This report shows public data only. Is this your organisation? If so, login here to view your full report.

Bridges Fund Management

PRI reporting framework 2020

You are in Strategy and Governance » ESG issues in asset allocation

ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe For example, for the Property Funds we use climate change scenario analysis and/or modelling to assess for example physical risks like structural stability above and below ground, overheating, flood risk, CO2 emissions, habitats, and resource use and also transition risks as well as assessing opportunities for adaptation and mitigation.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

13.3. Additional information. [OPTIONAL]

Bridges is a specialist fund manager dedicated to sustainable and impact investment. We, therefore, use an impact-driven approach to create returns for both investors and society-at-large across all our funds. We select companies that will generate our intended outcomes in line with our primary impact-driven investment thesis; we are sector agnostic and we focus on addressing our four impact themes across our funds.

In March 2020, we publicly supported the FSB Task Force on Climate-related Financial Disclosures (TCFD) on its effort to develop recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers, and investors. We are incorporating climate-risk and opportunities into our governance, strategy, risk management and targets. The main area of focus for the future is to understand the feasibility of expanding scenario analysis to our Growth, Evergreen, and Social Outcome Funds.


SG 13 CC.

13.4 CC. Describe how your organisation is using scenario analysis to manage climate-related risks and opportunities, including how the analysis has been interpreted, its results, and any future plans.

Describe

We use climate change scenario analysis and/or modelling in the property funds to select resilient building sites, assets and developments, decrease energy and future CO2 emissions (for example by simulating building behaviour under different weather scenarios and selecting appropriate services strategies that are future-proofed and decrease maintenance and replacement cost).

 

Describe

We have used different scenarios in our property funds, with regards to climate change physical risks (embodied and operational CO2 emissions) and transition (public perception of sustainable buildings) to build our latest residential development. It is built out of Cross Laminated Timber (CLT), a renewable material that saved 1,600 tonnes of CO2 in embodied energy in comparison to traditional construction (BAU), using timber from sustainable sources, reduced waste in construction and CO2 emissions in operation as timber is a better insulant than concrete, minimised environmental impact to neighbours with regards to traffic, noise and air quality, shorten the construction programme, material used in the foundations and reduced costs.

Describe

In our property funds, we have developed user guides for our residents with regards to how to occupy their homes under different climate seasons and scenarios.

13.5 CC. Indicate who uses this analysis.

specify

          Building occupants
        

13.6 CC. Indicate whether your organisation has evaluated the potential impact of climate-related risks, beyond the investment time horizon, on its investment strategy.

Describe

Yes, Bridges considers climate change material risks beyond the investment time-horizon, as described above in case of flooding, structural stability, CO2 emissions reduction, overheating, etc.

13.7 CC. Indicate whether a range of climate scenarios is used.

13.8 CC. Indicate the climate scenarios your organisation uses.

Provider
Scenario used
IEA
IEA
IEA
IEA
IEA
IRENA
Greenpeace
Institute for Sustainable Development
Bloomberg
IPCC
IPCC
IPCC
IPCC
Other

Other (1) please specify:

          Met Office UK Climate Projections
        
Other
Other

SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

other description (1)

          Bridges' impact-driven approach focuses on four impact themes - Healthier Lives, Future Skills, Sustainable Planet and Stronger Communities.
        

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

Specify the AUM invested in low carbon and climate resilient portfolios, funds, strategies or asset classes.

Total AUM
trillions billions millions thousands hundreds
Currency
Assets in USD
trillions billions millions thousands hundreds

Specify the framework or taxonomy used.

Within our Sustainable Planet theme, we invest in the transition to a lower-carbon economy. Most Western countries need to take drastic action in order to meet their carbon emissions reduction targets. Across our funds, our Sustainable Planet investments are helping to accelerate this transition by diverting waste from landfill, promoting a more sustainable approach to food and farming, refurbishing buildings to make them more energy-efficient, promoting more efficient use of natural resources, and more.

Total low carbon and climate-resilient AuM is £297,311,433.0 including PE and property.

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

other description

          We supported our portfolio companies to comply with the Energy Savings Opportunity Scheme and with the Streamlined Energy and Carbon Reporting.
        

14.5. Additional information [Optional]

Over the last few years Bridges has actively supported the development of a common ESG measurement and benchmarking standard by working closely with the non-profit B Lab in developing the B Impact Assessment - the questionnaire that powers the B Corp certification. A partner from Bridges is an active member of the B Lab UK Standards Advisory Council, ensuring this US-founded benchmark is accurately applied in a UK context. The use of the tool has now been incorporated into our assessment of ESG issues.

The benefits of B Impact Assessment are two-fold.

  • First, it helps us identify and monitor the most material risks and opportunities. KPIs used to track progress against these areas are aggregated into 'Impact Scorecards', and are regularly reviewed at company board meetings and our own internal portfolio review meetings.
  • Second, it helps us drive deeper engagement across the four key stakeholder areas (workers, community, environment & governance). Management teams are able to use the 'Improve your score' resources to better understand how to get top marks in each ESG area. As such, management teams feel greater ownership of the ESG process - while the recommendations are more likely to become real objectives during the initial 100-day plan and subsequent investment period.

