Ten years: it takes a village to grow social impact investment


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As we start our campaign to celebrate what has been achieved in the social impact investment sector over the last ten years, we thought it would be a good time to invite one of our Big Society Capital ‘decaders’ to take a moment to reflect on the last ten years and the developments that they’ve seen. We’ve asked Christine Chang, Deputy Chief Investment Officer, to share her insights.

“The saying goes it takes a village to raise a child" – that’s certainly held with my two children, and I’ve found the same is true for growing the social investment market.

My key takeaway from the last ten years is how fundamental it’s been to build trusted relationships with partners from the social, private and public sectors in order to create that village. I hope that over the last ten years we’ve been able to demonstrate the value that we can add by bringing the different voices together. The importance of listening to and learning from our partners, uniting the capital, ideas and expertise to help improve people’s lives. And I’d be remiss if I didn’t note those that started building the village long before us including Resonance, Big Issue Invest, Charity Bank, SIB, Esmee, CAF and the list goes on.

Starting with the social issue

We learned early on that you need to start with a deep understanding of the social issue and the way it is being addressed, including the role that charities and social enterprises have to play. Next is understanding the business model of the organisation delivering the impact; then, and only then, can you look at the role that social investment can play in helping them to sustain, grow and increase that impact. The final step is testing whether the prospective financial return, social impact, and risk proposition is attractive to investors.

A great example of this came in 2014 when I was focussed on criminal justice and the role social investment could play in helping to improve the rates of reoffending in the UK. I became deeply engaged with charities, social enterprises, social investment fund managers, and the Ministry of Justice with the aim of diversifying the provider landscape in the government’s landmark Transforming Rehabilitation programme. The programme offered contracts with a total value of up to £450m per annum and promised bidders the opportunity to focus on providing services that would stop offenders from the cycle of reoffending. Large scale charities like Change, Grow, Live and Catch-22 spent substantial time and money bidding to be primes in the programme supported by social investors including SASC, Bridges Fund Management, and Social Finance. Big Society Capital was prepared to back purpose-led bidders with tens of millions of pounds to enable them to bid into the programme, but despite this the Ministry of Justice didn’t award any contracts to the social sector, as the Evening Standard highlighted.

From this experience, we gained a much better understanding of the challenges faced by charities and social enterprises in public service markets and the role social impact investment can play. My personal reflection is of the value Big Society Capital was able to add by highlighting the structural inequalities in public service commissioning.

Widening Access to social impact investment

For the last five years, I’ve been responsible for leading Big Society Capital’s client investment strategy. The conversations we’d been having with wealth managers and asset owners has demonstrably shifted since we launched. We were hearing an increasing drumbeat from investors for access to the sorts of investments we were making. Access to investments that make a sustainable financial return alongside delivering deep impact for vulnerable and disadvantaged people in the UK, including women experiencing domestic violence, children on the edge of care and people experiencing homelessness or people at risk of homelessness. Again, as in Transforming Rehabilitation, it started with engagement, this time with investors, and listening and understanding the challenges they faced.

We found a partner in Schroders, an organisation as passionate about offering access to these investments and more generally the catalytic nature a deep impact product could have on the broader market. It was a rollercoaster from when we had the first conversation with Kate Rogers at Cazenove, Schroders’ wealth management arm, in June 2018. Following an unprecedented global pandemic, and a gargantuan amount of work from our team, our partner, the Trust Board and the shareholders who put their faith in us, we successfully launched the Schroder BSC Social Impact Trust (SBSI) in December 2020. I’m proud that 18 months on we’ve raised £85m, and I’m excited by the future it has.

We’ve learned a huge amount as an organisation in launching our first client product, and we’ve been fortunate in having a partner and a brilliant Trust Board to help us along the way. My personal reflection is the importance of the foundation of trusted relationships, being able to be open about the challenges we face and working together to deliver something that had never been done before.

Embedding Equality, Diversity and Inclusion in investment

A topic that has finally gained more prominence in recent years is Equality, Diversity and Inclusion (EDI). The structural inequalities in society have become increasingly difficult to ignore with movements such as Black Lives Matter and “me too”. I’ve been on a journey to recognise that to address these inequalities and make sure everyone’s voice is heard, we need to examine our own unconscious biases. I hugely valued the opportunity to take part in training provided by The Other Box which helped to do just that. I personally recognise my privilege and this training helped give me added impetus to advocate for change.

One of the tangible actions we are taking at Big Society Capital is embedding EDI in our investment process, so we are consciously and consistently considering EDI in all our investment decisions to ensure that we are enabling access to under-represented groups and reaching overlooked communities. There is no such thing as an equality neutral investment. Again, our starting point has been to bring in others with expertise to help us to do this, including the Equality Impact Investing Project and the Diversity Forum. We don’t get things right all the time, but we are carefully reviewing how we do things and identifying what needs to change is the only way we can make progress.

Shifting mindset

Reflecting on where we’ve come from naturally makes me consider the future and how we’ll apply the lessons we’ve learnt. When we started in 2012, we were in a niche market, since then the mainstream has moved in our direction. As reported by the FT, ESG was mentioned in fewer than 1 per cent of earnings calls between 2005 and 2018. By 2021 it was mentioned in almost a fifth of earnings calls, after a meteoric rise through the pandemic. And regulation is starting to bite, as we’ve seen with the highly visible resignation at the end of May of the chief executive of asset manager DWS Group after the company’s offices in Frankfurt were raided by police investigating claims of greenwashing. Increasingly sophisticated questions are having to be asked by investors about where their money is going. ESG is evolving from a box ticking exercise - the Global Head of Sustainability at Franklin Templeton believes a “broader, human centred approach” is required. And I agree. It goes back to the idea of starting with the social issue, and I am optimistic about how the next ten years will unfold for social impact investing.

Finally, I’d like to comment on what a privilege it has been to be part of an organisation where our shared passion for the social mission drives us all. This for me has been such an important element in our successes over the years as has been apparent not only at Big Society Capital but also across our partners. It has been the catalyst for spurring us on and pushing us to go further and more quickly.

More to come

There’ve been so many more notable events and learnings over the last ten years than I am able to squeeze into a short blog, but we will be sharing more in the coming months. Please follow our ten-year anniversary campaign on our social channels to hear more and share your impact stories and experiences over the last ten years using the hashtag #InvestForImpact.