Understanding Impact in Social Investments 3
Our approach Understanding impact is fundamentally about becoming a more effective impact-first investor. We see three interconnected ways that a considered approach can help us do this. 1. Improving our practice and decisions For example, it can help us reflect on whether we used the right financial instrument or if we took too much or too little risk. It can also help us identify where social investment is the right tool to achieve social or environmental change, and where grants or other types of support will be more effective.
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Introduction
Our approach
2. Better support for investees This is both for individual social investments (where we can use our Funding Plus support programme to help investees overcome a challenge), and for identifying common challenges across the portfolio. In these cases, we can consider what role we have in addressing these common challenges using further funding or another tool, such as using our voice or commissioning research and evidence.
3. Generating learning We hope to generate insights that will be useful to social investors taking or considering a similar impact-first approach. It also has the potential to inform other parts of our work, particularly for our endowment where we have carved out a portion of funds to make environmental, social and governance (ESG) investments, and for our exploration into the role of impact investing where we have recently allocated £10m to the practice.
How we’re doing this
We developed our approach taking into account our specific circumstances as a social investor. We have a relatively large portfolio of 841 active, mostly bespoke social investments – the majority of which contribute to our three organisational aims: to protect and restore ‘Our Natural World’, create ‘A Fairer Future’ and help enable ‘Creative, Confident Communities’. We also have a small number of social investments focused on ‘Infrastructure and New Ideas’ designed to support the future development of the social investment market. Finally, we want to ensure that any approach is aligned to our values.
We used the following principles to help us design this new practice: • Investee-centric: We want any approach to understanding impact to be proportionate, to avoid placing additional burden on investees, and to be relevant and supportive of their day-to-day work. • Portfolio-level learning: This work is not about assessing investees or picking winners. Instead, it is about spotting trends and patterns across our portfolio that can inform how we operate. • One source of insight: This approach is not intended to be the only lens through which we understand impact or generate learning. It is intended to be one source that will complement others, including the in-depth insights from our relationships with investees, and our broader knowledge of the sectors and the impact areas we are working in.
1 As of January 2022
Understanding the impact of our portfolio
What we’ve done so far
Looking ahead
