50% n = 4
50% n = 2
50% n = 2
50% n = 4
40% n = 5
33% n = 3
33% n = 3
40%
17% n = 6
20%
0% n = 2
0% n = 2
0% n = 3
0% n = 2
0%
26 Survey results are displayed as a percentage of fund managers who responded to the specific question. Where fund managers have not answered a question, they have not been included in the population (n = denominator). For non-disability, the percentage represents % of able-bodied individuals in the respective team.
53
52
Powered by FlippingBook