Based on the B Impact Assessment results and our own analysis, during due diligence we work with management to develop Key Performance Indicators ("KPIs") e.g. around the carbon footprint that tell us whether the company is achieving impact through what it sells or where it is located (outcome KPIs), as well as through how it is operating (ESG factors that signal risks as well as opportunities to create additional value).

Also, Bridges has introduced an environmental reporting tool to capture a more complete set of data on the environmental impact of our portfolio companies. We believe there is a clear business case and we are providing free access to the tool to accurately track key environmental indicators including Carbon Footprint, waste efficiency and water usage.  We have also supported portfolio companies with meeting the ESOS requirement; the energy-savings recommendations we received from the auditors are now being assessed by the boards of directors.


SG 14 CC.

14.6 CC. Provide further details on the key metric(s) used to assess climate-related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Climate-related targets
          Carbon emissions reductions in our new property developments
        
          % over the baseline (standard new built property)
        
          KgCO2/yr / Building simulation
        
Carbon footprint (scope 1 and 2)
          Minimise carbon dioxide emissions to atmosphere and find opportunities for improvement
        
          KgCO2 emissions or tonnes of CO2
        
          Energy audits
        
Portfolio carbon footprint
          Understand our overall impact
        
          KgCO2 emissions or tonnes of CO2
        
          Mix, mostly energy audits and internal assessment
        
Carbon intensity
          Understand energy efficient assets
        
          tonne of CO2 per sqm
        
          (tCO2e) from energy-related floor area (m2) from energy audits
        

14.7 CC. Describe in further detail the key targets.

Target type
Baseline year
Target year
Description
Attachments
          Year
        
          
        
          % CO2 improvement of new developments versus standard new construction
        

          
        
          
        
          
        

          
        
          
        
          
        

          
        
          
        
          
        

          
        
          
        
          
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risk management processes used for identifying, assessing and managing climate-related risks.

Please describe

Prior to making an investment, we consider the positive and negative effects across different stakeholders. To identify ESG risks and opportunities Bridges uses the B Impact Assessment - the questionnaire that powers the B Corp certification. 

Based on the B Impact Assessment results and our own analysis, during due diligence, we work with management to develop Key Performance Indicators ("KPIs") e.g. around the carbon footprint that tell us whether the company is achieving impact through what it sells or where it is located (outcome KPIs), as well as through how it is operating (ESG factors that signal risks as well as opportunities to create additional value). 

As example of climate change transition risks in the property funds we require EPC rating of B, as a minimum, in all our new developments. This is well above the current minimum requirement now of EPC rating of E.

 


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

100 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

19 Percentage of AUM (+/-5%) per asset class invested in the area
95 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

One of our four impact themes is Sustainable Planet. Across our funds, we seek investment opportunities that promote the transition to a lower-carbon economy. Within this theme in November 2019 Bridges Evergreen Holdings, our specialist long-term capital vehicle, invested in AgilityEco (“AE”) a leader in fuel poverty, energy efficiency, and low carbon services across the UK, helping to tackle the challenge of fuel poverty primarily via two Government-backed schemes. Firstly, AE helps energy providers to meet their obligations under the ECO scheme by arranging the installation of energy-efficiency measures such as better insulation and efficient boilers. Secondly, AE works closely with over 150 Local Authorities to identify households eligible for the Warm Home Discount, a separate Government scheme for those in particular need. It has designed and operates a number of community-based programmes to provide fuel poverty and energy efficiency solutions to these households. Since its launch in 2013, AE has grown rapidly, supporting nearly 40,000 UK households in 2019 alone.

Asset class invested

3 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

The Bridges Sustainable Growth Funds invest in growth companies that are helping to create a more inclusive and sustainable future. In July 2019 the fund acquired GEV Wind Power which supports the transition to sustainable energy. GEV provides high-value blade repair and maintenance services to wind farm manufacturers and operators in the UK, Europe, and the US, operating both onshore and in complex offshore environments. Wind turbine blades are susceptible to erosion and weather damage, which affects aerodynamic efficiency and reduces their energy production (and can sometimes stop the turbine operating altogether). GEV specialises in providing expert technicians to repair blades, reducing downtime and maximising production. It has repaired over 3,000 turbines to date – and with turbines increasing in size and rotating faster, making them more prone to damage.

Asset class invested

95 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

In our Property Funds, we partner closely with both the developer and operator, agreeing upfront on the ‘win-win’ strategy of creating commercial and societal value. For example, by partnering closely with Hub a specialist residential developer, we are delivering 1,500 lower-cost mixed-used developments we are delivering over 35% CO2 emissions savings relative to the standard new properties – which results in direct cost savings to occupants. For example in the Old Vinyl Factory in Hayes, we have saved embodied carbon, cost and time / programme by building the boiler house out of Cross Laminated Timber, which has saved 1,600 tonnes of CO2, equivalent to operate the development as carbon neutral for the first 30 years in operation and achieved a 52% COe emissions reductions against standard new built construction, moreover, the scheme has achieved Code for Sustainable Homes Level 4 and BREEAM Very good certification. 

