In April, Better Society Capital teamed up with the Scottish National Investment Bank, The Impact Investing Institute and The University of Edinburgh to unite a diverse group of stakeholders, focused on a common goal: investing for social and environmental impact in Scotland. The event buzzed with discussions about net-zero, place-based investing and innovation – all underpinned by the Just Transition as a unifying force to bring together a cohesive and collaborative impact investing community.
The Scottish context
Scotland is already home to a highly developed impact investing ecosystem, with an estimated market size of more than £4bn[1].
The country boasts one of Europe’s largest life sciences clusters, with over 40,000 people working in the sector. This offers significant opportunities for impact investors, as climate change and health inequity increasingly come under the spotlight.
The establishment of the Scottish National Investment Bank Scottish National Investment Bank was another pivotal step, having been set up by the Scottish Government to deliver both impact and financial returns. Since its launch in 2020, the Bank has already made significant strides, concluding 22 investments totalling £300 million, met by a further £550 million from third parties.[2]
Despite these leaps, Scotland’s impact investing market is characterised by relatively small deals and high complexity. The ecosystem needs support, scale and strengthening – the cultivation of a strong impact investing community will do wonders to achieve this.
The power of community
From our own practitioner experience, we know that successful impact investment relies on input from a range of actors. Asset owners – whether they be institutions, charities or high-net worth individuals – supply the necessary capital. Investment intermediaries bridge gaps, structure deals, incubate and align interests. Agenda-setters, like governments and universities, provide the frameworks that drive innovation. Innovators and entrepreneurs pursue and deliver ultimate impact on beneficiaries.
This system thrives on collaboration.
No single actor has the capital, knowledge or expertise to tackle significant social issues alone. Additionally, our observation has been that peer influence is powerful – asset owners are more likely to invest for social good when they see others doing the same.
Our role at Better Society Capital
At Better Society Capital, we’ve helped build these impact investing communities and seen them in action. Our recent Edinburgh event in partnership with The Scottish National Investment Bank and the Impact Investing Institute was a testament to this, sparking connections and fostering growth within the impact investing community.
But there are more examples of how we’ve enabled place-based impact investment by bringing the right people together and investing capital.
- Community Owned Renewable Energy (CORE)
The CORE initiative puts renewable energy infrastructure into community hands, accelerating the transition to net-zero while building community resilience. CORE Partners, a collaboration between Better Society Capital and Power to Change, has worked with six community partners since 2017 to transfer solar assets into community ownership. These solar farms generate stable, long-term revenues that can be re-invested in local projects.
- Community Investment Enterprise Fund (CIEF)
Launched in 2018, CIEF provides debt finance to Community Development Finance Institutions (CDFIs), aiding small businesses that lack access to mainstream finance. The fund has helped over 960 businesses with £72 million in capital. Its second phase, this time with co-investment from Lloyds, underscores a commitment to sustainable business and regional development.
- Social and affordable housing via investment in Octopus Affordable Housing Fund
Starting in December 2023, the Octopus Affordable Housing Fund aims to accelerate the delivery of new, affordable and energy-efficient homes for low-income households. Partnering with housing associations, the fund targets the construction of over 500 homes, with a long-term goal of 5,000 homes. Our focus on energy efficiency and fuel poverty makes for a comprehensive approach to affordable housing that also considers access to resources and the transition to net-zero.
The path forward
We’re excited to build on the momentum from the event and take the next steps to build a community dedicated to maximising impact in Scotland. Collaborating with the Impact Investing Institute and Scottish National Investment Bank, we envision a robust impact investing network that can drive meaningful change.
Our priorities at Better Society Capital include helping assets owners discover, define and deliver on their impact investing goals. We do this by providing tailored support for investors transitioning to impact-focused strategies, ensuring they have the resources they need and connecting them with our network of expertise.
Join us in embedding impact investing in Scotland to be part of the movement towards a more equitable future.
And for those in other regions, stay tuned – similar initiatives are on the horizon as we continue to build thriving impact investment communities across the UK.
[1] https://www.thebank.scot/sites/default/files/2022-11/SNIB021%20Impact%20Investing%20Review.pdf
[2] https://www.thebank.scot/sites/default/files/2022-11/SNIB021%20Impact%20Investing%20Review.pdf
