Welcome to the 2022 CT UK Social Bond Fund Annual Impact Report. In its eighth year, the Fund grew to a total of £372 million in assets under management and held 217 bonds from 127 issuers, with a continued focus on generating positive social and environmental impact.
The Fund’s objective is to support more inclusive and sustainable development primarily in the UK. The devastating effects of the Pandemic on the lives of the most disadvantaged and the ongoing cost-of-living crisis have shown how systemic shifts like these hit the worst-off the most. Inequality also has long-term repercussions, from reduced life expectancy and higher infant mortality to poor educational attainment, lower social mobility and increased levels of violence and mental illness. We see reducing inequality as paramount now and for future generations.
Since its inception in 2014, the Fund’s investment strategy to identify areas of greatest social need has been two-fold. Firstly, the Fund considers investments that tackle specific challenges or benefit demographic groups, as can be seen through its alignment to the eight impact outcome groupings. Secondly, the Fund has been prioritising projects in areas of high socio[1]economic deprivation and unemployment. 58% of the UK-based bonds are in sectors employing staff in high deprivation areas.
The Fund also looks to bring the ‘Environmental’ into the ‘Social’ context of Environmental, Social and Governance (ESG) through investing in bonds that finance decarbonisation, while contributing to a more balanced and inclusive economy. This is particularly important for high carbon-emitting “brown” companies, that may struggle to receive the needed capital to transition to Net Zero, as ESG investors prefer cleaner environmental credentials. It is an opportunity to boost employment and growth in areas of economic deprivation. Beyond investment activities, Columbia Threadneedle have actively supported the Just Transition Finance Challenge, a flagship initiative to mobilise more public and private capital into investments that support a Just Transition to Net Zero in the UK and other developed and emerging markets. The Fund has been engaging utility companies to target social as well as environmental outcomes. Columbia Threadneedle is also seeking to provide input on the upcoming Just Transition label in the UK.
Columbia Threadneedle plays a role in driving innovation in ESG and responsible investment labelling, by contributing to the design of the Belgium Towards Sustainability and Luxembourg LuxFlag labels. Columbia Threadneedle intends to update the UK guidelines to be more consistent with the evolving SFDR regulation. These labels provide minimum standards for transparency, reporting and governance.
Download the full report
Read in-depth engagement case studies and learn how portfolio holdings are making the greatest contribution to four sustainability themes including ‘Sustainable cities’, ‘Decent work and economic growth’, ‘Affordable and clean energy’ and ‘Good health and wellbeing’.
