BSC understands that our clients seek advice on investing in UK impact investments. We set out below how we focus our advice to meet this aim.
We define “impact investments” following the definition provided by the Global Impact Investors Network (GIIN): “Impact investments are investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return.”
The Impact Frontiers Norms [1] classifies impact investments in the following categories:
A. Act to Avoid Harm
“identifying where the organisation (or asset) is causing harm to people’s well-being and the condition of the natural environment and improving those outcomes so that they are getting nearer the positive range established by the societal or ecological threshold.”
B. Benefit People and the Planet
“maintaining or causing improved well-being for one or more groups of people and / or the condition of the natural environment, so that it is within the positive range established by the societal or ecological threshold.”
C. Contribute to Solutions
“improving the well-being of a group of people or the condition of the natural environment so that the outcome is within the positive range, where the outcome had been negative prior to engaging with the organisation.”
Within this universe, BSC’s advice will primarily focus on “Contribute to Solutions” impact investments, although our advice will at times also consider “Benefit People and the Planet” opportunities.
Our advice will focus on investments made via private markets, but may also include public markets:
- Private market impact funds and separate accounts managed by third party asset managers (Impact Funds);
- Co-investments made alongside Impact Funds or other impact investors (which may include BSC);
- Direct investments in impact assets.
The asset classes we will advise on are: secured and unsecured private debt, private equity (including venture capital), Social Outcomes Contracts [2], renewable energy assets and property/land investments. We may also consider investments in other asset classes, bringing in external expertise as appropriate. The types of investment instrument we will advise on are listed on the Financial Conduct Authority Register [3].
Our geographical focus will be on investment opportunities either where the fund manager (or directly invested in organisations) are based in the UK, or where they seek to generate a substantial, measurable impact within the UK [4]. For the avoidance of doubt, this may include investments in funds not domiciled in the UK but that seek to generate a substantial, measurable impact within the UK.
The market for impact investments in the UK is rapidly evolving. We will review and update the types of investments on which we provide advice accordingly.
[1] https://impactfrontiers.org/norms/abc-of-enterprise-impact/
[2] “Social Outcomes Contracts” means contracts between a commissioning body (typically government or other public sector entity) and a delivery organisation whereby an external investor provides upfront capital to the delivery organisation which is repaid by the income stream from the commissioner, who pays based upon the outcomes delivered (rather than on a fee-for-service basis). Outcomes are judged, and payment levels measured, against expected outcomes without the intervention of the delivery organisation.
[3] We have permission to advise on the following types of investment: certificates representing certain security, debentures, government and public security, rights to or interests in investments (security), shares, units and warrants.
[4] “Substantial, measurable impact in the UK” means the investment vehicle holding the aim of deploying 25% of its capital in the UK, or that 25% of the ultimate service users or beneficiaries of organisations invested in by the investment vehicle are located in the UK.