Andrew Dawber, Founding Partner at Civitas Investment Management, discusses the rise of impact investing, the importance of ESG (Environmental, Social, and Governance), considerations and its benefits within the social care sector.
The rise of impact investing over the past decade is the result of growing evidence that investments can deliver positive social outcomes as well as provide sustainable returns. With ESG rising on investors’ priority lists, impact investing has become an established asset class in sectors such as social care, healthcare, living and education.
In the UK, it is well known that there is a large demand/supply imbalance within social care; factors such as a rising and ageing population are met with budget constraints and funding shortfalls, and local governments simply don’t have the capital to satisfy the need. Therefore patient, long term private capital is becoming a greater part of supporting these sectors both in the UK and Europe. As this private investment increases, measurement and transparency around ESG are an increasingly important part of the investment.
To be successful in achieving sustainable returns whilst delivering positive social outcomes, it requires impact objectives to be at the core of investment strategies, considered and embedded in processes and delivered by a specialist team with robust measurement and governance frameworks.
At Civitas, ESG considerations are a key part of our due-diligence and investment committee approval process. We operate a demand-led model, working closely with local authority commissioners and care providers to establish areas with unmet demand, ensuring each investment reaches those most in need. A recent example being our Holloway Road property. In consultation with the local authority and care provider, the property was fully renovated to provide 27 modern self-contained units for adults with specialist care needs, responding to a change in local demand. Prior to acquisition, we assess each property for suitability of location, EPC, structure and care provision. Rents are also assessed to ensure affordability for the care provider and to ensure the properties deliver on our impact objectives of providing long-term stable community-based facilities for individuals with specialist care needs.
After acquisition, we have an active asset management programme and specialist team to monitor our properties and support the housing and care providers as necessary to ensure high standards are maintained for our residents and service users.
However, impact investing is not solely about providing capital, but also strategic support. Although Civitas has no legal responsibility for the care delivery in our properties, we take our social responsibility very seriously, partnering with best-in-class operators and in 2023, we established an independent Quality Assurance Board (QAB). The QAB is responsible for clinical and quality oversight of Civitas’ portfolio in addition to the primary regulatory oversight that is undertaken by the CQC and care providers. This rigorous framework allows us to assess and track the quality-of-care delivery as well as the efficacy of our capital in achieving positive social outcomes.
On a macro scale, we also work together with industry and globally recognised bodies in pursuit of responsible and sustainable investment, including becoming signatories of UNPRi, members of GIIN and contributing to several UN Sustainable Development Goals. We also engage independent impact consultants to report on our social impact delivery across our portfolio.
By channelling private capital towards innovative solutions and sustainable models that enhance the quality and accessibility of care services, it can provide higher quality and more affordable social care alternatives to NHS care, easing pressure on the healthcare system and saving taxpayers’ money at the same time.
Ultimately, we are seeking to create a more resilient and equitable social care system through each investment.
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Image depicts, Andrew Dawber, Founding Partner, Civitas Investment Management