Latest annual impact report shows mainstream social investment fund supporting the Covid-19 recovery

• Report by The Big Issue Group assesses how well the Threadneedle UK Social Bond Fund has delivered on its impact objective to support more inclusive and sustainable development in the UK
• Investment highlights include £14 million invested in social bonds aimed at alleviating the negative effects of the pandemic

(Thursday, 24 February) The Big Issue Group has released the seventh Annual Impact Report for the Threadneedle UK Social Bond Fund, as part of the fund’s disclosure to investors. The report assesses the degree to which the investment strategy’s impact objective to support more inclusive and sustainable development in the UK[1] has been achieved.

Launched in 2014 as the UK’s first mainstream, fixed income social investment offering, the fund is a partnership between global asset management firm Columbia Threadneedle Investments and The Big Issue Group, who acts as the social advisor to the fund.

Every year, the report assesses portfolio holdings according to the bonds’ alignment to the Sustainable Development Goals (SDGs) and their social performance rating (high, medium, low) by outcome area and geography. The investment projects’ impact reporting, transparency and relevant impact evidence are also scored using standards such as the Impact Management Project.

The 2021 report shows that overall, the fund held 225 bonds from 121 issuers including charities, registered social housing providers and publicly listed companies in sectors such as health & social care, utilities & the environment, and housing & property. Most bonds (83%) were scored to have a high or medium social performance rating, with nearly 60% favouring regional development outside the Greater Southeast.

The report also shows a new type of bond introduced to the portfolio, with £14 million invested into so-called “pandemic bonds” which aim to finance both the healthcare response to, and wider economic recovery from, the Covid-19 pandemic.

Examples of such bond issuance includes:

• An $8bn sustainability bond issued by the International Bank of Reconstruction & Development to help member countries expand laboratory capacity, invest in detection equipment, train health workers and resolve supply constraints.
• A $750m social (vaccine) bond issued by the International Finance Facility for Immunisation for funding to the Global Alliance for Vaccines and Immunisations’ core immunisation programmes and its COVAX Advance Market Commitment scheme, which pools funding to purchase Covid-19 vaccines for participating countries.

Outside of pandemic bonds, last year’s notable investments include Tesco’s first sustainability-linked bond contributing towards its target of reducing Scope 1 and 2 greenhouse gas emissions by 60% by 2025. The growth of such sustainability-linked social bond issuance has been significant over recent years and the report calls for future issuance to consider the intersection of social and environmental impact.

Nigel Kershaw OBE, Chair of The Big Issue Group and co-founder of The Big Exchange, said: “Our aim with this partnership was to bring the mainstream to social investment by giving ordinary people, as well as institutional investors, an opportunity to see their savings and investments do social good. Having grown to just over £408 million in assets under management[2], the fund’s success shows that more and more people want to be able to plan and save for the future while helping to create a more inclusive UK – it’s finance for the people. I am incredibly proud of what the fund has been able to achieve, not only over the last year but over the last seven years.”

Simon Bond, manager of the Threadneedle UK Social Bond Fund, said: “It has been fascinating to watch the quick and efficient bond market response to one of the most pressing social challenges of our time. This has presented our fund’s investors with an opportunity to support an inclusive and sustainable recovery from the Covid-19 pandemic, while at the same time generating returns on their investments. The developments over the last few years also reflect the growth of the ’S’ within Environmental, Social and Governance investment – social bond issuance was up 129% year on year to the end of September. There will be plenty more opportunities to put investments to work for social good, and I look forward to continuing to manage the fund in this way.”

The Annual Impact Report was produced by Big Issue Invest’s Impact team, led by Joshua Meek, Head of Social Impact. Joshua and his team were recently the recipients of the inaugural Pensions for Purpose “Best Impact Report Content Award” for Big Issue Invest’s Impact Report 2020-21.

You can access the Annual Impact Report here.  

The Threadneedle UK Social Bond Fund contributes a share of its annual management fee to The Big Issue Group, as well as the Columbia Threadneedle Foundation.

[1] The fund’s investments are primarily concentrated in the UK, with a particular focus on driving inclusive development and tackling regional inequality by targeting regions outside the Greater Southeast. The last three years have also seen an increase in investment in bonds targeting development outcomes internationally, including in countries in Europe, Africa and Latin America (representing 18% of total bond holdings as at 30 June 2021).

[2] As at 31 January 2022. Source: Columbia Threadneedle Investments