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Bridges co-founder Michele Giddens (who previously chaired the UK National Advisory Board on Impact Investing, the GSG’s UK offshoot) recently led a Working Group tasked with exploring the role of government in shaping the impact investment ecosystem.

The Working Group’s final report identifies a number of areas in which policy-making can be catalytic, and provides practical recommendations for next steps – with a view to facilitating better knowledge exchange between countries.

The Working Group hopes this research will be particularly useful for policy-makers or government officials looking to build a thriving impact investment ecosystem in their home country.

Read the report here.

Within the portfolio, we have seen record levels of growth – and continued to deliver some powerful social and environmental impact. This report draws out some of these stories in more detail, but just to take a few headline figures from across the portfolio this year, our investments have:

• Delivered 1.3m hours of quality care
• Provided healthcare services to almost 40,000 people
• Helped over 2,600 children achieve better educational outcomes
• Averted more than 30,000 tonnes of carbon emissions
• Supported over 2,600 jobs

2017 has also seen a continued rise in the number of new entrants coming into sustainable and impact investing. This is a hugely exciting trend; and a much-needed one, given the scale of the problems we face. But it presents a challenge, too: as these new entrants join the field, all with their own goals, metrics and methodologies, how do we make sure that everyone thinks and talks about ‘impact’ in a broadly similar way? If we fail to get this right, there’s a real risk that expectations may become misaligned and different actors along the impact value chain may end up disappointed.

A key part of the answer, we believe, is the Impact Management Project: an industry-wide effort (facilitated by Bridges Impact+) to agree on some common fundamentals for how we talk about and manage impact. Our report this year includes a special section that introduces some of the key concepts emerging from the Impact Management Project, and explains how this emerging consensus is informing our own approach as an investor.

Read the report here:  (screen view)  (print view)

Its new report: ‘The Rise of Impact’ features five recommendations for investors, businesses and Government, drawing on the lessons of impact investing to propose concrete steps that would make the UK economy more inclusive and more sustainable.

Over 200 people attended the launch event hosted by the City of London Corporation at the Guildhall this week, where Michele and the rest of the UK NAB outlined an ambitious vision to unlock an additional £300bn for investments that directly address social and environmental challenges, while also establishing the UK as a global hub for impact investing.

The report’s recommendations include: the creation of a £2bn fund to catalyse investment and stimulate opportunities in communities that have seen decades of underinvestment and no real income growth; the creation of ‘Pensions with Purpose’ that will enable savers to invest in line with their values; placing even greater emphasis on social value within public procurement; and strengthening the UK’s role in international development finance.

The UK NAB is the UK’s voice in a Global Steering Group of 15-member states plus the EU: chaired by Sir Ronald Cohen, it was established as the successor to the Social Impact Investment Taskforce set up during the UK presidency of the G8. Chaired by Michele Giddens (co-founder of Bridges Funds Management), members include David Blood (co-founder of Generation Investment), Saker Nusseibeh (CEO of Hermes Investment Management), Sacha Romanovitch (CEO of Grant Thornton), and Hazel Blears (former Labour MP).

The launch was covered by the FT, City A.M., and Pensions & Investments amongst others. We believe this points to a real appetite for constructive ideas about how to can build a more inclusive and sustainable economy.

For more information, and to read the full report, ‘The Rise of Impact’, please visit the UK NAB’s website at www.uknabimpactinvesting.org

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More broadly, this year’s political turbulence has underlined quite how urgently we as a society need to find better ways to promote equality of opportunity; to support underserved regions; to improve educational outcomes for young people; to build a more sustainable health and social care system; and to reduce our environmental impact.

At Bridges, we have been thinking about these challenges and seeking out investable solutions for more than a decade. In this year’s Annual Impact Report, we explain how this approach has enabled us to identify a range of different strategies across our platform of funds – and we outline some of the impact we’ve been able to deliver as a result. For instance, through our investments:

• 3.3m care hours have been delivered to elderly and vulnerable people
• 2,500 tonnes of CO2 saved through renewable and green energy usage
  across our property portfolio
• 4,345 students have been enrolled in high-quality afterschool programs in the US
• Almost 1,600 previously unemployed people have been helped back into work
• Vulnerable children have spent 23,500 fewer days in care

We also show how this challenge-led focus has underpinned the new investments we’ve made in 2016.

Read the full report here:  (screen view)  (print view) 

At the 2013 G8 summit, Prime Minister David Cameron described the power of impact investment as “tackling the most difficult social problems”. This put impact investment growth squarely on the global agenda and led to the establishment of the dedicated G8 Taskforce. Yet despite the compelling ‘win-win’ of generating both a financial and social return, the addition of an impact lens to investment propositions has increased the concern of risk for many mainstream investors, deterring or even prohibiting many from pursuing impact investments.