 

Asset class invested

100 Percentage of AUM (+/-5%) per asset class invested in the area
33 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

SMEs contribute disproportionately to job creation, accounting for 60% of private-sector employment and nearly half of private-sector turnover. Yet small companies struggle to innovate and grow without access to skills and support. In addition to all investments in our Sustainable Growth Funds being SMEs, Bridges has long supported hubs of enterprises that encourage ideas sharing, collaboration and competition, all of which promote productivity. 

In our Property Fund we have invested in strategic niche sectors (SME workspace) and value situations (industrial parks, secondary offices and business parks) and are supporting circa 3,000 SMEs through our investments in Flexspace , Middlemarch and Beeston Business Parks and other commercial developments and provide workspace for over 25,000 jobs. Flexspace has incorporated/installed several energy-efficient technologies and has reduced the CO2 emissions by 50% in comparison with the portfolio at purchase. Moreover, the energy intensity of the portfolio is c.60kWh/m2/yr which is nearly the energy intensity target expected by the Royal Institute of British Architects for 2030 for new and retrofitted non-domestic buildings. In recognition of the environmental initiatives and performance the portfolio was eligible for a green loan.

Asset class invested

100 Percentage of AUM (+/-5%) per asset class invested in the area
83 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Based on the PRI’s definition of social enterprise/ community investing, 100% of our funds are invested for positive social and environmental change.

  • In our Growth Funds we look to invest in ambitious, profitable organisations that have a strong social purpose, a clear competitive advantage and high growth potential
  • Through our property funds we enable lower-cost housing and regeneration of disadvantaged areas.
  • In 2016 we launched the Bridges Evergreen Holdings Fund that provides patient capital and operational support to businesses with a social purpose
  • The Bridges' Social Outcome Contracts (SOC) Fund was the first of its kind worldwide. It provides working capital and support to charities and social enterprises delivering services to the public sector, on a payment by results basis. With outcomes contracts, providers are paid for the results they achieve, not the services they deliver. This gives them more freedom to innovate and improve their service as they go along, while also providing a clear incentive to over-deliver. At the same time, these contracts encourage closer collaboration and better alignment between commissioners, delivery organisations and funders, which reduces risk and improves contract management. And through their strong focus on data, they can also help to inform future policy

Asset class invested

9 Percentage of AUM (+/-5%) per asset class invested in the area
12 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Seven of our investments across the Social Sector Funds (9%) provide subsidised housing for vulnerable young adults and families at risk of becoming homeless. These organisations also provide a range of other support services to help young people into education, training or employment, reducing the risk of homelessness.

By way of example, The Ethical Housing Company (TECH), a portfolio company of Bridges Evergreen Holdings, intends to boost the supply of decent affordable rented accommodation in Teesside. TEHC will acquire suitable 1-3-bedroom properties, and – through its partner The Ethical Lettings Agency (TELA) – rent out this accommodation out to people in housing need (including those on benefits). TELA will always make sure that potential tenants can afford their bills, and then through its management services, support the tenant to ensure they can sustain their tenancy for as long as they need. By building and sustaining a portfolio of well-maintained houses with stable tenancies, the TEHC and TELA partnership will also help to support vulnerable individuals, local communities and protect value in the local housing market.

In our property funds, all residential investments during the year have an allocated proportion of affordable homes as part of the development.

 

Asset class invested

9 Percentage of AUM (+/-5%) per asset class invested in the area
0 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

An investment in our Social Entrepreneur fund, London Early Years Foundation (“LEYF”) is a charitable social enterprise that provides early years education through nurseries in London. Its mission is to build a better future for London’s children, families and local communities through a commitment to excellence in early years education, training, and research. LEYF operates in some of the most disadvantaged areas in London, where there is typically an under-supply of high-quality nurseries. It operates an innovative 'balanced portfolio' business model which enables it to provide a consistently high quality of nursery education in all the areas in which it operates. 

Through the SOC funds, we have been supporting West London Zone, a tailored programme of mentoring and support for disadvantaged young people in West London schools. The area around Harrow Road in West London is one of the most unequal in the country. West London Zone is a charity created to focus local community resources to work with schools in this area, bringing together resources from local authorities, philanthropists, central Government, and the schools themselves to improve life chances for the 20% of children most at risk of poor outcomes in this geographical area. 

Asset class invested

58 Percentage of AUM (+/-5%) per asset class invested in the area
17 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Bridges has a number of health-driven investments. Two examples from our Sustainable Growth and Evergreen Holdings below:

  • Alina, a domiciliary care business backed by the Sustainable Growth Funds – where there is a strong emphasis on establishing a comprehensive staff recognition, reward and training programme. Staff receives refresher training, group and individual supervision, as well as tailored specialist training, all with set minimum hours. These go well beyond the industry norm, where the tendency is to provide refresher training only to the extent that is required by regulation.
  • Shaw healthcare was the second investment of our Evergreen Holdings vehicle. Shaw healthcare, an employee-owned care provider is one of the UK’s leading providers of residential and nursing care for the elderly, helping to address the urgent under-supply of quality provision by providing high-quality, affordable residential and nursing care to the elderly.

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



Top