We have heard much about responsible investing over the last few years, particularly with last year’s landmark case Butler-Sloss v Charity Commission bringing the issue to the fore. The judgement confirmed the discretion that charity trustees already have to decide their investment approach to best further their charity’s purposes – including the ability to pursue ethical or moral investment policies.

This blog gives an overview of Access’s approach to investing our endowment in support of our wider mission – much of which has been in place since we started investing in 2016.

Reflecting on our investments to date

Our latest Impact Report shows that it is possible to deliver social and environmental impact while still achieving a financial return. We’ve been able to align our investments with our broad mission of driving more capital to the charity and social enterprise sector – targeting as much finance to social and environment-focused organisations via our Bull’s Eye model while delivering the financial returns and cash flow we need to fund our grantmaking.

To date, our £22 million portfolio has outperformed our market benchmarks, achieving a total weighted return (after fees) of 13.89% (to December 2021). Though it is worth noting that this may well represent the ‘peak’ given a difficult and challenging year in the markets in 2022.

Over a third of the portfolio (34%) is now directly invested in UK charities and social enterprises delivering social impact, with the rest, either invested in similar organisations overseas, or in funds that have a strong environmental or social impact (ESG).

During 2021 for example, the fund’s investment in organisations has supported a wide range of impact themes:

• Decent work: Lending to thousands of SMEs and promoting mental health awareness via networks of mental health first aiders.
• A more inclusive society and economy: Lending to 145 micro-entrepreneurs, providing accommodation for 84 people with learning disabilities and mobility solutions for 139 people with physical disabilities.
• Resilient institutions: Supporting news organisations across 29 countries, most of whom have limited press freedoms.
• Positive climate action and energy security: Supporting the generation of renewable energy for 114 UK homes, avoiding 145 tonnes of greenhouse gas emissions and delivering over £37k in green finance.

The levels in the different tiers change over time. Until 2020 we had more than 40% in the centre of the ‘bull’s eye’ and it is as a function of the maturing portfolio and bonds coming to the end of their life that this has now fallen back as a proportion of the total.

In 2023, we hope to go further and publish the carbon footprint of our existing portfolio holdings (where available) and efforts taken to reduce it. This reflects our own growing awareness of the need to reduce carbon emissions across the board and follows the addition of ‘environment’ to our investment policy statement.

Looking ahead

We’ve been so encouraged to see other foundations build on our version of the Bullseye model and make it their own – Barking and Dagenham Giving for example in their GROW fund.

According to the Association of Charitable Foundations’ Foundation Giving Trends report, the largest 300 endowed charitable foundations in the UK have over £72bn in total assets. Unfortunately, most of these assets are invested in mainstream capital markets with little consideration of impact.

Sharing our own approach is only the first step towards positively advocating for broader change. As ever with our work, we are not just thinking about our role but about the broader ecosystem. We have started to scope out how we can step up our work in this area and look forward to testing ideas with our partners in 2023.

Please don’t hesitate to get in touch if you would like to chat more about Access’s approach.