The report will be launched today at an event hosted at Bank of America Merrill Lynch’s European headquarters, to be opened by the Minister for Civil Society, Nick Hurd, and illuminates the key risk factors that are deterring investors from gaining exposure to impact investments. It also identifies seven de-risking features that can mitigate these factors; from catalytic guarantees, which governments and foundations are well-placed to provide; to specialised brokering services and credible distribution platforms. The result is a de-risking toolkit for impact investment products, brought to life by a catalogue of 20 case studies highlighting de-risking features already at work.

Through these practical examples, drawn from around the world, the report aims to encourage collaboration amongst asset owners, advisors, product developers and government, in order to broaden the impact investment market.

While demonstrating that a track record of sufficient financial return is a key step for mainstreaming impact-driven investment strategies, the report provides another approach to achieve greater participation: that of adjusting the risk side of the equation and ‘de-risking’ impact investments, thereby creating a more accessible investment for a wider range of investors.

Clara Barby, Head of Impact at Bridges Ventures, said: “One way to reduce the sense of risk is to wait for impact investment strategies to prove themselves, but we don’t have time – some of the societal challenges that impact investments can address are too urgent. By clarifying some of the key risks and exploring features that will mitigate them, we hope that more investors can participate in the market and more impact-driven organisations can access the capital they need.”

“The development of a robust market for impact investment is an important progression in creating a healthy economy,” added Andrea Sullivan, Head of Corporate Responsibility, EMEA and Latin America, Bank of America Merrill Lynch. “Impact investment is currently still a niche activity and, in order to broaden the market, it’s essential to clarify and mitigate the associated risks so that we can connect more capital with need. This report aims to spark a meaningful discussion on impact investment as a strategy for long-term financial and social return, and ultimately bring innovative ideas and new players to the market.”

The research was conducted by Bridges IMPACT +, the advisory arm of Bridges Ventures that seeks to promote the growth of the sustainable and impact investment sector by offering practitioner-led advisory services.

A copy of the report can be accessed here.  

Press contacts

Bank of America Merrill Lynch

Rianne Buter

020 7067 0016

rbuter@webershandwick.com

Bridges Ventures

Claire Aslett

020 3219 8825

Claire.Aslett@capitalmsl.com

Notes to Editors

Bank of America Merrill Lynch (www.bankofamerica.com)
Developing solutions for social and environmental challenges is at the core of Bank of America Merrill Lynch’s responsibility platform. In more than 100 markets around the world, the company partners with employees, clients and stakeholders to make financial lives better. Bank of America Merrill Lynch focuses on responsible business practices, environmental sustainability, advancing opportunity in local communities through education and employability programmes, investing in global leadership development, and promoting cultural understanding. By harnessing our intellectual resources, sharing knowledge and connecting capital with need, we are providing opportunities that effect positive change. Learn more at www.bankofamerica.com/about and follow us on Twitter at @BofA_Community.

Bridges Ventures (www.bridgesventures.com)

Bridges Ventures LLP (“Bridges Ventures”) is a specialist fund manager dedicated to using an impact-driven investment approach to create superior returns for both investors and society at large. Bridges Ventures has raised seven funds to date which total £340m: Sustainable Growth Funds I, II and III, the Bridges Sustainable Property Fund, the CarePlaces Fund, the Bridges Social Entrepreneurs Fund and the Bridges Social Impact Bond Fund.

The report, titled‘Bridges Ventures Ten Year Report: a decade of investing for impact and sustainable growth’, gives a detailed account of the key milestones that have helped shape the sector since Bridges was founded in ten years ago. By analysing the firms’ own growth and achievements, the report aims to show  how investing for impact has evolved from being a small niche within the sustainable investment universe, to becoming a fast-growing, attractive investment proposition that is finding its place within conventional investment portfolios and across asset classes.

Bridges was created in 2002 with the aim to focus exclusively on opportunities where investments can generate attractive investor returns through helping meet pressing social or environmental challenges – be it backing business that generate jobs in underserved areas, building environmentally friendly care homes for the elderly, or providing flexible financing for innovate community transport models. In pursuing this strategy over the last ten years, the firm has innovated a range of investment vehicles across three main fund types: Bridges Sustainable Growth Funds, Bridges Property Funds and Bridges Social Entrepreneurs Fund.

Commenting on the publication of the report Philip Newborough, Managing Partner and Co-Founder of Bridges Ventures, said: “Over the last ten years we have seen social and environmental issues becoming a more integral part of the investment process and we are very proud to have played such an important role in the establishment and growth of impact investment. In this report we reflect on our experience and share some of the lessons that the last decade has taught us, to hopefully show that social impact and attractive financial returns can go hand-in-hand.”

Ten years, ten lessons

The report highlights key milestones in the development of the sector, starting with the work of the  UK’s Social Investment Task Force, through to the launch of the United Nations Principles for Responsible Investment, and to the creation of Big Society Capital, the UK’s first social investment bank.

Through Bridges’ own experience and numerous investment case studies, the report analyses the impact of the firm’s investments and also reflects on the most important lessons learnt. In summary, these are:

1. Where there are pressing societal challenges, there can also be rapid growth opportunities: ten years ago most people thought that social impact and financial returns were at best incompatible and at worst mutually exclusive. Bridges’ investments have hopefully shown that impact and commercial returns can go hand-in-hand.
2. Impact can be an engine of value across asset classes: over the last decade Bridges has innovated a variety of models that use investment to drive impact, ranging from growth capital for high-impact SMEs, to funds for property investment in care homes, to flexible funding for social enterprises.
3. The value in value for money: ‘consumer champion’ companies seeking to provide value-for-money for underserved areas can offer attractive growth opportunities and strong impact potential.
4. Clarifying investment selection: the ‘lock-step’ and the ‘impact first’: Bridges has learnt how to refine its approach for selecting the businesses to back by analysing whether the investment’s impact and competitive returns will go in ‘lock-step’ – and therefore a good fit for the Bridges Sustainable Growth Funds (or the Bridges Property Funds) –  or if, instead,  impact will be prioritised over fully commercial investor returns – and therefore a potential investment for the Bridges Social Entrepreneurs Fund.
5. The importance of alignment in property investing: a key challenge of investing in properties that demonstrate environmental leadership is to ensure that sustainable construction methods are followed by energy efficient operating practices by the tenant. By partnering closely with both the developer and the operator, Bridges can agree upfront on the ‘win-win’ strategy of creating commercial and societal value.
6. How the structure of social enterprises can create a competitive advantage: through the work of Bridges Social Entrepreneurs Fund, Bridges has learnt that there are mainstream sectors where the structure of social enterprise may create a competitive advantage over traditional business.
7. Policy as a catalyst for change: over the last decade the UK’s government has increasingly recognised the potential of high-impact innovative investment models, backing initiatives to bring the private sector to where it might not otherwise have ventured.
8. It’s not just about what we do, it’s about how we do it: While Bridges selects companies that will inherently create impact for what they do, they also focus on how they do it, tracking environmental, social and governance (ESG) impacts that signal both risks and opportunities for value creation.
9. Finding a place in conventional investment portfolios: Bridges’ investor base has evolved to include a broad group ranging from banks to pension funds, to private families and individuals, to endowments and charities.
10. A variety of skills, a shared vision: the variety of skills of the Bridges team, united by values and a shared vision, has been key to straddle the worlds of traditional finance and social impact and to encourage innovation.

The ‘Bridges Ventures Ten Year Report: a decade of investing for impact and sustainable growth’ is available here. For more information or to arrange an interview with a member of the Bridges Ventures team please contact Capital MSL

ENDS

Contact information

Hannah Randall – Capital MSL

T: +44 (0) 20 7255 5177

hannah.randall@capitalmsl.com

Notes to Editors

About Bridges Ventures

Bridges Ventures LLP (“Bridges Ventures”) is a sustainable growth investor established in 2002 with a mission to use its commercial expertise to achieve focused social or environmental benefit, as well as attractive returns for investors. Bridges Ventures has raised six funds to date which total almost £275m: Sustainable Growth Funds I, II and III, the Bridges Sustainable Property Fund, CarePlaces Fund and the Bridges Social Entrepreneurs Fund.

Bridges currently has two property funds under management: Bridges Sustainable Property Fund and CarePlaces Fund. The Sustainable Property Fund is an entrepreneurial fund which invests in properties in regeneration areas and environmentally sustainable buildings. The CarePlaces Fund , a partnership between Bridges Ventures and Castleoak, concentrates on first class care facilities for the elderly with a focus on sustainable design and construction.

The Bridges Sustainable Growth Funds (I, II, III) invest in growth businesses across the four impact themes of Underserved Areas, Education & Skills, Environment and Health & Well-being. The Funds typically invest up to £10m at a time in ambitious, entrepreneurial businesses including early stage, growth capital and buyouts / buy ins. Since 2002, these Funds have made equity investments totaling over £75m in 34 businesses.

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Get the Investing for Impact Report.

This paper has catalysed a global effort to develop a shared convention for describing impact goals, in a way that can inform portfolio construction.

In traditional asset management, we have developed a shared convention (risk, return, liquidity – and asset classes, as a shorthand) to describe, align and manage against our respective financial goals. However, the same is not yet true within impact investment.

Over the last decade, there has been an industry push to improve impact measurement. Better measurement is essential, but we found it is most meaningful when you have spent time thinking about what success looks like from the start.

Our new report, which you can download here, outlines this approach. (screen view)   (print view)  

[N.B. Please download in a browser other than Microsoft Edge, as this browser cannot render the PDF file correctly]

We are sharing this candid summary in order to encourage openness and an exchange of ideas.

We welcome feedback, as we look to provide some concrete next steps to the practitioners’ journey we present in this report. For more information please visit www.impactmanagementproject.com.